Thanks, theindustriesdriver.
I thought I understood based on stervc’s posts #294 and #429, but the information in your post #590 has muddied the waters a bit. I'm going to go ahead and post this (somewhat muddy) understanding, and tackle it again later (maybe).
Any input would be welcome.
MY UNDERSTANDING
The State of Wisconsin currently has authority to have $200 million of bonds issued under this Federal program (the “volume cap allocation”). The State allocates portions of this amount to cities within Wisconsin.
The cities issue bonds on behalf of companies, though the companies must find the investors. The city then loans the proceeds to the company, the loan being secured by the facilities and equipment (per post #590).
But the company, not the city, is responsible for interest payment and principal repayment to investors. Even though the bonds are issued by the city, the city does not guarantee payment.
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-- Since the city issued the bonds, does the city act as middleman, receiving payment from the company and sending it to investors?
-- Since the loan from the city to the company is secured by the facilities, if the company defaults perhaps the city would perform some kind of seizing and disposition of assets in an attempt to repay investors?
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The benefits of the program are
1. Since the interest is federally tax-free, investors may be willing to take a lower interest rate.
2. Since the “city technically owns title to the facility” (post #294), the company gets tax breaks. (The facility will be given to the company in 20 years or so - this may simply mean that once the loan to the city is repaid, the facility is no longer encumbered.)
3. I assume there is a sense of safety for investors in that they assume that the city has done DD on the company, even though there is no guarantee of payment from the city or state. So it should be easier for a small company to find investors than would otherwise be the case.
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AMOUNT AVAILABLE
And there is $20 available for GBOE (if they can find the investors.) (per post #429)
