Recovery Zone Facility Bonds
Categories: 2010 Press Releases, Property Management News |
January 11, 2010 Contact: Barbara Hayden, Director
St. Louis County Planning & Development
227 W. First St., Suite 100
Duluth, MN 55802
Recovery Zone Facility Bonds $6.088 Million
The St. Louis County Board of Commissioners has adopted procedures to allocate $6.088 million in bonding authority to local units of government, or qualified issuers in St. Louis County, for Recovery Zone Facility Bonds (RZFB) as authorized by the American Recovery and Reinvestment Act of 2009 (ARRA).
Recovery Zone Facility Bonds are authorized for the financing of projects located in designated recovery zones. Recovery Zone Facility Bonds are tax-exempt private activity bonds, similar to Industrial Revenue Bonds. A qualified business must be undertaking project costs that involve any depreciable property that is to be constructed, reconstructed, renovated, or acquired by a private user (a Recovery Zone Property) within a recovery zone as designated by the issuer, i.e., the local unit of government. Projects can be for any trade or business conducted within the recovery zone (a qualified business). A qualified business does not include residential rental housing and other limited businesses. The bond principal and interest is repaid by the revenues generated from the private project.
Counties and major cities throughout the U.S. have been allocated maximum amounts of bonding authority for these types of bonds, which are established through ARRA and the enacted federal formula. St. Louis County has been allocated $6.088 million of RZFB authority by the U.S. Treasury Department and will re-allocate its bonding authority to local units of government or qualified issuers within the county and/or to the State of Minnesota. Applications will be accepted from local units of government or qualified issuers in St. Louis County according to the timelines prescribed by the adopted procedures.
A qualified business must substantially operate within an identified Recovery Zone. A Recovery Zone is designated by the issuers as an area having significant poverty, unemployment, home foreclosures, or general distress; or within an area that is economically distressed by reason of the closure or realignment of a military installation; or within a project area formally designated by theU.S. Department of Housing and Urban Development. Recovery Zone Facility Bonds must be issued by December 31, 2010.
The application process has the following features:
• St. Louis County does not intend to issue RZFB bonds itself. Instead, allocations of bonding authority will be provided to local units of government or qualified issuers per federal and state laws through an application process for economic development projects in their jurisdictions.
• Allocations will be awarded competitively. The first round of allocations will be awarded to qualified applications received by March 1, 2010, based on statutory project criteria, including jobs created, jobs retained, the local unemployment rate, and tax base created. Allocations for applications received after March 1, 2010, will be awarded to qualified projects on a first-come, first-served basis. Any bonding authority remaining after September 30, 2010, will be transferred to the State of Minnesota for re-allocation statewide.
• A non-refundable application fee of $20 per $100,000 of allocation authority with a minimum of $500 is established to offset administrative costs.
• Allocations will be awarded by the St. Louis County Board of Commissioners.
• The County Board reserves the right to amend application procedures and materials, as necessary. According to the Federal Act, qualified businesses that are not eligible include: residential rental projects, private golf courses, country clubs, massage parlors, hot tub facilities, suntan facilities, racetracks, gambling establishments, and off-sale liquor stores.
Application forms and procedures are available on the St. Louis County website at:
www.co.st-louis.mn.us – click on Departments, Planning and Development.