Industrial Revenue Bonds are a financing tool that helps manufacturers and nonprofit organizations build, expand, or equip facilities. The Economic Development Authority of the County of Frederick, Virginia, (EDA) acts as a conduit for issuance of Industrial Revenue Bonds (IRBs). The borrower is responsible for repayment. The EDA and qualified Bond Counsel retained by the Applicant ensures the process complies with federal, state, and local regulations and that the project aligns with community goals.

Legal Framework in Virginia

Virginia’s Industrial Development and Revenue Bond Act (§15.2-4900 et seq.) authorizes local governments to create Industrial or Economic Development Authorities that issue IRBs to support projects with a public benefit, including:

• Manufacturing facilities.
• Nonprofit hospitals, senior living facilities, and schools.
• Research, energy, and recycling facilities.

Projects should demonstrate positive community impact through job creation or expanded public services.

Benefits of IRBs

IRBs offer:

• Lower interest rates (tax-exempt for qualified non-profits and manufacturers).
• Flexible repayment terms (up to 40 years).
• Preservation of working capital and bank lines.
• No financial risk to the local government or the EDA.
• Process assistance through the EDA.

IRBs are a powerful solution for senior living, healthcare, and mission-driven capital projects.

IRB Process

1. Initial inquiry to the EDA and eligibility review with qualified Bond Counsel to understand project scope, financing need, and potential public benefits.
   • Confirm eligibility based on Virginia law, federal tax rules, and EDA policies.
   • Assess fit for tax-exempt or taxable IRB financing.
2. Application and resolution of inducement via a formal IRB application to the EDA that includes project description, estimated costs, ownership structure, and Bond Counsel details.
3. EDA Board review of the application and, if appropriate, adoption of an Inducement Resolution to publicly support the project and begin the bond issuance process.
4. Scheduling and advertisement of a Tax Equity and Fiscal Responsibility Act (TEFRA) public hearing (if tax-exempt), allowing for public comment on the project’s purpose and benefits.
5. EDA adoption of a Final Bond Resolution outlining the financing structure and confirming bond issuance terms.
6. Local governing body approval through the Frederick County Board of Supervisors.
7. EDA collaboration with Bond Counsel, underwriters, trustees, and the borrower’s legal team to draft legal documents, including bond indentures and loan documents.
8. Compliance confirmation with IRS regulations and SEC disclosure requirements as well as coordination of bond pricing, sale, and closing logistics.
9. Execution of bond documents by the EDA.
10. Post-issuance compliance by the borrower, such as continuing disclosure and IRS filings.
11. EDA maintenance of public records of the bond issuance.

Is Your Project a Good Fit?

You might benefit from an IRB if:

• You are a manufacturer building a new facility or expanding an existing one.
• You are a 501(c)(3) nonprofit planning a large capital project.
• You are creating jobs, expanding healthcare access, or adding senior housing.
• You are investing $5 million or more into your facility.

Contact the EDA to learn more.

^{DISCLAIMER: Nothing stated herein shall in any way constitute an obligation by the EDA to guarantee repayment of the EDA Bonds. The EDA Bonds and the premium, if any, and the interest thereon shall not be deemed to constitute a debt or a pledge of faith and credit of the Commonwealth of Virginia, or any political subdivision thereof, including the EDA or the County of Frederick, Virginia. Neither the Commonwealth of Virginia nor any political subdivision thereof, including the EDA and the County of Frederick, Virginia, shall be obligated to pay principal of or premium, if any, or interest on the EDA Bonds or other costs incident thereto except from the revenue and receipts pledged therefor. Neither the faith and credit or the taxing power of the Commonwealth of Virginia or any political subdivision thereof, including the EDA and the County of Frederick, Virginia, is pledged to the payment of the principal of the EDA Bonds or interest thereon or other costs incident thereto.}