The Tempe Industrial Development Authority (IDA) is a non-profit corporation which operates as a public board under the City of Tempe, Arizona. The Tempe IDA's purpose is to promote economic development and help companies scale their business by lowering the cost of project finance through the issuance of private activity bonds. Additionally, the Tempe IDA invests in the City of Tempe in ways that will encourage further development, attract new business, assure job opportunities, and enhance the quality of life of the local residents and businesses.
Since our formation in 1980, we have issued over $600 million in private activity bonds for numerous projects, and we have granted over $570,000 in college scholarships to local students to enhance the quality of life in Tempe.
Tempe, Arizona is a vibrant community, with a rich and diverse history and continuous drive for improvement in such areas as technology, education, infrastructure, environmental sustainability, the arts, economic development and overall quality of life, among others. By utilizing the services of the Tempe IDA, project developers are simultaneously reducing their cost of funds and investing in and further enhancing a remarkable city.
Borrowing funds at an acceptable interest rate is critical for managing and scaling a business. Financing your qualifying project with Tempe IDA private activity bonds is a creative and cost-effective solution for project finance in many cases.
By financing your project through the Tempe IDA as the conduit bond issuer, your bonds may be deemed “qualified private activity bonds”, which is a form of tax-exempt bond. This means that the interest paid to the holders of your bonds, subject to federal alternative minimum tax in certain cases, is tax-exempt. From the bondholders’ perspective, because the interest income is not taxable, investors in qualified private activity bonds are typically willing to accept (or “charge”) a lower interest rate. The upshot is that qualified private activity bonds carry a lower interest rate than other forms of comparable borrowing and may lead to greater access to capital. We pass 100% of the savings on the reduced interest rate to the ultimate borrower in the transaction.
Individuals and businesses are not able to directly issue private activity bonds themselves. Rather, if a borrower desires to finance its project in this fashion, the borrower must use the service of a conduit bond issuer--typically an industrial development authority--such as the Tempe IDA. Private activity bonds may be suitable at any level within a borrower's capital structure, including as the sole debt, senior debt, or a subordinate tranche. For their part, prospective investors may choose to invest in private activity bonds for any number of reasons, including the appeal of the underlying asset and its management, portfolio diversification, yield, tax benefits and tax planning, and the social impact or cause associated with the underlying project.
If you believe your project may be eligible to be financed through the issuance of qualified private activity bonds, it would be worthwhile for you and your professional advisors to investigate private activity bonds in greater depth. Please contact us to discuss your project!
Interest income on private activity bonds is tax-exempt to the holder (subject to alternative minimum tax in certain cases). This means that private activity bonds are issued at a lower interest rate than corporate bonds or bank loans. We pass 100% of the savings on the reduced interest rate to the ultimate borrower in the transaction.
The Tempe IDA's operating expenses are negligible, which means that substantially all of our fee revenue derived from private activity bond issuances is available for reinvestment into various philanthropic and community projects in the City of Tempe.
Based on the published rates of other industrial development authorities in region, the Tempe IDA charges the lowest fee for its service of issuing private activity bonds.
The Tempe IDA has a long track record of fast and seamless execution of transactions, both large and small. We have broad authority to serve as the bond issuer and we are motivated to close upon transactions.
Tempe IDA private activity bonds can be used to finance or refinance large or small qualifying projects, and may be used in conjunction with other tax incentives such as Opportunity Zone funds and Low-Income Housing Tax Credits. Moreover, your project does not necessarily need to be located in the City of Tempe or the State of Arizona.
Over the past 15 years, ASU Enterprise Partners and ASU Foundation have enlisted the Tempe IDA to assist in issuing bonds to build or buy office buildings and technological enhancements. Our experience with the Tempe IDA has been tremendously positive, even with complicated projects. The Tempe IDA understands the importance of community growth and is skilled at assisting organizations with funding to contribute to the development of our community and economy.
- Virginia DeSanto, CFO and Treasurer
ASU Enterprise Partners
As an Executive Director of a not-for-profit organization like Friendship Village Tempe, it is important to partner with the right organizations that maintain a similar business philosophy. Specific to funding our projects for growth, I believe we have found just that when it comes to the team at Tempe IDA. We feel like we enter into the process with a true partner that is looking to work with us rather than creating obstacles that make the process less efficient or cumbersome. We value our relationship with the Tempe IDA and truly enjoy working with them from start to finish and believe our goals are aligned which lends itself to a sustainable win/win position for both parties.
- Cole Marvin, Executive Director
Friendship Village of Tempe