Final answer:
The primary source backing an Industrial Development Bond (IDB) is the revenue from the financed project, not the treasurer of the issuing municipality. IDBs are loans to private entities, paid back from project cash flows.
Step-by-step explanation:
The primary source that backs an Industrial Development Bond (IDB) is not the treasurer of the city or town of issuance, but rather the revenues generated from the project financed by the bond. An IDB is typically issued by a municipality to attract and support industrial or commercial development within its jurisdiction. The bond is a loan to a private company that seeks to build or expand its facilities, and the repayment, along with interest, is secured by the cash flows from that particular project, not from public funds.
IDBs are a form of private activity bond where the loan proceeds are used for private business development, but the bonds are issued by public entities. While the public issuer provides the legal authority to issue the bonds, it generally does not pledge its credit. Instead, the credit risk for investors is mostly associated with the success of the development project and the ability of the private business to repay the loan.