PA Ranked #1 in 2013 in Issuance of Industrial Development Bonds

The Center for Private Financing of the Office of Innovation and Investment is proud to announce that Pennsylvania was the #1 state for the issuance of Industrial Development Bonds (“IDBs”) in 2013, with almost $90 million of bonds issued. Pennsylvania has been a leader for decades in the use of tax-exempt bonds known as Industrial Development Bonds to catalyze investment in business, industry and infrastructure throughout the commonwealth. Industrial Development Bonds serve a public purpose by encouraging economic development and job creation. In accordance with the U.S. tax code, when bonds are issued through public entities, the securities become tax-exempt. That means that the investors who buy the bonds do not have to pay federal (and in Pennsylvania, state) tax on the interest income they receive. Because of this advantage, tax-exempt bonds typically carry a lower rate of interest. The difference between the interest rate on tax-exempt bonds and the interest rate on commercial corporate bonds constitutes the subsidy to the business which encourages them to undertake projects to build and expand their businesses. The bonds may be issued by either an Industrial Development Authority (“IDA”) — which is a local industrial development authority created by a Pennsylvania county, city, borough or township — or by state agencies, such as the Pennsylvania Economic Development Financing Authority (PEDFA).

By encouraging companies to invest in projects that build their businesses, the local communities in which the projects are located (and in turn the commonwealth as a whole) receive a crucial economic benefit in the form of the job creation and/or job retention associated with these projects.