The MIDA (founded by the Town in 1968) acts as a “conduit” to provide the benefits of both federal and state income tax-exemptions to the entity (typically, a bank) making a loan to a borrower for an eligible project. This results in the borrower paying a lower interest rate on the loan than a bank would normally charge for a direct loan to the borrower.
The benefit of going through the Authority for a borrower is to obtain a lower interest rate on its loan since the lender does not have to include the interest on the loan for federal and state income tax purposes. The federal government (in the tax code) has many more restrictions on what can be financed on a tax-exempt basis than the projects which are allowed to be financed through an IDA under Pennsylvania law.
Under federal tax law, eligible projects include (1) projects for any borrower designated as a 501(c)(3) charitable organization under the federal IRS Code and (2) certain industrial/manufacturing facilities and equipment.
Loans to commercial businesses are generally not eligible to be financed on a tax-exempt basis. Prior to 1986, the federal tax law did permit commercial facilities to be financed on a tax-exempt basis through an industrial development authority (in fact, MIDA had financed commercial projects in the past). After 1986, the federal tax law was changed to only permit certain manufacturing/industrial facilities and 501(c)(3) projects (which include education facilities such as LaRoche College and other facilities, such as Vincentian). Certain other public facilities can be financed on a tax-exempt basis such as convention centers, stadiums and public utilities but these are typically done through other types of authorities. The state and the county have their own authorities which also do tax-exempt financings.
Therefore, there is no benefit for a commercial business to go through an IDA if it cannot get the tax-exemption. It just adds another level of expenses to the transaction.
The MIDA does not provide its own funds for the loans, so an eligible borrower must identify a bank which is willing to make the loan. Each loan is a limited obligation of the MIDA (payable solely from payments made by the borrower) and is not an obligation of the Town of McCandless. The borrower is not required to be located in the Town.
Its membership is made of five members from the Town of McCandless appointed for a five-year term. Experience in finance, banking, law and other professions or business is helpful, but not required. It meets approximately three times per year.
Roger H. Krey
Dec. 31, 2019
Dec. 22, 2014
Cynthia N. Potter
Dec. 31, 2020
Dec. 21, 2015
Secretary and Town Council's Liaison
Dec. 31, 2021
Feb. 27, 2017
Dec. 31, 2018
June 23, 2014
Gerard J. Aufman, Jr.
Dec. 31, 2022
Dec. 18, 2017
Town Council Alternate Liaison
Dec. 31, 2020
Jan. 2, 2018