• The maximum remaining principal amount of tax-exempt IDBs and qualified redevelopment bonds outstanding with any company, including affiliated persons and/or companies, cannot exceed $40 million nationwide.
• The capital expenditures for the project, when added to other capital expenditures of your company and certain principal users, for the three years immediately preceding and the three years following the closing, plus the remaining principal balance of other IDBs outstanding, cannot exceed $10 million * in the jurisdiction in which the IDB is issued. If your company has multiple locations, the $10 million limitation applies only to the jurisdiction (generally the city or county) where the capital project will be located. Up to $1 million of IDBs can be issued for any company, regardless of capital expenditures, in a jurisdiction, provided no other tax-exempt bonds for the company are outstanding.
• The maximum remaining principal amount of tax-exempt IDBs and qualified redevelopment bonds outstanding with any company, including affiliated persons and/or companies, cannot exceed $40 million nationwide.

$10 Million Capital Expenditure Test
An IRS requirement that the amount of the current IDB financing - plus the capital expenditures of the company for the three years immediately preceding and three years following the issuance of the current IDB - plus the principal outstanding of any other IDBs, not exceed $10 million * in the government jurisdiction where the project is located.

$40 Million Test
An IRS requirement that limits the outstanding principal amount of certain types of tax-exempt bonds to $40,000,000 per taxpayer. Tax-exempt bonds subject to this limitation include IDBs and qualified redevelopment bonds and outstanding exempt facility bonds. A new issue exempt facility bond may not be subject to this test.

Equipment
All new manufacturing equipment purchased after inducement would qualify for tax-exempt financing.

Rehabilitation Expenditures
Defined in the Internal Revenue Code as "any amount properly chargeable to capital account which is incurred by person acquiring the property (or additions or improvements to property) in connection with the rehabilitation of a building." Tax-exempt bond financing of an existing building requires the borrower to spend 15% of the bond proceeds as "Rehabilitation Expenditures."

Acquisition Financing
Your company may qualify for IDB financing when acquiring an existing manufacturing facility. You may be able to use tax-exempt proceeds to acquire the fixed assets of the company being acquired. These assets must continue to be used for manufacturing and cannot be relocated. Tax-exempt funds cannot be used solely to finance used equipment without being part of an integrated facility. The capital expenditure test is applied to the jurisdiction where the acquired facility is located. At least 15% of the amount financed with IDB proceeds must be spent to refurbish the facility or equipment. This amount may be financed either through the IDB or paid directly by the company within 24 months of bond closing.

* It is important to note that while the current capital expenditure limitation is $10 million, Congress has recently authorized an increase to $20 million, which will be implemented for deals issued after December 31, 2006.