Bank Qualified Tax Exempt Bonds (BQ)
Billings, Yellowstone County – Rimrock Foundation
$610,000 in bonds to refinance three existing loans, install a chiller system and build a basement for a new modular facility.
Recovery Law Aids Banks and MFFA Clients
The Authority, Montana’s banks and their borrowers have all benefited from a particular section of the American Recovery and Reinvestment Tax Act of 2009, which creates what one Montana bank official describes as a "win/win situation."
The Act lets banks write off up to 80% of carrying costs when they purchase an MFFA-issued Bank Qualified Tax-Exempt Bond. Simultaneously the bank can provide its clients with favorable lower interest rates and help strengthen relationships while maintaining a respectable yield for the bank.
In the first Montana application of the new law, First Interstate Bank of Billings and Rimrock Foundation teamed up with the Authority to structure a deal. Trisha Zowada, an Assistant Vice President for commercial loans at First Interstate, says, "It’s definitely a win/win situation. We were able to provide our customer with a much lower interest rate. At the same time, because the bond is tax-exempt, the bank’s interest margin wasn’t completely eaten up."
Rimrock Foundation CEO David W. Cunningham said that as soon as he heard about the opportunity, he saw it "could play a key role in helping us meet some financial and infrastructure goals."
"As a client of the bank, we met with them to let them know about our interest in taking advantage of this opportunity. The rest is history. We couldn’t be happier with the team we worked with from the bank and the Authority. While we have always been a client in good standing, now we have cemented our relationship. More nonprofits and Montana banks should take advantage of this."
The benefit of this three-way partnership can be clearly seen in Billings where the Rimrock Foundation is completing the final phase of its 2009 facility expansion.
Note: This provision of the American Recovery and Reinvestment Act sunsets on December 31, 2010, unless extended by Congress. For more details on the opportunities it offers, please contact the Authority at 406-444-0052.
