The Internal Revenue Service has preliminarily determined that $68.1 million of tax allocation bonds issued by the Industry, Calif., Urban Development Agency in 2003 to finance the acquisition of property, as well as highway and water projects, are hedge bonds and therefore taxable.

Industry, located near Los Angeles, had a population of less than 1,000 as of the beginning of the decade, according to the Census Bureau. However, the city is home to several high-tech companies that provide a source of jobs for 80,000 people residing in the San Gabriel Valley Area, according to bond documents.

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