Industrial Development Revenue Bonds (IDRBs) are a type of tax-exempt municipal bond/public debt instrument. Proceeds are utilized by private manufacturing companies interested in locating a facility in Nevada or expanding an existing Nevada-based business.
These bonds, issued by the Nevada Department of Business & Industry, are structured to assist a borrower achieve the lowest cost of capital. The size of the expansion, the number of new jobs created, and high wages are important factors in weighing the approval of the application along with the ability of the applicant to pay back the bonds.
Bonds may be used for projects located in Nevada including but not limited to:
· Industrial uses including manufacturing and warehousing
· Research and development facilities
· Commercial enterprises
· Civic and cultural enterprises open to the public including theaters and museums
· Accredited educational institutions
· Health facilities
· Preservation of historic structures
The project must comply with requirements of the Internal Revenue Code and will be subject to specific evaluation criteria.
1. Public benefit to the community and state, including: new employment, wages and distribution of wages, programs promoting employee education and skills.
2. Demonstrated need for tax-exempt financing and ability to pay off the new bond debt. .
3. Location of facility: rural areas with high unemployment rates disadvantaged economic areas, etc.
4. Energy efficiency and/or incorporation of renewable energy strategies.
1. Bond proceeds cannot be used to refinance debt, inventory or operating capital.
2. Only 2% of bond proceeds may be utilized for paying costs related to issuing the bond debt.
3. Up to 3% of the bond proceeds may be utilized to cover other non-qualified costs.
4. 95% of the bond proceeds must be utilized for expenditures related to manufacturing processes, buildings and equipment. Of that, no more than 25% of the bond proceeds may be utilized for purchase of the land associated with the manufacturing premises.
5. All property financed with IDRB debt MUST be depreciated on a straight line basis over the periods prescribed for ACRS cost recovery.
6. The average bond life must not exceed 120% of the average useful life of the bond financed facilities.
7. The maximum face amount of a tax-exempt IDRB for a manufacturing project is $10 million per company, per public jurisdiction. The $10 million limit applies to the sum of the face amount of the tax-exempt bonds to be issued and the remaining principal amount of all prior issued IDRBs.
8. Capital expenditures for the company in the municipality where the project is located cannot exceed $20 million, 3 years prior to and 3 years following the issuance of the bonds, including the bonds.
9. Any one manufacturing company cannot have more than $40 million in bonds outstanding throughout the United States.
Bonds can either be publicly offered where buyers on Wall Street compete for the right to purchase an attractive investment, or can be privately placed with sophisticated investors or financial institutions. A private placement is usually undertaken when a bond issue's small size will not justify the cost of a public offering or where an existing banking relationship between a borrower and a bank makes a private placement more attractive.
Applicants should familiarize themselves with the general rules, regulations, timing and process before filing an application. The Nevada Administrative Code sections governing the program can be found on this website. Once an applicant has a general knowledge of the program, the pre-application can be requested. Once a review of the pre-application has been completed by the Department and a letter of inducement has been issued, you will be required to submit the full IDRB application at that time.
To conduct a preliminary review of potential eligibility or a pre-application, please call (775) 684-2999.