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Bonds/Industrial Financing |
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Bonds/Industrial Financing |
Financing of industrial projects in
West Tennessee communities is an
important factor in attracting new
firms to the area and encouraging
existing firms to expand. Local
communities and the West Tennessee
Industrial Association can suggest a
plan suitable for most projects.
Financing can be obtained from area
financial institutions or
application for funding can be made
to one of several federal loan
agencies. In addition, the Tennessee
Legislature has authorized three
specific plans for financing. Many
West Tennessee industrial plants
have been financed in whole or part
by these methods. Copies of the
Legislative Acts authorizing the
following plans are available from
the West Tennessee Industrial
Association.
PLAN I
AUTHORIZES LOCAL REVENUE BONDS
FOR INDUSTRIAL PLANTS, LAND, AND
CERTAIN
TYPES OF PLANT EQUIPMENT.
This plan authorizes Tennessee
cities and counties to issue Revenue
Bonds to finance the construction or
purchase of industrial buildings for
lease to private industrial
concerns. Such buildings are leased
on terms which provide for the
retirement of the principal and
payment of the interest. The bond
issue must receive the approval of a
three-fourths majority of those
voting in the public referendum on
the issue and the interest on the
bonds cannot exceed ten percent.
These bonds are exempt from State,
county and municipal taxation except
inheritance, transfer and estate
taxes. The Tennessee Supreme Court
has held that industrial buildings
may include fixtures, machinery,
etc. that are permanently attached
to the building.
This plan is authorized by the
Industrial Revenue Bond Act of 1951.
PLAN II
AUTHORIZES THE FORMATION OF
PUBLIC INDUSTRIAL DEVELOPMENT
CORPORATIONS
FOR INDUSTRIAL FINANCING.
This plan authorizes the cities and
counties to establish a public
industrial development
corporation to acquire and dispose
of properties and buildings to
private industrial concerns. The
corporation may issue bonds payable
from the revenues received from the
leasing or sale of industrial
property. These bonds do not require
a public referendum, and interest
cannot exceed ten percent.
These industrial development
corporations also may pledge the
full faith and credit of the city or
county provided they receive a
Certificate of Public Purpose and
Necessity issued by the State
Building Finance Committee as
described in Plan III, and the
approval of a three-fourths majority
of those voting in a public
referendum on the issue.
Those local industrial development
corporations must obtain charters of
incorporation from the State
Secretary of State and operate as an
independent organization working in
conjunction with the city or county.
This plan is authorized by the
Industrial Development Corporations
Act of 1955.
PLAN III
AUTHORIZES FULL FAITH AND CREDIT
BONDS TO PURCHASE LAND AND/OR
CONSTRUCT
INDUSTRIAL BUILDINGS.
This plan authorizes cities and
counties to issue full faith and
credit bonds for the purpose of
financing the purchase or
construction of industrial buildings
for lease to private industrial
concerns.
The rental income from industrial
buildings must be pledged to the
full retirement of the bonds. The
bonds may not be issued for a term
of more than forty years or have an
interest rate in excess of ten
percent, and must be approved by a
three-fourths majority of those
voting in a public referendum. In
order to issue these bonds the city
or county must receive a Certificate
of Public Purpose and Necessity from
the State Building Finance
Committee. The committee serves as a
screening board and must determine
that sufficient resources and labor
are available and that the total
amount of the indebtedness will not
exceed ten percent of the assessed
valuation of the city or county. The
committee must also determine that
the project is well conceived, has a
reasonable chance of success, will
provide proper economic development
and employment, and will not become
a burden upon local taxpayers.
This plan is authorized by the
Industrial Building Bond Act of
1955.
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