SWIDA E-News
Fall 2014

Letter from the Executive Director

Greetings Friends ~

 

Welcome to the first edition of SWIDA E-News, a new quarterly electronic newsletter which aims to generate a greater understanding of the important role that SWIDA plays in spurring economic development in our region. In each issue, you'll learn about the financing and development tools SWIDA offers, and see examples of significant projects we have helped to make a reality. On behalf of SWIDA's chairman, Bob Lombardi, and our entire board, I hope you'll take a few minutes to read our first edition and share it with any colleagues you think would be interested in learning more about our organization.

 

If you're currently exploring any projects for which SWIDA can be of assistance, don't hesitate to contact me directly at 618-345-3400.

 

Sincerely,

 

Mike Lundy

Executive Director


In the Spotlight - Creation of SWIDA

In the mid-1980s, Southwestern Illinois was in the throes of recession. Plant closings and layoffs sent unemployment rates soaring above 15 percent in some communities. Then Governor Jim Thompson convened a task force to make recommendations to jump start the area's economy. From this task force came the concept of a regional governmental body that would cover both Madison and St. Clair Counties and all municipalities therein and would have the powers to facilitate economic development in the region. (Bond and Clinton counties were added in later years.)

 

The result was the creation of the Southwestern Illinois Development Authority (SWIDA) by the General Assembly in 1987. The appointees to the Board of Directors came together for their first Board meeting on April 19, 1998 to determine how they could fulfill their mission of economic development, and in the 25-plus years since then, SWIDA has issued more than $1 billion in bonds to facilitate development in the region.

 

The current Board of 14 is appointed as follows: eight by the Governor, two each from Madison and St. Clair counties and one each from Bond and Clinton counties.  These members come from a variety of professional backgrounds that contribute their expertise to the diversity of economic development projects in which SWIDA is involved. Board members receive no compensation for their time.

 

Legally, SWIDA is a municipal corporation uniquely structured as a quasi- governmental private sector agency managed by the Board, but not funded in any way by the State or any other taxing body. With a lean staff of just three, SWIDA is solely funded from fees and interest it charges for its financing and consulting services.

 

In the enabling legislation of SWIDA it was specifically stated that the SWIDA Board "study and make recommendations on the economic development of the city of East St. Louis and the economic development of the riverfront". We'll have more on that topic in our next issue! 

 

Project Spotlight: $15 Million Emerald Ridge in East Alton

In recent months, SWIDA was instrumental in working with the Village of East Alton to redevelop a part of the community known as The Defense Area. Over many years, Mayor Fred Bright was aggressively buying condemned property in that area of town and tearing it down in the hope of finding a developer to build new housing in its place.

 

In the end, it was a development team, led by RISE STL, that stepped in to make the project happen.  RISE Staff, along with SWIDA Chairman Robert Lombardi, Executive Director Mike Lundy, City Treasurer Joe Silkwood, and a special committee of the SWIDA board  worked many months to create a redevelopment plan for that area. RISE has many years of expertise in Tax Credit Projects in both Missouri and Illinois and SWIDA worked as a minority partner with the organization on the financing for this unique project. The goal was to build 46 Lease-to-Own Low Income Housing Tax Credit Units. The tax credits are a function of IHDA (Illinois Housing Development Authority). This $15 million development is meeting the need for quality housing in this area of East Alton and providing stability around the current housing market. This Development is providing a boost to the local economy and creating jobs in the construction trade.

 

The project is currently under construction with a total completion date of early 2015. Several units have been completed and have new tenants living in them.

 

SWIDA's Resources

Through its enabling legislation, SWIDA has been given a wide variety of powers to: finance, buy, sell, own, create, and manage almost any type of activity that would contribute to the economic development of SWIDA's four- county region.

 

SWIDA's main tools for fostering economic development include:

 

Issuing tax-exempt revenue bonds: 

For all bonds issued through SWIDA, the buyer of the bonds does not only not have to pay Federal income tax, but also does not pay State of Illinois income tax on the interest they receive from buying the bonds. The project has to meet Federal IRS guidelines to qualify to be Federal tax-exempt.

 

The bonds are not bought or guaranteed by SWIDA or any other governmental entity. The bonds are sold in the private financial markets to individuals or institutions solely on the strength of the project and the company borrowing for the project.  If the company financials are not strong enough to meet the market requirements, they may have their local bank guarantee or buy the bonds directly.  

  

Advantages of tax-exempt financing: 

The main and very strong advantage of tax-exempt bonds is the significantly lower interest rate the borrower pays. Because the buyer of the bonds does not have to pay income tax at all on the bonds, the buyer is willing to accept a lower tax-exempt interest income. This is similar to an individual buying municipal bonds for one's personal financial portfolio. In fact most SWIDA bonds can be bought by individuals.

 

The lower differential interest rate can be as much as 1.5% to 2% annually, which over the course of a typical 20-year, multi-million dollar bond issue can add up to significantly large actual dollars saved from financing of the project.  Depending on the size of the project, the overall savings over the life of the bonds can range from at least hundreds of thousand dollars to several million dollars.      

 

Where Are They Now?

SWIDA's First Bond Issue Helped Foster Port District's Growth

In 1998, SWIDA issued its first double tax-exempt bond for the then called Tri-City Regional Port, now America's Central Port. The $3.5 million in bonds were issued to build a 150,000-square-foot public warehouse to be owned by the Port but leased to private users. The Port chose to issue the bonds through SWIDA, despite the fact that the Port could have issued its own bonds which would have been Federal tax-exempt. That decision was driven by the fact that the Port's bonds are not State tax-exempt, attesting therefore to the benefits of issuing bonds through SWIDA's double tax exempt structure. 

 

The project SWIDA financed is just one of many that have taken shape at the Port District over the past 50 years, as America's Central Port has been fulfilling its mission of creating jobs and providing freight transportation opportunities in the Tri-Cities area of Granite City, Madison and Venice, Illinois.  Covering a service area of 77 square miles, the Port District has quietly grown throughout the years to become a leader in economic development in southwestern Illinois.

 

Originally created in 1959 as Tri-City Regional Port District, this special purpose unit of local government operated on 350 acres of land that was owned or leased from the US Army Corps of Engineers. It was not until 2002, with the deactivation of the Charles Melvin Price Support Center, that the Port was given additional land that helps make up the 1,200 acre facility that currently exists.

 

While it is home to over 70 tenants, America's Central Port is more than just your traditional business park. As the region's only full-service, public intermodal port, America's Central Port and its operators handle over $1.1 billion in goods and services over 2,500 barges each year.

 

From its humble beginnings, the Port District has grown to a net worth of over $79 million today.  This remarkable growth has been largely due to sound policies established by its Boards of Commissioners throughout the years, strong and stable leadership of the Port District, and its ability to utilize assets and take advantage of opportunities as they become available.  Amazingly, this growth has occurred by a self-sufficient organization that does not receive the benefit of general tax revenues, as most other local or municipal forms of government do.

 

In This Issue
Contact Us

Southwestern Illinois Development Authority


1022 Eastport Plaza Dr

Collinsville, Illinois

62234-6121

 

(618) 345-3400

Email: info@swida.org

 

www.swida.org


 
In Our Next Issue...

Learn more about SWIDA's role in fostering development in the City of East St. Louis.


 
Did you know...

SWIDA has issued $1.2 Billion in Bonds.


 
If you would like to be added to our mailing list or have a topic suggestion for our newsletter, please let us know.

info@swida.org


 




Copyright 2014. All Rights Reserved.