The Florida Development Finance Corporation (“FDFC”) is a special development financing authority. We offer tax-exempt, low interest bond financing to qualifying projects or borrowers. These can include small manufacturers and 501(c)(3) non-profit organizations.
We support economic development by assisting for-profit and not-for-profit businesses with access to capital for project financing. The use of these funds may be eligible to finance or refinance up to 100% of the cost of acquisition, construction, and equipping of land, facilities, equipment and other costs needed for the project. The primary mechanism for accessing the capital markets is tax-exempt and taxable bonds.
Conduit Issuing Authority
FDFC has been given authority in Chapter 288, Part X of the Florida Statutes to act as a state-wide conduit issuer for bond financing. Borrowers do not have direct access to the capital markets for bond financing, therefore, FDFC serves as a borrower for the borrower. This means that the responsibility for the repayment of debt falls solely on the borrower.
Bonds issued by the FDFC are not guaranteed by the State or any local government. The FDFC Board does not provide project or entitlement approval (ie. zoning, future land use, site or building permitting, etc.), which can only come from Federal, State or the local jurisdiction where the project is located.
Tax-Exempt Project Finance
The IRS Code outlines certain borrowers or projects that qualify for tax-exempt financing. These non-governmental bonds are known as Private Activity Bonds (“PAB”) or 501 C 3 Bonds. The federal government limits the amount of PAB’s that can be issued by allocating to each state a certain amount of PAB allocation. Within the State of Florida, the Division of Bond Finance is given the responsibility for receiving the annual allotment from the federal government and foe managing the process for PAB allocation. Certain projects, such as Small Manufacturers or Not-for-Profit organizations are not required to seek PAB allocation by having an exemption from this process.
It is also important to note that “tax-exempt” means the bond or debt instrument is exempt from federal income taxes. Tax-exempt bonds are neither a sponsorship nor subsidy since the government does not transfer part of its revenue to the borrower; rather the government has chosen to abstain from requiring that the borrower support the government (Walz v Tax Commission of the City of New York (1970).
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WHY CHOOSE FDFC?
We will work with your team of finance professionals to move through the bond approval process in a timely and efficient manner.
Lower Overall Cost
Financing through FDFC allows qualified business and organizations to acquire capital investments with the added benefit of untaxed interest. Bonds issued by the FDFC are not subject to documentary stamps or intangible tax.
Financing That Fits
FDFC-issued bonds may offer borrowers a level of convenience unmatched by standard bank loans. The Borrower’s financing team can structure bonds with versatile terms of maturity to meet your needs.
Upon partnering with FDFC, our staff will work with a borrower and their finance team to:
Seek TEFRA approval (Tax Equity and Fiscal Responsibility Act of 1986) for tax-exempt financing only,
Assist with Private Activity Bond Allocation, as necessary
Seek approval of bond documents from the FDFC Board.
Depending on the complexity and type of offering, these processes can take between 3-6 months to close on a transaction.