Industrial Development Bonds “Chapter 100”
Issued pursuant to Chapter 100 RSMo and may be used to provide real and personal property tax exemption and to provide sales tax exemption on purchases. Industrial development bonds may be issued to finance the land, buildings, fixtures, and machinery for warehouses, distribution facilities, research and development facilities, office industries, service industries engaged in interstate commerce, and industrial plants. Retail and service industries in intrastate commerce are not eligible.
Chapter 100, RSMo allows local government to issue bonds to finance industrial development projects for private corporations, partnerships, and individuals. Upon issuance of the bonds, the company transfers ownership of the development site and/or equipment to the local government. The bond proceeds are then used to fund the construction of the development project. The company buys the bonds and repays them over a set period. Once the bonds are completely repaid, the local government conveys title of the site and/or equipment back to the company.
The property is owned by the city during the bond term and thus is exempt from taxes. A payment in lieu of taxes (PILOT) agreement may be required to modify the level of abatement. As with real property, the city owns the equipment during the bond term; therefore, the equipment is not assessed a personal property tax. Equipment purchases may also be structured such that the city’s sales tax exemption is used. Chapter 100 bonds may be tax-exempt, which makes it possible to issue the bonds at a lesser interest rate compared to conventional financing.