Industrial Development Bond Financing

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.


Who Can Apply

Eligibility Requirements

Qualifying Costs. At least 95% of the bond proceeds must be spent on qualifying costs, generally capital expenditures such as land, building and equipment and other depreciable property (and can also include capitalized interest during construction).Land. No more than 25% of the proceeds can be used to acquire land.

Acquisition of Existing Manufacturing Facilities.  The acquisition of existing facility (including manufacturing equipment) can be financed if at least 15% of the portion of the bond amount used to purchase the facility is spent on eligible rehabilitation of expenditures within a two-year period.

No Used Equipment.  Except as part of the acquisition of an entire facility, bond proceeds cannot be used to acquire used equipment.

Maturity. The average maturity of the bonds cannot exceed 120% of the average economic life of the assets financed.

No Working Capital or Inventory. Bond proceeds cannot be used to finance working capital or inventory.

$20,000,000 Capital Expenditure Limitation. The capital expenditures for the project, when added to the company’s other capital expenditures in the same public jurisdiction as the project for the three years immediately preceding the three years following the closing of the financing of the project, cannot exceed $20,000,000.

$40,000,000 Aggregate Limitation. A borrower and certain users may not be the beneficiary of more than $40 million of certain tax-exempt bonds regardless of the location of the projects, during a three year period after the facility being financed is placed in service.

Credit Requirements: The borrower needs to secure a letter of credit in the amount of the bonds from a bank with a long-term credit rating of at least “A3” from Moodys Investors Service, or an “A-” from Standard & Poor or Fitch Ratings, Inc. Bonds can also be sold directly to Qualified Institutional Buyers or Accredited Investors, without a rating, as long as IBank conditions for direct Purchases or private Placements are met.


Eligible 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.

Public Benefits

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.  CDLACs criteria for IDBs and other types of private activity bonds can be obtained at

Benefits of IDB Financing

  • Low interest rates
  • Long-term financing
  • Comprehensive Funding
  • Assumable
  • No Prepayment Penalty in some cases, determination made by lenders and letter of credit banks

The IDB Process

The IDB financing process can generally be completed within 120-150 days. The IBank staff and financing team, which typically consists of an underwriter, bond counsel and financial advisor, will assist the applicant through each stage of the process.

Stage 1 – Pre-Qualification

  • Pre-Application
  • Federal Requirements
  • State Requirements

State 2 – Approvals

  • Inducement Resolution by Issuer
  • Application to Issuer for Final Approval
  • Noticed Public Hearing (“TEFRA”)
  • Letter of Credit Commitment from Bank
  • State Tax-Exempt Allocation Approvals

Stage 3 – Bond Issuance

  • Documentation
  • Final Resolution of Issuance by Issuer
  • Bond Sale
  • Funding

How to Apply

Applications are continuously accepted and are available below. We  encourage you to call us before applying. IBank representatives provide technical assistance and work with you throughout the process. IBank’s Board of Directors normally meets each month to consider approval of applications received prior to the meeting date. Check here for board meeting deadlines.

Application: PDF Version | Word Document Version -Please submit completed applications via email to or by mail to P.O. Box 2830 Sacramento, CA 95812-2830.

Application Fee to Request Extension of the Expiration Date of IBank Approving Resolution – IDB

Policies and Procedures for Conduit Revenue Bond Financing for Economic Development Facilities – Updated 06/27/2017

Post-Issuance Tax Compliance Policy for Tax Exempt Bonds

Industrial Development Revenue Bond Fees

Request of Post-Bond Issuance Actions – Complete this request form if you wish for the IBank to take post-bond issuance actions in connection with outstanding IBank bonds.  Such actions include, but are not limited to, agreement modifications, Letter of Credit substitutions, mode conversions, redemption, and agent substitutions.

For more information contact:

BlankFariba Khoie, Bond Program Manager
California Infrastructure and Economic Development Bank (IBank)
Office Address: 1325 J Street, Suite 1300, Sacramento, CA 95814
Mailing Address: P.O. Box 2830, Sacramento, CA 95812-2830
Telephone: (916) 341-6600


Nothing contained herein should be construed or relied upon as legal advice. Instead, this information is intended to serve as an overview of the general subject of the use of tax-exempt bonds by nonprofit corporations, from which better-informed requests for advice, both legal and financial, can be formulated.