Authorization & Purpose
The Mississippi Development Bank was
created by the Mississippi Legislature in 1986 as an independent
organization with the power
to "borrow money and issue its bonds and notes to make funds
available [to local governmental units: which means any county,
municipality, regional solid waste authority, county cooperative
service, political subdivision, utility district, state agency
or other governmental unit created under state law] at reduced
rates and on more favorable terms". The legislature stated
that it is the Development Bank's purpose to "finance infrastructure
improvements and other public purposes from the proceeds of bonds
and to the extent possible, reduce costs of indebtedness to taxpayers
and residents of the State through the encouragement of investor
interest in the purchase of such bonds."
MBFC/Mississippi Development Bank Board
All powers conferred upon the Mississippi Development Bank are
vested in the Board of Directors of the Mississippi Business
Finance Corporation. The Board of Directors of the Mississippi
Development Bank is composed of nine (9) directors to be elected
by the members of the Mississippi Business Finance Corporation.
The Board typically meets immediately following the Mississippi
Business Finance Corporations Board meetings each month.
Program Overview
The Mississippi Development Bank is a statewide issuer of
revenue bonds with proceeds going to local governmental
entities. Local governmental units must request that bonds be
issued through the Mississippi Development Bank on their behalf
and are responsible for the retirement of revenue bond debt
through annual payments to the Mississippi Development Bank.
Program Benefits
The benefits of the Mississippi Development Bank flow directly
to the local governmental unit. These benefits include the
following:
-
Ready access to bond
funds;
-
Provides for a
higher bond rating, resulting in lower interest rates;
-
Does not count
against a local government’s general obligation debt limit;
-
Allows smaller units
of government, that may be unable to issue stand alone revenue
bonds, to issue bonds through the Mississippi Development Bank;
-
Greater flexibility
in bond covenants and debt service coverage requirements;
-
Tax-exempt interest rates for a period of up to 20 years.
Security
The security for Mississippi Development Bank bonds is a lien on
revenues of the local governmental entity. A Mississippi
Development Bank revenue bond may also contain the moral
obligation of the State of Mississippi. This structure provides
for a higher bond rating resulting in lower interest rates.
Through this feature, should a local governmental entity fail to
make debt service payments on the bonds, the State Tax
Commission can withhold sales tax, homestead exemption, and
other funds to make those payments.
In the wake of Hurricane
Katrina, the Mississippi Development Bank, along with the State
Treasurer, have worked with and on behalf of affected local
governmental units in developing options to address their
anticipated capital and working capital needs in a time of tax
revenue interruption. These discussions and the local governmental
units’ capital needs led to the creation of the Mississippi
Development Bank Hurricane Katrina Relief Program.
