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IDB Key Points
Industrial development bonds (IDB’s) have been used for several years to finance a wide variety of projects in Virginia. Between 1978 and 1981 $1.9 billion in bonds were issued in Virginia for almost 1,000 different projects.
Under federal tax laws, the holders of qualifying IDB’s (eg: banks, savings & loans, insurance companies) pay little or no income tax on interest earned. In turn, these tax savings are passed on to business borrowers in loans at reduced interest rates.
The type of facility that can be financed with IDB’s is regulated by federal and state law. Financing for facilities for the residence or care of the aged is permitted by Virginia law.
Other key points include:
• Neither the authority that issues the IDB’s or the local government has any financial obligation for repayment of the bonds. IDB’s are issued solely on the credit worthiness of the business being financed, and are repaid entirely by that business.
elf a proposed project qualifies for IDB financing, the Industrial Development Authority must hold a public hearing on the proposed bond issue, notice of which must be published in a local newspaper. At this public hearing, citisens must be given the opportunity to voice their opinions on the proposed bond issue.
At the conclusion of the public hearing, the Industrial Development Authority usually will eonsidok the adoption of an inducement resolution, agreeing to issue its bonds to finance the project.
• If the inducement resolution is approved by the Industrial Development Authority, it then must be submitted to the board of supervisors of the county (or city council of the dty) in which the preset wiB be located for approval.
To approve or not to approve an am an dad bond for development of a group boms hi Hands Hollow Is the decision to be made fay Rappahannock’s supervisors following a public hearing June 21 on the project.
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