Illinois Development Finance Authority (IDFA)
Municipal Leases

By RONALD BEAN, Executive Director, Illinois Development Finance Authority

Finding affordable financing for municipal improvement projects can be a very trying and often impossible task in today's market. The Illinois Development Finance Authority (IDFA) has a program which is specifically tailored to the financial challenges that face municipalities and other units of local government in Illinois,

IDFA offers tax-exempt leasing for municipal projects that range from $100,000 to $1 million. This financing program offers a viable alternative to issuing municipal bonds.

IDFA municipal leases are very cost-effective. In addition to low transaction costs, IDFA does not require application fees from municipalities. Most importantly, the financing program offers a unique double tax-exemption which means lower interest rates for the borrower.

IDFA makes leasing available for a variety of projects, such as energy conservation equipment, water projects or town halls. With IDFA leases, municipalities can avoid the high costs associated with leasing through a commercial finance company or manufacturer.

For example, IDFA recently entered into a $200,000, tax-exempt municipal lease with the city of Monmouth on behalf of Community Memorial Hospital, a 91-bed, municipally-owned, acute care facility.

Small local governments like Monmouth often find it difficult to procure the necessary and affordable financing needed for a municipally-owned health care facility. Vital equipment acquisitions made possible by IDFA's assistance and expertise in local government financing have helped the city's hospital remain financially stable and fit to provide quality health care.

The IDFA municipal lease financing will enable the city of Monmouth to purchase vital medical equipment including an emergency generator, laserscope, and a major operating room table.

When it comes to local government financing, the municipal lease program offers a real alternative to issuing bonds or other lending vehicles. When a municipality in Illinois needs a cost-effective financing for capital improvement or acquisition, municipal leaders would benefit by calling IDFA first.

The municipal lease for the City of Monmouth is a good illustration of how IDFA leases can work for Illinois municipalities. The municipal leases are part of IDEA'S overall Local Government Financing Program which helps municipalities and other units of local government finance public improvement projects.

In addition to municipal leases, the IDFA Local Government Finance programs offer tax-exempt bond financing and cash flow assistance.

IDFA also offers financing to qualified manufacturers, small businesses, as well as 501 (c) (3) not-for-prof it corporations.

Created by the Illinois General Assembly in 1983, IDFA has played a major role in stimulating the state's economic development by funding projects through the agency's many financing vehicles. Since its inception, IDFA has provided more than $3.3 billion in financial assistance to Illinois businesses, not-for-profit corporations and municipalities which has resulted in creation of more than 30,000 full-time jobs. •

Page 22 / Illinois Municipal Review / December 1992