Some cities/states offer Industrial Revenue Bonds (IRB) to encourage investments. How it works:
- A city issues the bonds to finance the building/buying of a facility/land/equipment.
- Using the bond proceeds, a company builds/buys the facility/land/equipment. However, the title of the facility/land/equipment is owned by the city.
- The city leases the facility/land/equipment to the company for say 20 years. At the end of the term, title is transferred to the company.
- In the meantime, the company is responsible for the payments to the IRB buyer.
How it benefits companies:
- Because the city owns the title to the project, the company is exempt from property taxes on land, buildings, and equipment. Also, a company may receive gross receipts and compensating tax exemptions on initial purchases of equipment made with bond proceeds.