“IRBs are a
special obligation of a government
unit with the interest not subject to federal or
state income tax,” said Phil Ehlinger, business
development manager for the county’s Economic
Development Department. “So, the bond purchaser
or lender does not need to charge the
same net rate of return as if the loan were being
made on a conventional basis. The lower interest
cost is passed along to the borrower.”
The tax exemption provided by an IRB allows
the borrower to achieve interest rates well below
the prime lending rate or the prime plus rates that
more traditional forms of capital borrowing
require.
“Interest
rates and terms generally are negotiated
by the borrower and the bond purchaser
and are based on an assessment of creditworthiness,”
said Ehlinger. “Banks and institutional
investors are traditionally the buyers of most
bonds.”
Qualifying
companies include those involved
in manufacturing, distribution, warehousing,
research and development, and corporate headquarters.
IRB financing covers all related capital
expenses, including land acquisition, new construction,
acquisition or renovation of existing
facilities, new additions, capital equipment, and
machinery.
According to
Ehlinger, up to 100 percent of a qualifying project is eligible for
financing.
Even the legal and bond fees associated
with the issuance of the bond are eligible as
are architectural and engineering costs
related to the project. IRBsmay not be used
for refinancing, restructuring of debt, venture
capital or for working capital and
inventory.
IRB financing
in Volusia County has
been used effectively to support the expansion
of existing companies plus the recruitment
and relocation of new industry to the
area.
“We have
recommended millions of
dollars in IRB financing for a number of
existing companies including, most recently,
new equipment for Independent Printing
in Daytona Beach, and the construction
of a production facility and new equipment
for Florida Folder in Port Orange,” said
Rick Michael, economic development
department director. “We also have used
IRB financing for the recruitment and relocation
of Ideal Aluminum in DeLand. This
project alone created more than 200 new
jobs.”
Amore creative
application of the IRB
program was the use of an IRB by Edgewater
Power Boats in Edgewater. IRB financing was
used to acquire the facility the company
was occupying, allowing them to
build an addition to the existing facility as
a cost-effective alternative to relocating
the company.
“The actions
taken by Edgewater Power
Boats allowed the company to lower the
cost of acquiring the production plant and
its new addition, removing a threat to company
investors to relocate the company to
North Carolina,” said Michael. “This single
action saved more than 100 boat manufacturing
jobs in southeast Volusia County.”
Currently, the
IRB program is being
used to help finance the construction of a
30,000-square-foot production facility for
MBI Printing in DeLand. The project
includes the construction of the new facility,
and new printing equipment. Additional
jobs are planned to be added upon
completion of this project.
Applications
for Industrial Revenue
Bond financing are available from the Volusia
County Department of Economic
Development at Daytona Beach International
Airport, 700 Catalina Dr., Suite 200,
or by calling Ehlinger at (386) 248-8048
