Manufacturing and processing facilities are the most common types of Industrial Revenue Bond (IRB) uses. Other qualifying industrial development facilities include transportation, airports, docks / shipping facilities, solid waste or industrial sewage facilities, and research facilities for nonprofit organizations.
Bonds are normally used to:
- Buy land
- Buy new machinery or equipment
- Construct buildings
- Upgrade existing facilities
At least 95 percent of funds must be spent on qualifying new capital expenses. Up to two percent may be used to pay issuance costs. An IRB may not be used for inventory or working capital.
For manufacturing or processing, at least 75 percent of the funds must be used directly for the process. Only 25 percent can be used for related expenses like land, landscaping, storage areas, or office space.
The maximum size of a manufacturing IRB and other aggregate capital expenditures is $20 million. For manufacturing IRBs, this maximum can be spent in capital expenditures within the port’s jurisdiction during a six-year period, which starts three years before the bond issue date. The $20 million limit applies to all capital expenditures, bond-financed or not.
Additional Financing Information
Some other activities may also qualify for tax-exempt financing without the dollar limits that apply to manufacturing facilities, including water, solid waste, and wastewater treatment plants, power generating plants, airports, docks, and wharves. The methods for financing these types of projects are somewhat different rules that described here.
For more information about industrial revenue bonds, please contact the Economic Development Department at 360-676-2500.