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    Tax-Exempt Industrial Revenue Bonds

    Industrial Revenue Bonds (IDRBs) allow manufacturers and certain non-profits to finance economic development projects at an effective fixed or variable interest rate significantly lower than the prime rate offered by conventional financing. Reduced rates are possible because the lender pays no state or federal income tax on the interest income they receive.

    Project costs that qualify for bond funding include land purchase (limited to 25% of the bond proceeds), new building purchases, and the purchase of new machinery and equipment.

    If an existing building is to be purchased, at least 15% of the cost financed with bonds must be invested in renovation of the building (excluding delayed maintenance) within two years. Bonds may be used to purchase used machinery and equipment, as long as it is acquired in conjunction with an existing building, and 20% of the total costs financed with bonds is invested in building renovation.

    All capital costs must be attributed to manufacturing facilities with 75% allotted to manufacturing operations, and 25% earmarked for ancillary uses such as loading docks, warehousing, offices, etc.

    Up to 2% of bond proceeds can be used for insurance costs, publication costs, attorney fees and other fees. Bond proceeds outside the 2% limitation may be used to finance letter of credit, commitment fees, and the first year annual fee (if paid in advance). Bond proceeds must be spent within three years. Read more about IDRBs on the Michigan Economic Development Corporation fact sheet.

    For more information contact the Economic Development Office at (616) 456-3431