Industrial Development Bonds

Local jurisdictions, like the City of Ventura, have the authority to offer low-interest financing to businesses locating in their community through the use of tax-exempt industrial development bonds (IDBs). An eligible IDB project can be the construction of a new plant, or replacement of all or part of an existing plant. Industrial activities eligible for financing include assembly, fabrication, manufacturing and processing.

The primary advantage of IDBs is that the financing provided bears an interest rate significantly lower than conventional methods. IDBs are long term (e.g. 15-30 years maturity) and may be assumable.

Companies taking advantage of IDBs receive approval for a project through a local industrial development authority, a joint powers authority, or the California Infrastructure and Economic Development Bank. The project must also receive private activity bond allocation from the California Debt Limit Allocation Committee.

The proceeds from a bond issue can be used to pay for virtually all costs incurred by the company for its project including the financing of land acquisition, building construction, machinery and equipment, and other incidental costs. General terms and conditions are listed below.

Eligibility:
Manufacturing or processing companies.

Uses:
Land, buildings, equipment, furnishings and issuance costs.

Amounts:
Limited to $10 million per applicant per jurisdiction including all capital expenditures made by company in the same jurisdiction 3 years prior and 3 years after.

Rates/Terms:
Rates average more than 2% below prime. 15 to 30 year maturities.

Special Conditions:
Company may not have any more than $40 million in IDBs outstanding nationwide. Letter of credit from a bank rated “A” or better. One job created or retained within two years of issuance for every $50,000 in bond financing.

Contact us if your company is interested in IDB financing. We can provide assistance through the entire bond issuance process. (or do we do for more information…)