Industrial revenue bonds are a form of public-private partnership — a tool that governments can use to stimulate economic development, allowing them to offer tax subsidies for new or expanding businesses that create jobs and improve communities.
Subsidies may include a property tax exemption, a gross receipts tax deduction and compensating tax exemption if certain equipment is purchased with bond proceeds, an exemption for bond interest from New Mexico income tax and, in some cases, an exemption of bond interest from federal income tax.
These types of bond issues have been popular as a way to help New Mexico cities and towns compete — without assuming financial liability — for capital-intensive projects by extending tax subsidies to reduce the risks and costs for a company to move here.
New Mexico cities and counties are authorized to issue IRBs.
To be eligible for IRB financing in New Mexico, a project must encourage manufacturers and commercial businesses to move or expand here or to promote the state’s agricultural products or natural resources.
IRB candidates include factories, assembly plants, warehouse and distribution hubs, nonprofit enterprises, health-care services, research facilities, industrial parks and corporate offices.