CHICAGO — With several large Midwestern disaster-area bond deals in the pipeline, the Iowa Finance Authority might come close to tapping all of its allowance under the 2008 federal program before it expires at the end of the year.

The $14.6 billion disaster program permits the use of tax-exempt bonds for qualified privately owned projects aimed at generating jobs and economic activity in certain Midwestern counties that saw severe weather-related damage in 2008. The private-activity revenue bonds must be sold by the end of 2012.

The Iowa Fertilizer Co. submitted a request earlier this year for up to $1.2 billion of MDABs for a $1.3 billion nitrogen fertilizer plant the Egyptian-based parent company Orascom Construction Industries wants to build.

That deal is far from final as the company has yet to settle on a site and Illinois is pushing to offer an incentive package to lure the company. Iowa had offered up to $31.5 million in incentives for one site under consideration. It was one of the largest packages ever offered by Iowa to a corporation. Several counties are vying to house the plant.

“The Iowa Fertilizer Co. project is the big one and if they return and seek all $1.2 billion, that will leave the authority with just about $100 million remaining in MDAB authorization,” said David Grossklaus, partner at Dorsey & Whitney LLP, which is issuer’s counsel to the Iowa agency on the program.  “That’s pretty darn good.”

If the $1.2 billion financing comes to fruition, officials said it would be one of the largest private-activity issues on behalf of a for-profit company.

Alcoa Inc., the giant aluminum producer based in Pittsburgh, on Thursday priced $250 million of MDABs.

Bankers included Morgan Stanley, Citi, Goldman, Sachs & Co., Mitsubishi UFJ Securities, PNC Capital Markets LLC and RBC Capital Markets. Greenberg Traurig LLP was bond counsel.

The bonds mature in 2042 and are secured by payments under a loan agreement. Alcoa will use the proceeds to finance renovations to its aluminum rolled products plant in Riverdale, Iowa.

Alcoa operates in 31 countries. Its products are used worldwide in aircraft, automobiles, commercial transportation, packaging, building and construction, oil and gas, defense and consumer electronics.

The authority recently reauthorized the issuance of $125 million of MDABs for Minnetonka, Minn.-based agricultural giant Cargill Inc. The company issued $75 million in June 2011 but did not exhaust its remaining $125 million authority as planned last year. Thornton Farish Inc. and US Bancorp are underwriters on the second transaction.

The nearly 150-year-old, privately held processor and marketer of agricultural and food products employs 130,000 people in 63 countries.

The IFA board at its meeting earlier this month advanced MDAB applications for FedEx Corp. projects. The company wants to borrow $4.4 million to finance construction of a warehouse facility in Council Bluffs and $5.6 million for a warehouse facility in Dubuque.

The authority last year authorized up to $200 million for Decatur, Ill.-based Archer Daniels Midland Co., the world’s largest grain processor, for improvements at its processing facilities in Iowa’s Cedar Rapids, Clinton and Des Moines.

Seventy-eight of Iowa’s 99 counties were designated disaster areas. The state received an allocation of more than $2.6 billion and has doled out about $1.4 so far to help finance dozens of qualified projects, ranging from office buildings and hotels to processing plants.

The agency said it took a while for word to spread of the program’s benefits, but it has worked. Community development director Lori Beary had said previously that the slow start was due to companies’ lack of familiarity with tax-exempt financings and reluctance to undertake capital projects during the recession.

The IFA manages the state’s disaster allocation under an executive order. It has served as issuer on some of the borrowings while also doling out allocations to local governments. The agency has promoted the financing tool with local and state economic development officials in an attempt to spread the word.

When the program was first approved, some bond lawyers said it was limited to firms that suffered damage from the flooding and storms that hit the Midwest earlier in 2008. They had questions as to what constituted a loss and, in a replacement situation, whether the new business needed to be the same as the old one.

The Internal Revenue Service released guidance in late 2009 that gave a governor or a designee authorized by the governor the freedom to choose which projects or replacement businesses to finance with proceeds, as long as those decisions were being made in good faith.

In the Midwest, states can issue up to $1,000 of bonds per person living in a federally declared disaster areas. Counties in Arkansas, Indiana, Illinois, Iowa, Missouri, Nebraska and Wisconsin are eligible.

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