Industrial Development Revenue Bonds
Incentive: Industrial Development Revenue Bonds (IDBs) finance business and industrial expansions for firms with strong credit. IDBs can provide low-interest loans for large projects by permitting the borrower to take advantage of long-term financing with lower than prime interest rates. Additionally, for certain types of manufacturing facilities, interest rates can be lowered further due to the tax-exempt status of the bond issue. Private parties purchase the bonds, in effect making the loan to the borrowing business.
Project Cost: IDBs may finance up to 100 percent of project costs, with loans up to $10 million available if the financing is tax-exempt. In the case of taxable bonds, no cap on the amount exists. Since significant legal costs are necessary with an IRB issue, projects should be at least $1 million in value to be cost effective. Authority & PPM:
PPM# CW-F-065 establishes the guidelines for processing industrial development/private activity bonds. The legal secretary to the bond attorney in the County Attorney's Office will handle all initial inquiries regarding industrial development/private activity bond applications.
Loan Structure: Interest on IDBs may be at a fixed or variable rate. Variable rates typically range from 85-100 percent of prime, depending on the strength of the firm's credit. Fixed interest rates average approximately one percent below prime. Maturity varies from five to 30 years, matching the life of assets.