Industrial Development Revenue Bond
(IDRB) Program

For projects that are approximately $1 million or larger, financing is available through Tax Exempt Industrial Development Revenue Bonds (IDRB). Tax exempt IDRB financing makes the cost of borrowing approximately 80% -90% of prime rate because the interest paid to the bond buyer is exempt from federal taxes (and state taxes in certain cases). The funds are limited to the purchase of land, buildings, new equipment, engineering costs and infrastructure. Typically the borrower is required to provide at least 10% equity or whatever the financial community, who underwrites the bonds, will require.

The downside of this program is the competitive nature for the funds. Because each State is allocated a portion of the total amount of tax exempt Industrial Revenue Bonds issued throughout the Country, the project would need to compete for the States cap limit. In addition there are specific legal and financial requirements for these funds which are applicable to the type of project it is. The limit on capital spending for each company is $20,000,000, for each locality, from three (3) years prior to three (3) years ahead and a $40,000,000 capital acquisition limit on the company as a whole. There are additional requirements for these funds which are applicable to the type of project it is. It is best to meet with a bond counsel if you wish to pursue this funding source further.

Applications for IDRBs are made to the Genesee County Economic Development Corporation. The Genesee County Economic Development Corporation will consider a resolution of intent and preliminary approval. This resolution establishes that the project accomplishes the public purposes; indicates the intent; authorizes the applicant to proceed with the project at its own risk; authorizes the publication of a Notice of Intent; and authorizes a request for the State Treasurer to set aside an allocation equal to the face amount of the proposed bond issue. A notice is then published in the newspaper and a public hearing is held. A resolution is adopted authorizing the terms of the bond issue and directing the issuance of the bonds. The bonds are delivered to the bond purchaser following a public or private sale and the bond proceeds are used to pay the applicants project costs.

Eligibility:

Bonds may be issued to finance land, building, machinery, equipment and bond issuance costs for facilities suitable for, and intended for a factory, mill, shop, processing plant, assembly plant, fabricating plant, warehouse or research and development facility or engineering, architectural, or design facility, or tourist and resort facility. Bonds may also be issued for certain water and air pollution control facilities and solid waste disposal facilities.