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~ ~ <br />• Minutes, Regular Meeting and Public Hearing <br />La Porte City Council, July 7, 1982, Page 3 <br />by the City, to the effect that the project, for example, <br />will increase the tax base and alleviate unemployment problems. <br />Eligible blighted areas have no effect on the ability of <br />Industrial Development Corporations to finance projects which <br />are manufacturing or industrial in nature. This type of <br />project can be financed anywhere in the jurisdiction of the <br />Industrial Development Corporation, which I might add, is <br />co-extensive with the boundaries of the City which creates it. <br />Mayor Cline asked if, at this point, questions from the <br />Council might not be appropriate. <br />Pfeiffer: I understood the Corporation being formed by the <br />City included not only the City limits of La Porte but our <br />ETJ as well. <br />Lyons: I'm sorry; that is correct if the County gives its <br />permission. <br />• Pfeiffer: Is that a problem? <br />Lyons: No. <br />Longley: Could you give a brief overview how it would operate <br />from the beginning to the end payment? <br />Lyons: There are two different laws which mesh in to do this. <br />There is the State law and the Federal income tax law. The <br />reason the bonds are attractive and companies want to come in <br />and locate, is because the bonds which are issued by the <br />Industrial Development Corporation are tax exempt dollars. <br />Therefore, whoever purchases those bonds is going to be able <br />to loan that money at a lower interest rate than if the <br />Company went out and got commercial financing. The way the <br />financing is structured is the loan agreement between the <br />IDC and the user of the facility that will provide that the <br />user of the facility will pay the loan back in an amount which <br />will equal the debt service on the bonds. So that, in effect, <br />what it does is allow the user to come in and get a loan to <br />build their facility at lower interest rates. The way the <br />whole thing works out is, a company that wants to use IDB's <br />under the Development Corporation will ask the Corporation to <br />take what is known in tax parlance as official action towards <br />issuance of the bonds. This is a tax requirement which relates <br />to the expenditure of funds which can be reimbursed out of <br />• current bond proceeds, because once the Industrial Corporation <br />