Debt Management

Obliging the Issuers

Page from GFR

At a glance, U.S. Steel Corporation, Penn Hills Charter School of Entrepreneurship, and the Little Sisters of the Poor don’t have much in common. One is the second-largest steel company in the United States. One is a charter school with a curriculum that brings business and economics to life for K-8 students. The other is a group of nuns who run nursing homes. Their missions don’t seem to overlap. And yet, all three have upgraded their buildings and equipment with low-cost financing made available through the Allegheny County, Pennsylvania, Industrial Development Authority (IDA). In other words, taxpayers in greater Pittsburgh have supported all three, directly or indirectly.

IDA acts as a “conduit.” It borrows money and then lends that money to for-profit companies, healthcare organizations, cultural institutions, and other entities that contribute to the region’s economic development. The benefiting entity then repays the IDA, who then repays the bonds. A properly executed conduit transaction is a win-win. An economic development project with tangible public benefits that might not otherwise pencil out is made possible through access to affordable, often tax-exempt financing.

  • Publication date: April 2023
  • Author: Jara Kern