Bond Criteria, Eligibility & FAQs

As a conduit issuer, IBank issues bonds on behalf of a borrower and then lends those proceeds to that borrower. The borrower provides security to the bondholder and agrees to repay the bonds. IBank bond financing applications are continuously accepted. IBank bonds feature competitive application and issuance fees along with a team available for technical assistance throughout the process. A single TEFRA (Tax Equity and Fiscal Responsibility Act) hearing is required and closings are handled in a timely manner.

IBank issues four types of bonds and the criteria and eligibility for each are described below. IBank encourages all potential applicants to contact the Bond Unit team before applying.

Industrial Development Bonds (IDBs)

Tax-exempt conduit revenue bond financing for eligible small to mid-size manufacturing companies up to $10 million for the acquisition, construction, rehabilitation and equipping of manufacturing and processing facilities.

  • Eligible IDB Bond Applicants: Industrial Development Bonds (IDB’s) are tax-exempt securities issued up to $10 million by a government agency to provide money for the acquisition, construction, rehabilitation and equipping of manufacturing and processing facilities for private companies.
  • Eligible IDB Projects: The project financed by the bonds must be a facility used for manufacturing, production or processing of tangible property (including the processing resulting in the change of such property).  No more than 25% of the bond proceeds can be applied to ancillary office, warehouse or other space.
  • IDB Public Benefit Requirement: The project financed by the bonds must meet certain public benefit criteria established by the California Debt Limit Allocation Committee (CDLAC), which include, among other things, the creation or retention of jobs. All IDBs need to submit a separate application to the California Debt Limit Allocation Commission (CDLAC) in order to receive a tax-exempt allocation. Please visit

501(c)(3) Bonds

Tax-exempt conduit revenue bonds provide low-cost financing for capital improvement projects for nonprofit public benefit corporations.

  • Eligible 501(c)(3) Bond Applicants: Typical examples of nonprofit corporations include cultural facilities such as museums, libraries, aquariums, and historic preservation; educational facilities such as universities, colleges and schools; charitable organizations and foundations; recreational facilities such as community centers, local sports facilities and YMCAs; research institutes and centers; organizations that promote social benefits such as the prevention of cruelty to children and animals.
  • Eligible 501(c)(3) Projects: Capital expenditures, refinancing prior debt (under certain circumstances), reimbursing prior expenditures (under certain conditions), (limited) working capital, costs of issuance, capitalized interest and debt service reserve funds.

Public Agency Revenue Bonds (PARBs)

Tax-exempt bond financing for government entities are for projects that enhance infrastructure, or the economic, social or cultural quality of life for residents in the community or State.

  • Examples of PARBs: These include state entities or programs, such as the Clean Water State Revolving Fund or toll bridges. Certain schools can also qualify for a variety of improvements or construction.
  • Qualified PARB Purposes: Expand unique programs of specific state and local government agencies used for the furtherance of governmental and qualified purposes including the construction of transportation/transit (airports, ports), water/waste water systems, power generation/transmission systems, sewer systems, schools, as well as facilities and equipment used in providing related qualified services to such entities.

Exempt Facility Bonds

Tax-exempt financing for projects that are government-owned or consist of privately used or leased facilities on public -property; such as private airline improvements at publicly owned airports, ports, water facilities and other private enterprises that serve the general-public.

  • Examples of Exempt Facility Revenue Bonds: Public airports frequently build facilities which are leased or made available on a long-term contractual basis to air carriers for passengers or freight. 
  • Qualified Purposes: Airports, docks and wharves, mass commuting facilities, facilities for the furnishing of water, sewage facilities, solid waste disposal facilities, facilities for the furnishing of local electric energy or gas, local district heating or cooling facilities, qualified hazardous waste facilities, high-speed intercity rail facilities, environmental enhancements of hydro-electric generating facilities, and qualified public educational facilities.

Frequently Asked Questions

IBank Issued Bonds

Q: What are the benefits of conduit bonds?

A: Conduit bonds may be issued as tax-exempt and/or taxable obligations. The tax-exemption on the bonds means that the interest paid to bondholders is not includable in their gross income for federal income tax purposes. The tax-exempt status continues throughout the life of the bonds if all applicable federal tax laws are satisfied. A conduit bond may be issued on behalf of a public agency, a 501(c)(3) non-profit organization, a qualified small manufacturing facility, or exempt facilities.

Q: Does IBank offer bond counsel to assist during the application and issuance process?

A: Borrowers (applicants) will need to select and hire a bond counsel who will assist in completing the IBank application, preparing bond documents and providing necessary advice and direction during the issuance process.

Q: Can IBank finance projects consisting solely or primarily of residential structures?

A: No. The Bergeson-Peace Infrastructure and Economic Development Bank Act (the “Act”) specifically precludes IBank from financing projects focused on housing. Under certain circumstances IBank can finance the infrastructure related to housing, such as water systems, roads and other utilities, but cannot finance construction of the housing units.

Q: Can IBank finance economic and public development facilities that contain an element of housing?

A: Yes, subject to certain statutory restrictions. The Act was recently amended to authorize IBank to finance economic and public development facility projects that contain an element of housing provided that certain restrictions are met. These project types contemplate non-traditional housing elements included as integral parts of larger projects, such as employee housing or temporary treatment and social service housing. Effective January 1, 2022, IBank may finance economic and public development facility projects that include a housing element, subject to the following:

  • The housing element must be required for the operation of the facility.
  • The project cannot be financed by any funds from IBank’s Infrastructure State Revolving Loan (ISRF) Program.
  • The housing element portion of the project cannot be financed by private activity bonds issued by IBank under any state allocation.
  • The housing element must be incidental to the overall project and its cost may not represent more than 20 percent of the overall project costs financed by IBank.

Q: What are the costs involved with financing a bond through IBank?

A: The costs involved with issuing bonds are called Costs of Issuance (“COI”). COI generally includes, but is not limited to the fees related to underwriters/lenders, bond counsel, consultant/municipal advisor, underwriters/lenders counsel, agent-for-sale, IBank, rating agencies, trustee, printer, title company, verification agent. The total COI cannot be more than 2% of the issue par amount. Borrowers may select to pay the COI with the bond proceeds or pay it with their other sources of available funds.

Q: How does IBank manage the bond underwriting process?

A: IBank is a conduit bonds issuer and does not underwrite bonds in house. The underwriting is performed by the borrowers’ selected bank/lender.

Q: Can IBank adjust the debt service payments on a bond?

A: Bonds Indenture/Trust Agreement and/or Loan Agreement define the applicable rules on each transaction and provide information about authorized amendments to bonds. IBank cannot adjust the debt service payments on a bond. Borrowers will need to consult with their bond counsel about any changes to the bonds documents and/or the bonds structure.

Contact the IBank Bond Unit

Bond Finance Program Manager: Fariba Khoie

E-mail us, HERE 

Office: 1325 J Street, Suite 1300, Sacramento, CA 95814

Contact the IBank Bond Unit

Bond Finance Program Manager: Fariba Khoie

E-mail us, HERE

Office: 1325 J Street, Suite 1300, Sacramento, CA 95814

Mailing: P.O. Box 2830, Sacramento, CA 95812-2830