An Industrial Revenue Bond, or IRB, is a loan to a company from a private financing entity to build or buy a facility or buy land and/or equipment. IRBs are one way local governments can provide tax abatements to encourage relocation and expansion of companies.
The city issues the bonds but is not making the loan. The investor buying the bond makes the loan. The company must find its own bond purchaser. It can also buy its own IRBs. The city technically owns title to the facility built with IRBs and leases it to the company for up to 20 years. At the end of the term, title is transferred to the company.
No. Since the city is not responsible for the loan, the IRB does not have an impact on the city’s credit rating.