Industrial Revenue Bonds (IRB) may be issued by state and local governments in Kentucky to help finance industrial buildings.
-Generally, the issuer serves as a conduit to provide a lower interest rate to the borrower, but the issuer is not obligated for debt repayment. Bondholders look to the revenue arising from the project to cover debt service. Bond proceeds from bond issues can be lent directly by the issuer.
-KRS 103 also permits the issuer to hold title to the improvements financed with IRB proceeds. In this instance, the property owned by the issuer may be exempt from local property taxes during the duration of the bond issue. This property may also be eligible to be taxed at a reduced state rate of $0.015 per $100 of leasehold value, if such reduction receives the prior written approval by the Kentucky Economic Development Finance Authority (KEDFA) as required by KRS 103.210 and KRS 132.020. (See KEDFA operating procedures as it relates to this review process.) Any portions of such projects financed by private capital are subject to the full state and local property taxes applicable to private ownership.
-Communities may negotiate for payments by industrial tenants to replace portions of local property taxes lost through public title to the property. These agreements are commonly referred to as Payment In Lieu of Tax (PILOT) agreements.
The state ceiling on private activity is divided into three pools, with 30% reserved for the Local Issuer Pool, 10% reserved for the Energy Efficient Project Pool and 60% for the State Issuer Pool. "Local Issuer Pool" means the portion of the state ceiling from which allocations for local projects are made to issuers of affected bonds issued on behalf or for the benefit of an entity which is not a state agency. "Energy Efficient Project Pool" means the portion of the state ceiling from which allocations for manufacturing facility energy efficient projects are made to any issuer pursuant to KRS 103.282. "State Issuer Pool" means the portion of the state ceiling from which allocations for state projects are made to issuers of affected bonds issued on behalf or for the benefit of a state agency.
Eligible Recipients Detail:
Industrial Buildings as defined by KRS 103.200.
General Infrastructure; Last Mile Infrastructure; Building Infrastructure
Eligible Purpose Detail:
Bond funds may be used to finance the total project costs, including engineering, site preparation, land, buildings, machinery and equipment, and bond issuance costs.
A full list of required materials and documents are found on the program website.