The City Council got an education in some of the more arcane aspects of municipal finance in its Tuesday meeting.

Under consideration was a proposal to authorize $3 million in industrial development revenue bonds. The income from the bonds would help a Bountiful-based company, ProMark, purchase and renovate a sprinkler-products factory in North Salt Lake.Cities commonly use industrial development bonds to help small businesses get started. According to bond lawyer Blaine Carlton, a city issues the bonds, gets the money from their sale, and loans the money to the business. The business then makes installment payments to the city, and the city uses the money to pay off the bond interest and principal.

Yes, council members said, that's nice, that's fine. We need to encourage businesses, and it would be great to have ProMark in North Salt Lake.

But if ProMark defaults on the bonds, they worried, will the city be held liable?

"With a formal vote here I assume there's some risk lurking deep in the shadows," Council Member Stuart Hatch said.

In this case, however, there is no need to fear.

If ProMark defaults, holders of the industrial development bonds couldn't recoup their investment from North Salt Lake, Carlton said (except for the money the city had already received from ProMark). All the bondholders could do would be to get as much as they could from the company's income and property.

The council ultimately authorized the bonds. City residents will have the chance to air their opinions in a Jan. 17 public hearing.