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Ten public corporations in King County issue tax-exempt Industrial Revenue Bonds (IRBs) on behalf of private companies. The key advantage to this type of financing is that interest payments to IRB buyers are not subject to federal income tax. Because of this tax-exempt status, bond buyers are willing to accept lower rates of interest on the bonds, thus reducing the project financing costs for the participating companies.
Changes in the federal tax laws allow only manufacturers and processors to finance capital investment with bond proceeds. The type of IRB issued to finance manufacturers and processors are called "qualified small issue" bonds. Costs covered by IRB financing may include: property acquisition, machinery and equipment, design work, and consulting, accounting, legal and financing costs.
Additionally, "exempt facility" IRBs may be issued to finance the construction of specific types of facilities that will be owned or operated by private concerns but for which there is a distinct public benefit or need. Facilities that may be financed through the issuance of exempt facility bonds include airports, docks and wharves, sewage or solid-waste disposal facilities to furnish electricity or gas and qualified hydroelectric generating facilities.
The amount of money that can be raised by IRBs is set by federal law and depends upon the type of project and the total amount of capital investment made in the facility. Bond issues may not exceed $10 million.
For specific information on the King County Industrial Revenue Bond program, contact the King County Economic Development Program at (206) 205-0713.
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