These are tax exempt bonds which can be issued for you in the name of the City, and because the bonds are so issued, they are tax exempt, meaning that the purchasers of the bonds do not have to pay tax on the interest received, thereby causing the bonds to be more attractive to the purchasers at a lower rate of interest.
The maximum which can be issued to any borrower is $10,000,000 within a six-year period. The purchasers of the bonds must look to the borrower, for whom the bonds are issued, for payment, because the City does not pledge its good faith or credit, and has absolutely no obligation or liability.
Any project for which bonds are issued must be constructed with the prevailing wage rates as determined by the State of Ohio.
The cost of legal fees connected with the issuance of bonds can be included in the amount of bonds; the legal fee for a $1,000,000 issue is approximately $10,000.
Financing in Conjunction
Industrial Revenue Bonds can be used to finance a project in conjunction with other State and Federal programs and funds, such as State loans, Development Action Grants, etc. Bonds cannot be used in conjunction with a '504' loan.
City Has No Obligation
It must be remembered that because the City which issues the bonds has no obligation for payment of the principal and interest, the industry, firm or person for whom the bonds are issued must find a purchaser for the bonds, and negotiate the interest rates and terms. In summary, the City is merely lending its tax exempt status to the borrower. Length of issues can be up to 25 years.