Industrial Revenue Bonds—IRBs
Candlefocus EditorIRBs are a variety of private activity bond, and have tax-exempt status. As such, the bonds generate tax-free interest income to bondholders. The bond proceeds are used to build the new facility and purchase the necessary equipment, which is acquired and owned by the private company. The repayment of the bond is through the revenue created by the company that creates the project.
In addition to the financial benefits of IRBs, they also provide economic empowerment. By investing in manufacturing facilities, IRBs encourage economic development and the resulting job creation. They also help to strengthen the local infrastructure and the usual public services.
The terms of IRBs vary from one municipality to the next, and should be analyzed carefully by potential bondholders, as the repayment responsibility and the credit rating of the issuer determine the risk associated with the investment. Generally, IRBs are considered to be a secure investment, as the issuer of the bonds is backed by the government.
Overall, industrial revenue bonds are a beneficial form of municipal bonds that provide financing for new projects and investments, create jobs and stimulate economic development, while also providing secure and tax-exempt investments for bondholders. They serve a dual purpose of helping to benefit the issuer and a locally owned company, making IRBs an attractive option for both communities and investors alike.