Industrial Development Authority
City of Los Angeles
The Industrial Development Authority (IDA) of the City of Los Angeles is authorized under the California Industrial Development Financing Act (IDFA) to serve as a conduit issuer for the City’s private activity tax-exempt bond program. The IDA is administered by the City of Los Angeles Economic and Workforce Development Department and an appointed Board of Directors. All IDA bond issuances require the approval of the IDA Board, the Mayor and the City Council, and the Office of the State Treasurer.

Our Purpose

The Industrial Development Authority (IDA) was established to promote economic development by facilitating growth through industrial development bonds for qualified businesses and nonprofit organizations. Encouraging businesses to locate or expand within LA City limits creates jobs and boosts the local economy.

As a conduit-issuer of bonds, the IDA formed in 1982 by the Los Angeles City Council. The IDA enables bonds to be issued with a tax-exempt status, but does not pledge City funds to repay the bond issues. These bonds are offered as an incentive to companies involved in manufacturing and processing activities - to relocate to Los Angeles or remain and expand in the City - thereby creating and retaining jobs, promoting economic revitalization, and providing much needed public and community services.

Since its inception, the IDA has directly issued or facilitated over $2.3 billion in bond issues. The IDA works closely with a team of qualified financial professionals whose goal is to process bonds in a timely, accurate and cost-effective manner.


INDUSTRIAL DEVELOPMENT BONDS (IDBs) EXPLAINED

Small issue Industrial Development Bonds (IDBs) are tax-exempt securities issued by state or local governments to help manufacturing operations finance real estate acquisition, construction, rehabilitation and equipping of new and expanding businesses. IDBs benefit the investors, the borrower, and the communities in which the projects are located. The interest income may be lower than other investments, but the tax savings may offset the difference. The renovation of abandoned and deteriorating buildings, as well as the development of underutilized land revitalizes the surrounding community. The growth in business creates jobs for local residents. Bonds typically reduce financing costs by 20% - 30% annually. In many cases these savings allow companies to purchase their leased facility or acquire a new property, allowing them to expand and increase the capacity of their operations.

IDBs can be used for property acquisition, equipment purchases, building improvements, construction and expansion. The use of IDBs is governed by both federal and state laws and regulations. Some benefits of an IDB may include low interest rates, long-term financing, comprehensive funding, and no prepayment penalties.


FREQUENTLY ASKED QUESTIONS

  • What are tax-exempt bonds?
    They are municipal, private activity, non-housing bonds consisting of industrial development bonds (IDBs), and certificates of participation (COPs) issued by the City for qualified projects from 501c(3) non-profit organizations within the City.
  • How are bond proceeds used?
    Bond proceeds are used to acquire and develop real property and equipment. Tax-exempt IDBs are available only for manufacturing operations. The COPs can be used for acquisition, development, and refinancing.
  • What is the eligibility criteria?
    Qualified projects must be backed by a 100% letter of credit or bond insurance from, or privately placed with, a publicly rated financial institution. The project should also create jobs and/or provide goods and services to low- to moderate-income City residents.
  • What are the funding limits, terms and collateral requirements?
    IDB issues range from $2 to $10 million; there is no limit for COPs. The maximum financing participation is 80% of total project costs or the appraised value of the underlying property. The bond term usually ranges from 5 to 20 years and amortizes over 30 years. The collateral typically consists of real estate assets and/or equipment.


    Type of Bonds Funding Limits Eligibility
    Industrial Development $2 - $10 million Manufacturers Only
    Non-Profit 501c(3) $2 million - Unlimited 501c(3) Organizations

Contact

For more information, please call 213-744-7111 or dial 711 for TRS.


Resources
LA City Business Tax Information
www.finance.lacity.gov/tax-information-booklet

LA City Department of Water Power Commercial Services Programs
www.ladwp.com/commercial-services/programs-and-rebates-commercial

LA City Business Portal
www.business.lacity.gov

California Infrastructure and Economic Development Bank - an overview of Industrial Development Bonds
www.ibank.ca.gov/bonds/industrial-development-bonds

U.S. Government Accountability Office: Industrial Development Bond Information (1992)
www.gao.gov/products/rced-92-247r

CA Public Finance Authority on IDBs
www.calpfa.org/private-activity-programs/industrial-development-bonds-idbs-manufacturing
This page does not constitute a comprehensive prospectus nor is it illustrative of all aspects of the IDA bond program. The City of Los Angeles and IDA make no representation as to the accuracy and completeness of this page. The opinions and estimates represented on this page constitute an indicative perspective as of August 2014, and is subject to change at any time without prior notice. Users should consult their financial advisors for their qualification and eligibility under the program. This material may not be quoted, reproduced nor used as sales material without the prior written permission of the City and the IDA.