Business and Personal Finance Dictionary

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• INDUSTRIAL DEVELOPMENT AUTHORITY BOND (IDB)
  
  A special type of revenue bond issued by municipal authorities established to promote economic development in their communities. A community establishes an Industrial Development Authority to act as a conduit. A business that would otherwise have to borrow at taxable interest rates to finance the purchase or construction of a building may, under some defined circumstances, let the IDA own the building and pay rent to the authority with an option to purchase. The authority borrows at a lower, tax-exempt rate. The authority has no responsibility for the payment of interest and principal on the securities except to pass the business’s rent payments through to the investors. The business’s rent payments equal the interest and principal due for the lower rate, tax-exempt securities.
  
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