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Industrial Revenue Bonds (IRBs) The Industrial Revenue Bond Public Corporation of Clark County (IRBPC) has issuing authority for tax-exempt bonds in Clark County. The IRBPC works through the Columbia River Economic Development Council (CREDC) to market tax-exempt IRBs to manufacturing or processing companies looking to expand in Clark County, Washington. A key benefit of IRBs is a lower interest rate than conventional financing – typically two full percentage points below market rates – thereby reducing the overall cost of financing. Typically, IRBs are amortized over a 10 to 15 year period, although longer amortizations are available, depending on the credit strength of the company and the economic life of the financed asset. An eligible company could use an IRB to help finance purchases of:
CREDC
will work with you throughout the IRB process. Obtaining IRB funding For
further information: In addition to the lowered costs due to the tax-exempt status and reduced interest rates, you can benefit from IRBs because of customized financing, flexible terms, choice of fixed or variable rate, and longer-term financing. Typically, the projects financed by IRBs either create new jobs or retain jobs that would have been lost if the project was not completed. Clark County projects that can be financed by an IRB include the building or renovating of a manufacturing or processing plant. More specifically, the eligible costs involve land acquisition, building construction, and acquisition of new equipment and machinery used by the IRB project. Used equipment can be financed only if purchased as part of an existing plant. Borrower’s ResponsibilitiesThe borrower who is using IRB financing is responsible for repaying the loan. It is the borrower’s responsibility to make the arrangements to acquire an irrevocable letter of credit from a qualifying bank that will be used to pay the bondholders in the event the borrower is unable to pay. The borrower must also hire legal counsel, arrange for an underwriter if the bonds are sold to the public, and hire other professional advisors if necessary. Costs of IRBsFinancing costs vary due to project size and complexity but generally range from three to four percent of the principal amount of the IRB. The Internal Revenue Code allows up to two percent of the issuance costs to be financed from IRB proceeds. All applicants pay a one-time nonrefundable fee of $750.00 on the day an IRB application is filed with the Public Corporation. In successful cases and upon issuance of the IRBs, the applicant must pay to the Public Corporation all costs, direct or indirect, resulting from the issuance of bonds. This includes fees of bond counsel, fees of financial consultant or bond underwriters, costs of printing, fees to engineers and economists, fees of trustees, and all other expenses of the Public Corporation which result from the issuance of the IRBs. Also, a one-time fee of 1/4 of 1% of the bond issue is to be paid by the applicant when the bond is issued. IRB RestrictionsIRBs must be used for manufacturing or processing facilities. The maximum amount that can be borrowed is $10 million. Other restrictions include:
Bond CounselTo insure that IRBs are valid and binding tax-exempt obligations, bond investors require that nationally recognized bond counsel provide a legal opinion on each issue. Bond counsel is also responsible for drafting the documentation required for IRBs. CREDC provides a list of qualified bond firms. Security for IRBsNo governmental financial support is provided. Payment of interest and principal is solely the responsibility of the borrowing company. Publicly sold bonds must be credit enhanced by a letter of credit from an investment grade-rated bank. CREDC AssistanceCREDC provides the following support:
Contact CREDC at 360-567-1061 or visit CREDC’s website at www.credc.org. |