Davis County mulls using private activity bonds to help local manufacturers expand

At a Davis County Commission work session on April 7, 2026, commissioners heard a detailed presentation from Jonathan Ward of Design Bank about private activity bonds — a narrow IRS tax‑exemption the county could use as an economic incentive for private manufacturers.

Ward explained the bond program gives states a "volume cap" each year; Utah’s 2026 allocation is roughly $473,000,000, divided among categories such as single‑family mortgages, student loans, multifamily housing and small manufacturing. Ward said small manufacturing accounts for about 12% of the cap while exempt facilities are about 1%, and he noted roughly $56,000,000 in the 2026 allocation is available for qualifying projects in Utah.

Why it matters: private activity bonds reduce a borrower’s interest cost by providing tax‑exempt status, but they do not make the county the borrower or legally obligate the county to repay debt. Ward cautioned the county remains a partner for as long as bonds are outstanding, must approve certain modifications, and can be pulled into legal disputes or administrative obligations even when the documents state the county has no repayment responsibility.

Commissioners asked how the program would affect other county financing. Ward said a $10,000,000 ‘‘bank qualification’’ threshold can affect interest rates and that conduit issuances and other special‑district financings count toward that limit; practically, counties rarely preserve that status. He added that lenders underwrite based on the borrower’s credit, not the county’s rating.

Commissioners and staff discussed past local examples — the county previously authorized such bonds for Janicki Industries and Keomac — and noted Keomac has requested support for a 50,000‑square‑foot expansion tied to a drone program adjacent to its Eastgate facility. Staff emphasized applicants typically come with lender interest already in place; the county’s role is to provide the conduit and the tax exemption rather than to underwrite the project.

On vetting and costs, economic development and commissioners advocated passing third‑party issuance fees and bankers’ charges to borrowers and recommended using specialized bond counsel and public‑finance banks for transactions. Commissioners suggested initial participation guidelines that would prioritize expansions of proven local aerospace and defense firms, require evidence of bank or investor commitments, and seek projects that would create roughly 50 or more jobs.

Next step: commissioners directed staff and the economic development office to draft participation guidelines and bring them back to the commission for review. No formal motion or vote was taken at the work session.

"I would want to involve Zions, public finance involved with this and pass along whatever fee they charge us... to that entity," Ward said, recommending third‑party public‑finance involvement and cost recovery by passing fees to the borrower.

The work session closed the discussion by asking economic development to return with a framework that would guide future county participation in private activity bond transactions.