There's always a catch. (Wall Street West).

How would you like to borrow money for a business expansion, at an annual interest rate of 3.1 percent?

Businesses within the state of California qualifying for tax-exempt industrial-development bond status can borrow money in the low single-digit range, said Sam Balisy, partner and public finance specialist in the Pasadena offices Kutak Rock, a national law firm.

Of course, not all businesses qualify. The money must be used to buy or improve industrial property or buy manufacturing equipment, and one job must be created for every $50,000 borrowed - although the job criteria may be liberalized soon, said Balisy.

The bond issue process leaves something to be desired. Underwriters are hired to issue the bonds (often Dain Rauscher in San Francisco), and an obscure state entity, the California Debt Limit Allocation Committee (called CDLAC, or "see-dee-lak"), must review bond applications and give a thumbs-up. In larger cities, local officials often stick their noses in, too. Delays are frequent. "CDLAC reviews applications just twice a year," noted Balisy.

Another part of Balisy's work is helping cities re-finance higher-rate bonds issued in earlier periods. Investors might not be aware of it, but most municipal bonds include "call back" provisions, meaning cities can buy back the bonds at par.

Ergo, when rates drop, many cities choose to call back the old and issue new, as the City of Los Angeles is doing presently on several older bond issues, said Balisy. "I guess the (muni bond) investors will have to find somewhere else to park their money," said Balisy.

Contributing columnist Benjamin Mark Cole writes about the local investment community for the Los Angeles Business Journal. His new book is "The Pied Pipers of Wall Street: How Analysts Sell You Down the River," published by Bloomberg Press.