EIEDA - Eastern Illinois Economic Development Authority

News

Powerful New Tool for Economic Development

On July 13, 2005, Public Act 94-0203 was signed into law introduced by Representatives Roger L. Eddy, William B. Black, David Reis, Chapin Rose, and Robert F. Flider to create the Eastern Illinois Economic Development Authority (EIEDA). This Authority provides a powerful new financing tool for economic development in the Eastern Illinois Counties of Ford, Iroquois, Piatt, Champaign, Vermilion, Douglas, Moultrie, Shelby, Coles, and Edgar.

The Authority has the ability to issue up to $250 million in bonds for economic development purposes. EIEDA will be a general development agency for the counties located in the territory and will be one of only ten such organizations within the State of Illinois.

EIEDA can issue bonds on behalf of businesses in which debt service is payable exclusively from the earnings of the borrower. In issuing revenue bonds for the borrower, EIEDA acts as a "conduit" or "middle-man." The bonds are sold to insurance companies, banks, mutual funds or brokerage houses on behalf of individuals. The proceeds of the sale are made available to the borrower for the project. The borrower then pays the money back directly to those who bought the bonds.

The major advantages of EIEDA include providing savings of 2-3% lower than conventional financing for manufacturing. EIEDA generally wouldn’t seek donations or charge any type of membership fee. EIEDA would operate from fees charged companies to issue these bonds. The Companies that pay these fees recapture the fee by the lower interest rate savings, generally within twelve months of a 20 - 30 year bond.

The benefits of EIEDA Bonds include long term financing where the maturity of the bonds is flexible and can range from ten to thirty years, Interest rates that are generally 2.0% to 3.0% below Prime Rate. The interest rates are discounted to reflect tax-exempt status. Rates range well below conventional financing. Flexible terms where the interest rates may be fixed or variable and can finance up to 100% of the eligible project costs with no fixed minimum job creation or capital investment requirements, although some jobs have to be created

The Authority has the power to issue Tax Exempt Industrial Revenue Bonds (IRBS). The Internal Revenue Service tax law allows public entities, such as EIEDA to lend their tax exempt status to private entities that are involved in manufacturing under certain conditions. EIEDA issues bonds that are purchased by investors. The interest income received by these investors is exempt from federal income taxation. Therefore they are generally willing to accept a lower rate of return on the bonds, because the after-tax benefits would accrue the same to them. This lower rate is then passed though to the borrower. Tax Exempt issues are generally 200 to 300 basis points (2.0%-3.0%) below prime rate. In today’s market a healthy borrower could receive an all-in rate of 2.5% to 3.0%.

The Authority is governed by a 14 member Board of Directors which include: William Boyer of Vermilion County, Chris Eldredge of Edgar County, Todd Lee with the Illinois Department of Commerce and Economic Opportunity, Jim Looft of Shelby County, David McCabe of Moultrie County, Mike Neal of Coles County, Jim Reynolds of Iroquois County, Kathy Rhodes of Douglas County, Elynor Stagen of Ford County, Mitch Swim of Champaign County and Arthur Wilkinson of Piatt County. There are currently three Governor’s appointment vacancies. The Board has appointed Andrew Hamilton as their Executive Director. For more information on the Authority Please Contact Andrew Hamilton at 866-325-7525 or andrewjhamilton@eieda.com

June 2009 - Recovery Zone Bonds (RZBs)

In February 2009, President Barack Obama signed into law the American Recovery and Reinvestment Act of 2009 (the“Recovery Act”),which creates a new category of bonds called Recovery Zone Bonds (RZBs). RZBs are intended to stimulate economic recovery in areas identified as recovery zones. The two types of RZBs – Recovery Economic Development Bonds and Recovery Zone Facility Bonds – may only be issued prior to January 1, 2011.

Click here to download the full .pdf