Industrial Revenue Bond Financing

Manufacturers now can more easily use Tax Exempt Industrial Revenue Bonds through the Phoenix Industrial Development Authority. IRBs can finance up to $10 million for acquisition, construction, equipping, or improving land, buildings and/or equipment.

The PIDA board is comprised of community members appointed by the Phoenix City Council and its goal is to help manufacturers grow and create employment opportunities for residents and enhance the city's tax base.

In this special program, interest paid on IRBs is exempt from Federal and Arizona income taxes. As a result, investors/bond buyers generally are willing to accept lower interest rates. Thus, this tax exemption significantly lowers finance costs.

By using IRBs, manufacturing company management is able to negotiate loan period and interest rates, based on the merits of financial statements and/or banking relationships, directly with potential buyers or placement agents. PIDA is a vehicle for authorizing tax exempt status of a company's bond issue. PIDA does not directly provide credit enhancement.

A Phoenix-based manufacturer with expansion/improvement financing needs can apply for these tax exempt bonds. However, because federal guidelines govern the tax exempt status of the bonds, it is important that the manufacturing company is eligible before the application process begins. In about an hour, your questions can be answered and your company's eligibility can be determined. At the same time, other professional fees related to this financing will be discussed.

If the decision is made to apply, a $1,500 non-refundable fee is due with the application. An additional $1,500 is paid after the PIDA Board grants preliminary approval. Thereafter, you will be required to pay, $1,000 per year a share (currently) of PIDA's administrative costs during the period your bonds are outstanding. For more information, call (602) 262-5040.

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