Midwestern Disaster Area Bonds
The Heartland Disaster Tax Relief Act (HDTRA) of 2008 provides assistance to areas in the Midwest that suffered severe storms, tornadoes and flooding in the spring and summer of 2008. One of the provisions of HDTRA is the creation of Midwestern Disaster Area (MDA) bonds.
Benefits
MDA bonds are a new kind of private activity tax-exempt bond designed to facilitate the economic recovery and rebuilding of areas damaged by the severe weather. The bonds are issued on a conduit basis; that is, the borrower (business) is responsible for repaying the debt. Rates and terms will be dependent on the credit-worthiness of the borrower. Iowa was provided $2.6 billion in bonding authority for MDA bonds.
MDA bonds are a new kind of private activity tax-exempt bond designed to facilitate the economic recovery and rebuilding of areas damaged by the severe weather. The bonds are issued on a conduit basis; that is, the borrower (business) is responsible for repaying the debt. Rates and terms will be dependent on the credit-worthiness of the borrower. Iowa was provided $2.6 billion in bonding authority for MDA bonds.
Qualification
To qualify, the business or trade must have suffered a loss attributable to the severe storms, tornadoes or flooding or, the business must be replacing a business or trade that suffered a loss. Because Iowa lost so many businesses from the storms, tornados and flooding, most businesses locating, expanding or improving facilities in Iowa can be considered replacing a business that suffered a loss.
The loss and the project financed with the MDA bonds must be located in any one or more of the 78 Iowa counties declared a major disaster area by the President as part of disaster number FEMA 1763-DR declared on May 27, 2008. In Iowa, all counties except Buena Vista, Calhoun, Carroll, Cherokee, Clay, Dickinson, Emmet, Ida, Jefferson, Lyon, O’Brien, Osceola, Palo Alto, Plymouth, Pocahontas, Sac, Shelby, Sioux, Taylor, Wayne, and Woodbury are included. A total of 78 counties throughout Iowa are eligible. The eligible counties are shown in orange or red on this map.
To qualify, the business or trade must have suffered a loss attributable to the severe storms, tornadoes or flooding or, the business must be replacing a business or trade that suffered a loss. Because Iowa lost so many businesses from the storms, tornados and flooding, most businesses locating, expanding or improving facilities in Iowa can be considered replacing a business that suffered a loss.
The loss and the project financed with the MDA bonds must be located in any one or more of the 78 Iowa counties declared a major disaster area by the President as part of disaster number FEMA 1763-DR declared on May 27, 2008. In Iowa, all counties except Buena Vista, Calhoun, Carroll, Cherokee, Clay, Dickinson, Emmet, Ida, Jefferson, Lyon, O’Brien, Osceola, Palo Alto, Plymouth, Pocahontas, Sac, Shelby, Sioux, Taylor, Wayne, and Woodbury are included. A total of 78 counties throughout Iowa are eligible. The eligible counties are shown in orange or red on this map.
The proceeds of the bonds must be used for:
1. the cost of multifamily rental property for low and moderate income individuals
2. the cost to acquire, repair, replace or construct nonresidential real property
3. the cost to repair or reconstruct public utility property
Other Requirements
- The bonds can be used to refinance existing debt if the debt was for expenditures to repair or replace damage from the severe weather
- The bonds must be issued before January 1, 2013
- The bond issue must close within 5 months after receiving an allocation of MDA bonds
- If the bonds are used to acquire existing buildings, the borrower must spend (within two years) at least 50% of the cost of acquisition on rehabilitation of the building
- Not more than 25% of the bond proceeds can be used to acquire land
- MDA bonds are not bank qualified
- Not more than 2% of the bond proceeds can be used to pay costs related to the issuance of the bonds (legal fees, issuer fees, underwriter fees or discounts)
- Bond proceeds cannot be used to finance movable fixtures and equipment
- Bond proceeds cannot be used to finance: skyboxes, health clubs, golf courses, country clubs, massage parlors, hot tub facilities, tanning facilities, racetracks or other gambling facilities or liquor stores.
More Information
- Midwestern Disaster Area Bonds Application Process
- Midwestern Disaster Area Bonds Application
- Map of Counties Declared Disaster Areas
- Midwestern Disaster Area Bonds Rules
Contact us
Lori Beary
800.432.7230
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