Eligibility

Eligible Institutions

Institutions eligible for CHEFA financing must be a Connecticut domiciled 501(c)(3) organization and provide direct services to the public. Types of these nonprofits include:

• Child care institutions.
• Cultural institutions, such as museums, theaters and zoos.
• Healthcare institutions, including hospitals, health centers and visiting nurses associations.
• Private institutions of higher education, i.e., colleges and universities, including the Connecticut State University System.
• Human services provider institutions, such as adult day care facilities, boys & girls clubs, community action agencies, social service agencies and YMCA/YWCAs.
• Private independent schools.
• Long-term care facilities, i.e., nursing homes, assisted living facilities and continuing care retirement facilities which are part of a hospital system or a continuum of care.

For more information on CHEFA eligibility, please contact our New Business Department by e-mail newbusiness@chefa.com or calling (860) 520-4700.

Eligible Projects

Capital Projects

CHEFA can finance an institution's capital projects and related costs, so long as the project is related to the tax-exempt purpose of that institution. These projects may consist of larger components such as acquisition, construction, renovation, furniture and equipment and other capital needs, as well as smaller elements including computers, telecommunications equipment and health care technology. Other eligible projects include refinancing outstanding taxable or tax-exempt debt, mortgages and loans.

Public Hearing Requirements

A TEFRA hearing is mandated by the IRS to provide a reasonable opportunity for interested individuals to express their views, either orally or in writing, on the issuance of bonds and the nature of the improvements and projects for which the bond funds will be allocated.

The TEFRA notice of public hearing must be published in the daily newspaper of the largest circulation in both the project and Authority locations at least 14 days prior to the hearing date. In addition, the TEFRA hearing date must be held prior to CHEFA Board approval.

Restrictions on Use of Funds

IRS regulations state that not more than 5% of net bond proceeds may be used for private business use or trade or business activity unrelated to the nonprofit purpose of the borrowing institution. An example of what may be considered private business use might be physician offices located within a hospital, or a bank branch within a university student center building.

Projects Which are Considered Ineligible

Any project that is not related to the underlying tax-exempt purpose of that institution cannot be financed with tax-exempt funds. For example, any project that may produce unrelated taxable business income, including a related facility location, would be ineligible.  If the unrelated taxable component is a portion of a larger tax-exempt project, the unrelated purpose can be structured as a taxable part of the financing. There are various thresholds of tax law that serve to optimize the amount of tax-exempt debt that can be funded for a particular project.

CHEFA cannot finance projects for any facility to be used for religious instruction or worship (for example chapels), or any facility used primarily by a school or department of divinity.  Also, under its enabling legislation, CHEFA cannot finance working capital.

For more information on project eligibility, please contact our New Business Department by calling (860) 520-4700 or e-mailing newbusiness@chefa.com.