With the passage of the Heartland Disaster Tax Relief Act of 2008, a new type of Tax Exempt Bond was created, Midwestern Disaster Area (MDA) Bonds. The range of projects that can be financed through MDA Bonds would include projects such as:
- Manufacturing facilities
- Retail businesses
- Office and commercial development
- Medical facilities
- Warehouse and distribution facilities
MDA Bonds must be issued before January 1, 2013 by a state in which a Midwestern disaster area is located or any political subdivision of such state, and must be designated as a MDA Bond by the governor of such state. Participating states include; Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska and Wisconsin.
Projects With Private Business Users: Users Must Have Suffered a Loss or be Designated by the Governor as Replacing a Business Which has Suffered a Loss.
In the case of a project involving a private business use, either (i) the project must be used by a person who suffered a loss in a trade or business attributable to the severe storms, tornados, or flooding giving rise to any Presidential declaration, or (ii) the person using the project must be designated by the Governor as a person carrying on a trade or business replacing a trade or business with respect to which another person suffered such a loss.
The Advoca Securities program utilizes a straightforward application and closing procedure and is funded by the issuance of the Tax Exempt Bonds:
- Engage Advoca Capital as Advisor and Placement Agent.
- Advoca Capital undertakes an initial credit evaluation to determine if the borrower qualifies for the program.
- Upon qualification, Advoca Capital sends the underwriting information to a group of acceptable Letter of Credit Banks.
- Upon approval of the application by a Letter of Credit Bank, a Commitment Letter is issued to the borrower detailing the required security elements, operative loan covenants and other requirements and contingencies necessary for loan closing.
- Borrower’s counsel reviews the Commitment Letter.
- Borrower executes and returns Commitment Letter, along with any commitment fees stipulated in the Commitment Letter to Advoca Capital.
- Bond documents are generated and distributed to the financing team.
- Borrowers generally can be funded within 45 to 60 days following execution of the Commitment Letter.
- Advoca assists the borrower in securing interim financing if the borrower has immediate funding needs.
