CDFA - Legislative: Increasing the maximum IDB bond size limit

Limitation on Maximum IDB Bond Size

Industrial Development Bonds (IDBs) are tax-exempt financing which provides low-cost debt to small- and mid-sized companies that do not have access to credit markets. The $10 million maximum bond size limit, imposed by Congress twenty years ago, is arbitrary and fixed. The $10 million limitation has not been increased since 1979 during the Carter Administration and has not been adjusted for inflation since.

In today’s terms, the $10 million bond size limit has the spending power of less then half of what it had back when the limit was set. Many companies simply cannot complete a project that otherwise would fit into this category for less then $20 million. Staying under the $10 million bond limit is arbitrary and places an unnecessary burden on small to medium sized manufactures.

As a result of this limit many manufactures turn away from lower coast tax-exempt financing and settle for other higher cost financing. Many times projects are simply dropped or reduced, which effectively chokes economic development and job creation.

Raising the bond limit to $20 million would provide relief for hundreds of manufacturers nationwide searching for affordable capital to grow their businesses.

Status of Legislation

CDFA supports legislation to increase the maximum bond size limit from the current non-inflation adjusted $10 million to a more reasonable $20 million limit.

Council of Development Finance Agencies
815 Superior Avenue
Suite 1301
Cleveland, Ohio 44114
Phone: (216) 920-3073
Fax: (216) 771-4938
E-mail: info@cdfa.net