Guide
Choosing an issuer
Industrial revenue bonds are issued by a public authority on the borrower’s behalf. The choice is usually between a local authority, a statewide authority and a national conduit — and in every case the host jurisdiction approves and the host state’s volume cap applies.
The three kinds side by side
| Local authority | Statewide authority | National conduit | |
|---|---|---|---|
| Who it is | A county, city or regional industrial development authority or corporation | A state-created finance or development authority | An authority empowered to issue for projects in any state |
| Where it issues | Its own jurisdiction; elsewhere only where its statute allows and the host approves | Anywhere in its state | Any state, with the host’s approval |
| TEFRA approval | Its own elected official — the host jurisdiction already approves | The state’s or the issuer’s elected official, plus the host jurisdiction | The issuer’s governmental unit and the host jurisdiction’s elected official (IRC §147(f)(2)(A)) |
| Volume cap | The state’s ceiling, often through a local share or a state application | The state’s ceiling | Still the host state’s ceiling: cap cannot finance facilities outside the state that allocates it (IRC §146(k)(1)) |
| Typical strengths | Local knowledge; local tax abatements often run through the same authority | Standard documents and a repeat-issuer reputation with buyers | One issuer for a borrower with sites in several states; useful where no local issuer is active |
| Profiled examples | Maricopa County Industrial Development Authority, Philadelphia Authority for Industrial Development, Montgomery County Industrial Development Authority, Monroe County Industrial Development Corp | Massachusetts Development Finance Agency, New Jersey Economic Development Authority, Pennsylvania Economic Development Financing Authority, Florida Development Finance Corp | Public Finance Authority |
Local authority
A county or city issuer; issues for projects in its own jurisdiction (or elsewhere with the host’s approval). Counties and cities often pair the bonds with a property tax abatement or payment in lieu of taxes, which the same authority may administer. Check how often it meets: board calendars set the earliest inducement date.
Statewide authority
Issues for projects anywhere in its state. Many publish a fee schedule and minimum size; several limit manufacturing bonds to the federal $10 million small-issue ceiling. Each state page lists the issuers with published industrial bond programs.
National conduit
Issues for projects in any state, with the host jurisdiction’s approval and the host state’s volume cap. A national conduit does not bring its own volume cap: the host state allocates it as for any other issuer, and an elected official of the host jurisdiction must still approve the bonds after a public hearing.
Host approval and volume cap
- Public approval. The issue must be approved by the issuing governmental unit and by each governmental unit with jurisdiction over the area where the facility is located, after a public hearing following reasonable notice (IRC §147(f)(2)(A)–(B)).
- Volume cap. No part of a state’s ceiling may be used for a facility located outside that state, apart from limited exceptions for certain shared exempt facilities (IRC §146(k)).
- State steps. Some states add their own approvals — see the state comparison and each state page.
What to ask an issuer
- Its application and closing fees, and any annual fee on bonds outstanding.
- Minimum and maximum size, and whether it does manufacturing bonds at all.
- Board meeting dates for the inducement and the bond resolution.
- Who its counsel is, and who pays that counsel.
- Whether it requires a credit rating, a minimum denomination or sales only to qualified buyers.
See issuer profiles State deadlines
Important information. Securitief Research is published by Securitief, operated by Applied America. Securitief is not a placement agent or underwriter and does not seek or receive compensation from any financing, including financings of issuers and borrowers discussed here. It is not acting as a municipal advisor and owes no fiduciary duty to any issuer or obligated person unless separately engaged in writing.
This material is general information. It is not tax, legal, investment or municipal advice, a recommendation, or an offer to sell or a solicitation of an offer to buy any security. Offers are made only by offering documents and only where permitted by state securities laws. State allocation procedures change; confirm current rules with the allocating agency and bond counsel.
Sources: SEC Form N-PORT and FDIC call reports (holdings), IRS and Census (volume cap and population), state agency publications. Issuer classification and aggregation are Securitief’s own and may contain matching errors; figures may be revised. No licensed index levels (MMD, BVAL, ICE) or EMMA trade data are used. Past holdings do not indicate future demand, pricing or the availability of financing. Interest on private activity bonds may be subject to the alternative minimum tax; tax treatment depends on the facts and the opinion of bond counsel.