Industrial Revenue Bonds

Some cities/states offer Industrial Revenue Bonds (IRB) to encourage investments. How it works:

  1. A city issues the bonds to finance the building/buying of a facility/land/equipment.
  2. 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.
  3. 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.
  4. In the meantime, the company is responsible for the payments to the IRB buyer.

How it benefits companies:

  1. 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.


  1. The Economics of Industrial Revenue Bonds: http://www.rodey.com/publications/article4.html
  2. Industrial Revenue Bonds Explained: http://www.cabq.gov/econdev/irbs.html


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