Industrial Development Revenue Bonds

  • Overview
  • Attorneys

The Internal Revenue Code of 1986 (the Code) provides for the issuance of tax-exempt private activity bonds, the proceeds of which are used by private entities. By allowing the issuance of private activity bonds, the federal and state governments have effectively determined to subsidize the borrowing costs for activities deemed to provide significant public benefits. Kutak Rock’s national public finance lawyers have extensive experience with  private activity bonds that may be issued under the Code, including Industrial Development Bonds (IDBs). IDBs are used to fund the acquisition, improvement, construction or reconstruction of property that qualifies as a manufacturing facility. Our attorneys make sure, for example, that our manufacturing clients, are aware of the significant benefits, including serving as an integrated financing vehicle that can:

  • fund construction and development phases
  • provide long-term financing
  • fund future capital expenditures
  • allow for use of up to 2% of the bond proceeds for the costs of issuance

However, the most significant benefit of IDBs is the lower interest rates that can be obtained by manufacturers for financing capital facilities associated with a manufacturing facility.

Another category of tax-exempt private activity bonds our national public finance attorneys have extensive experience with is the exempt facilities category. Recognized exempt facilities include airports, docks and wharves, solid waste disposal facilities, sewage disposal facilities, qualified residential rental projects and a number of other less frequently funded activities. We routinely serve as bond and disclosure counsel in connection with large, sophisticated financings for large airports and ports around the nation. The flexibility of tax-exempt financing allows us to find a satisfactory solution to complex issues that may otherwise hinder traditional financings.

Kutak Rock has extensive experience as bond counsel, issuer counsel, underwriter's counsel, bank counsel and borrower counsel for IDB and exempt facility financings under a variety of financing structures. We have experience structuring sophisticated and flexible transactions, including the creative use of multi-modal rate structures and variable amortization schedules, to accommodate particularly complex financing problems and maximize the benefits of tax-exempt financings.