Manufacturing
General Rules for Manufacturing Facility Bonds

• At least 95% of the net proceeds must be used to finance a manufacturing facility.
• Manufacturing facility means any facility used in the manufacturing or production of tangible personal property (including the processing resulting in a change in the condition of such property).
• Facilities directly related and ancillary to the manufacturing facility (e.g., office space) may be financed provided such facilities are located on the same site as the manufacturing facility and not more than 25% of the net proceeds are used to provide such facilities.
• Must have a TEFRA hearing.
• No prohibited facilities (skybox, retail liquor, gambling, etc.).
• Weighted average maturity of Bonds may not exceed 120% of useful life of assets financed (ignore land; life of working capital equals zero).
• No more than 2% of tax-exempt proceeds may pay costs of issuance.
• Arbitrage and rebate rules apply.
• Private Activity Bond cap allocation required.
• Advance refundings prohibited.
• Limitation on land purchase (no more than 25% of net proceeds).
• "Substantial user/related party" problem.
• Restriction on acquisition of used property (15% "rehabilitation" required).
• AMT applies.