Industrial Development Bond (IDB)
Financing Program

Private, tax-exempt Industrial Development Bonds (IDBs) are an important tool to help communities grow their economies and provide a good wage for its inhabitants. These bonds offer interest rate savings with the goal of creating new jobs within the local jurisdiction.

CPCFA, as a conduit issuer, is able to issue IDBs for projects which involve a pollution control facility and also feature a manufacturing component. For these purposes, a pollution control facility means any land, building or structure or improvement thereto, work, real or personal property which provides or is designed to provide for:

• Control, reduction, abatement, remediation, elimination or prevention of pollution
• Improvement of air, water or soil quality
• Safe handling, recycling or disposal of materials that might otherwise be improperly disposed of or provide for environmental restoration, clean-up or enhancement.

Such facilities include but are not limited facilities for:

• furnishing water, sewage and solid waste disposal
• Local furnishing of electric energy or gas
• Local district heating and cooling
• Environmental enhancements to hydroelectric facilities
• Qualified green building and sustainable design projects.

Prospective borrowers should contact bond counsel to help determine if a proposed project qualifies under federal law. Bond counsel must be listed on the State Treasurer's Office list of approved firms.

Some Eligible Uses of Bond Proceeds include:

• Buildings and equipment
• Machinery and furnishings
• Land
• Costs of architects, engineers, attorneys and permits

Federal Eligibility Requirements

Federal restrictions on the use of proceeds include:

• 95% of proceeds must be used for the defined IDB project.
• 2% of bond proceeds may be used for costs of issuance.
• 25% of bond proceeds may be used for land costs.
• A Tax Equity Fiscal Reform Act (TEFRA) public hearing in the community where the project is located must be held before the bonds are issued.
• To acquire an existing building, a minimum of 15% of the bond proceeds must be used to renovate the facility.
• The average life of the bond issue cannot exceed 120% of the weighted average of the estimated useful life of the assets to be financed.
• The bond maturities cannot exceed 40 years.

Federal Restriction on Size of IDB Bond issues

Federal restriction on size of IDB issues include:

• The maximum face amount of an IDB issue cannot exceed $10 million per applicant, per public jurisdiction.
• Total capital expenditures in the public jurisdiction where the project is located cannot exceed $20 million during the period that runs from three years prior to issuance of the IDB through three years after issuance. The $20 million cap includes capital expenditures financed with the IDB.
• The total outstanding IDBs by any one company cannot exceed $40 million nationwide.

CPCFA, as the applicant, applies to the California Debt Limit Allocation Committee (CDLAC) on behalf of the Borrower for the IDB allocation for the project. CDLAC has the responsibility to review the public benefits of the transaction and ultimately provide allocation for the IDB project.

California’s criteria for IDB projects are based on statutory requirements and on CDLAC’s public benefits guidelines. The criteria include public benefits associated with the creation or retention of jobs, participation in welfare-to-work programs, average hourly wage paid to workers and the energy efficiency characteristics of the project. Other rules establish requirements when a business relocates from one jurisdiction to another. In order to apply for IDB financing please send an e-mail to CPCFA@treasurer.ca.gov or call Deanna Hamelin at (916) 657-4337 for more information.