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Industrial Revenue Bonds

Category: Local Incentives


  • Eddy County and the City of Carlsbad can both issue Industrial Revenue Bonds (IRB) for the expansion and relocation of commercial and industrial projects.  Significant property tax and compensating tax exemptions can occur through the use of an IRB. An IRB is a loan from the bond purchaser to a company where the loan proceeds and repayment flows through a governmental issuer. Instead of purchasing a facility directly, companies can enter into a lease with the issuer, provided the company will lease the facility from the issuer and, at the end of the lease, purchase the facility from the issuer for a nominal amount.
  • IRBs can generally range from 50% for 20 years to 75% for 30 years.
  • The benefit of remaining property tax exemptions can be passed on to the new owner or flow through a lease in event of a sale or lease to a new user, under certain qualifying conditions.  The County Commission must vote to induce an IRB, and the community does not lend its credit to an IRB.  The company must secure its own purchase of IRBs or the company can purchase its own IRB.
  • Assume a company invests $10 million in Carlsbad or Eddy County: $5 million in land and building, and $5 million in equipment purchased out of state:

Tax Exemption 

Calculation

Value

Property Tax Exemption on Land and Building

($5,000,000/3) x 0.045951

$76,585

Nominal value for 20 years:

$76,585 x 20 years

$1,531,700

Property Tax Exemption on Equipment (first year)

($5,000,000/3) x 0.045951

$76,585

Nominal value for 7 years

(Depreciated value/3) x 0.045951

$306,340

Tax Exemption on Equipment

$5,000,000 x 0.05

$250,000

 


Contacts

Carlsbad Department of Development
1976
400-2 Cascades Ave, Suite 201
Carlsbad, NM 88220
Phone: (575) 887-6562