Economic Development & Trade
Industrial Development Bonds
Updated January 23, 2003
 Economic Development & Trade
Industrial development bonds (IDBs) are issued by state and local governments, often through special authorities such as an industrial finance authority or a Department of Commerce. They are revenue bonds (with bond service funded by the activity to whom the issuer lends the proceeds). Until the mid-1980s, there were few limits on the state and local issue of tax-exempt IDBs to fund private activities. The Tax Reform Act of 1986 substantially limited the amount and uses of tax-exempt IDBs. They now are issued in taxable form as well as in tax-exempt form. IDBs are tied to specific projects whose revenues will repay them, rather than being used to create revolving funds.
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