Industrial Revenue Bonds

The FCEDA has the authority to approve Industrial Revenue Bonds according to the guidelines outlined below.

Pursuant to Chapter 33, Title 15.1 of the Code of Virginia, the Fairfax County Economic Development Authority (“FCEDA”) has the authority to approve conduit tax-exempt revenue bonds (“EDA Revenue Bonds”) for the financing of qualifying capital projects for certain applicant organizations (each, an “Applicant”). Below are some facts to familiarize your organization with an overview on eligibility and the process.

What is an EDA Revenue Bond?

EDA Revenue Bonds are sometimes referred to as “industrial development revenue bonds” or “IRBs” because, historically, they were primarily used to finance manufacturing and other industrial projects. As the legal eligibility requirements for EDA Revenue Bonds have changed over time, along with changes to the Fairfax County economy, EDA Revenue Bonds are now more frequently used to finance projects for 501(c)(3) Applicants like colleges and universities, independent primary and secondary schools and other educational organizations, healthcare and other charitable social services organizations and certain other non-profit associations.

To carry out its purposes of promoting industry, developing trade and promoting the safety, health and welfare of the inhabitants of Virginia, FCEDA has the legal authority to issue its conduit tax-exempt revenue bonds to be used in financing the acquisition, construction or equipping of various types of qualifying Applicant capital projects and facilities. Two of the most important features of an EDA Revenue Bond are, first, that the interest earned on the bond is exempt from Virginia and Federal income taxation and, second, that the bond is payable only from revenues of the Applicant and any security the Applicant pledges to repay the bond. The tax-exemption on the interest on an EDA Revenue Bond allows a lender or investor to offer debt financing to the Applicant at a significantly lower rate of interest. By serving as the conduit revenue bond issuer to the Applicant’s lender or investors, the FCEDA allows the Applicant to access this tax-advantaged, lower interest financing. However, the FCEDA, Fairfax County and the Commonwealth of Virginia are not responsible in any way for the repayment of the bonds.

What types of organizations are eligible?

In order to qualify, generally speaking, an Applicant and its capital project must be one of the following: (1) a facility owned and used by a non-profit 501(c)(3) entity; or (2) a small, for-profit “manufacturing facility”, as defined by the Internal Revenue Code.

What is the range of funding in terms of dollars that can be borrowed via an EDA Revenue Bond?

There is no limit on the maximum amount of an EDA Revenue Bond financing for a qualified 501(c)(3) Applicant’s project—other than any limit imposed by the lender or investor who is providing the tax-exempt financing. For example, as with conventional financing, lenders and investors in EDA Revenue Bond transactions may require the Applicant contribute some of its own equity to the financing, require a loan-to-value ratio or otherwise restrict the size of the bond. There is a Federal tax law-imposed limit on the size of EDA Revenue Bonds for qualified small issue manufacturing facilities that limits the issuance to a maximum of $10,000,000.

Due to the fact that EDA Revenue Bond financings are somewhat more complicated than conventional financings—primarily due to the required tax qualification analysis and FC EDA and Fairfax County approvals—it is somewhat more expensive to document and close them. Accordingly, generally speaking, it is not cost effective from a transaction costs perspective to pursue EDA Revenue Bond financing for projects of less than $5,000,000. 

Is it a public process?

Yes. Notice of the Applicant’s request for EDA Revenue Bond financing will be published in the newspaper and considered at a public meeting of the FCEDA’s Commissioners. In addition, FCEDA staff will contact the Fairfax County Supervisor’s office in whose district the project is located in to notify the Supervisor of the pending conduit revenue bond request. The intent of the notification is to identify any issues or concerns the Supervisor might have with the request prior to the scheduled public hearing before the FCEDA. Following FCEDA approval, FCEDA bond counsel will coordinate with the County Executive’s office to place the EDA Revenue Bond matter on the agenda of the Board of Supervisors for consideration at an upcoming meeting.

Are there any fees associated with an EDA Revenue Bond?

Yes. FCEDA charges an issuance fee for all new money associated with EDA Revenue Bond requests processed through our office. This issuance fee is a one-time payment of 25 basis points on the principal amount of the financing being requested via the revenue bond program.

Why would an organization pursue an EDA Revenue Bond rather than borrow directly from a financial institution?

As described above, the borrowing terms can be more favorable than, for example, a direct loan from a bank. Interest on qualified conduit revenue bonds issued by the FC EDA is exempt from taxation under the Internal Revenue Code and Virginia law. The availability of this tax benefit generally results in a significantly lower interest rate for the user of the borrowed funds.

What is the typical time-frame from application to approval?

The time-frame can vary, but typically takes 90 days from application to final approval.

How does my organization find out more?

Please send an e-mail to John Gustavo Blair at or call 703-790-0600.

Steps in the Application Process

While there may be some variation in the timing and sequence of events leading up to issuance of the bonds, the process normally proceeds as follows:

Week 1

  1. The Borrower decides to construct or renovate a facility in Fairfax County (the “Project”).
  2. The Borrower consults with the FCEDA’s staff and Bond Counsel who determines that the Project qualifies for financing under federal and state laws and that the interest on the Bonds will be exempt from state and federal income tax.
  3. The Borrower goes to a bank or investment banking firm and formally requests a commitment to purchase or place the Bonds.
  4. The bank or investment banking firm analyzes the Project and the financial strength of the Borrower to repay the Bonds and, if it agrees to finance the Project, structures credit requirements (collateral, insurance, ratings etc.)

Week 2

  1. The Borrower completes and files an application requesting the FCEDA to issue its Bonds in an amount estimated to cover the cost of acquisition, construction, renovation and equipping of the Project.

Week 3

  1. Bond Counsel prepares a resolution (the “Inducement Resolution”) to be presented to the FCEDA approving the application and publishes a notice of public hearing with respect to the Project.

Week 5

  1. Following newspaper notice coordinated by Bond Counsel (once a week for two successive weeks), the FCEDA holds a public hearing on the Project, and if the application is in order, adopts the Inducement Resolution.

Week 6

  1. The Inducement Resolution and certain documentation prepared by Bond Counsel are forwarded to the Board of Supervisors for approval.

Week 7

  1. The Board of Supervisors meets and adopts a resolution approving the bond issue. This approval must occur within 60 days following the date of the FCEDA public hearing described above.

Week 7-10

  1. Bond Counsel prepares bond documents and a final resolution authorizing the issuance of the Bonds. The final resolution and bond documents are reviewed by all parties to the transaction and revised documents are circulated. All documents are finalized.

Week 10

  1. The final resolution authorizing the issuance of the Bonds is adopted by the FCEDA.

Week 12

  1. All parties meet to execute the bond documents and close the bond issue.
  • The Borrower agrees to make all payments of principal and interest on the Bonds and the FCEDA has no obligation to make payments on the Bonds or to pay costs of the Project.
  • At closing, the bond proceeds are deposited in a special account to be used by the Borrower to pay for costs of acquisition, construction, renovation and equipping of the Project. Only 2% of the bond proceeds may be used to pay for issuance costs.
  • Although a bond issue typically follows these steps, each financing is unique and the procedures may vary depending on individual circumstances. The foregoing may take more time, depending upon complexity of transaction.

Download the IRB Documents packet (includes application materials and information on issuance fees).