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POLICY PROPOSAL
DATE FILE NUMBER SUBJECT Industrial Development Bonds PAGE 1 OF 2
7/15/82 CP-96
PROPOSAL PROPOSED BY: Mayor Pro Te CITY MANAGER'S REVIEW
Richard C. Newkirk and
Background
Industrial revenue bond (IRB) financing has been legal in Texas for nearly three
years. (It has been legal elsewhere in the United States for decades.) IRB's
have been issued by the Trinity River Authority over the past three years for
numerous projects located within the city limits of Fort Worth. Projects financed
have included both expansions of existing local plants and relocations and/or
expansions of firms into Fort Worth from other parts of the country. IRB financing
has also been available in the cities and states with which Fort Worth competes
directly for industrial relocation over this time period.
The use of IRB's leads to unintended but nonetheless perceived and often real dis-
crimination between the individuals and firms using the devices and those who do
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not.
{ Any form of tax subsidized financing draws from the same investors from whom tradi-
tional tax-supported activities seek their funds. The buyers of industrial revenue
bonds are, in the main, the same as those asked to buy the more traditional forms
of tax-free general obligation and revenue debt. The result is clearly a higher
interest rate paid on these more traditional forms of indebtedness.
Proposal
We propose that the City Council adopt .an official position opposing the use of
IDB's on a national basis and that the City Council communicate its opposition to
our elected officials.
Legality
The Council has the authority to adopt such a position.
Fiscal Note
The effect of such a proposal could impede industrial development.
LEGALITY
FISCAL NOTE
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CRY MANAGERS COMMENTS ?..y.�
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POLICY PROPOSAL (cont'd) PAGE—OF,
City Manager's Comments
The City. Manager supports the national prohibition of IDB's but recommends
til they are -prohibited nationally the City has to participate to r that
competitive. emain
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Richard C. hevkirk, Mayor pro Tem
Russell Lancaster, Councilman
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_ CITY OF FORT WORTH