ARRA: Connecticut Recovery Zone Facility Bonding Program : $135Million - None Used to Date.
About the Program
As part of the federal government’s economic stimulus efforts, Connecticut is receiving $135 million in private activity bond volume cap through the Federal American Recovery and Reinvestment Act of 2009 (ARRA) for shovel-ready construction projects within “Recovery Zones” to be designated throughout the state. The $135 million is separate and apart from the state’s overall private activity bond cap, and can be used for many private activity projects not eligible in the past.
CT Economic Recovery Zone Facility Bond Program will be jointly administered by CDA and DECD. Program award of tax-exempt bonding allocation will be on a competitive, ongoing basis by CDA based on criteria established by DECD and CDA to support shovel-ready construction projects that will grow the state’s economy including:
1. Located in a state designated recovery zone
2. Economic development goals
a. Projected job creation
b. Projected tax generation
c. Anticipated community benefits
3. Compatibility with state responsible growth strategies
4. Brownfield reuse
5. Transit-oriented development
6. Project readiness to proceed
Tax Exempt Private Activity Bond Program - Recovery Zone Facility Bonds (RZFB) - $135 million to the state: approximately $109 million to counties (i.e., the State) and $25 million to the five major cities, subject to reallocation. The bonds allocated to the State would be self-sustaining tax exempt revenue bonds issued by CDA under its existing authority as a conduit issuer. There would be no liability to the state.
Eligibility:
The Treasury and the IRS have established that a project supported by the bonds must meet eligibility requirements, including:
1. Support economic growth in areas hardest hit by recession
2. Residential rental projects are not eligible
3. Funds are to be used to acquire depreciable property (not land)
4. Flexible – can be combined with other programs such as URA grants, state grants and loans, sales tax exemptions and TIFs to leverage the benefits
5. Vertical Construction Projects -- public ownership of facility is not required
6. Bonds are not available for refinancing old debt
** ARRA RZFB must be issued by January 1, 2011.
Designation of Economic Recovery Zones:
The federal statute requires the state or cities receiving allocations to designate economic recovery zones before expenditures commence. It is proposed that CT utilize those programs that currently exist: federal entitlement communities, distressed municipalities, enterprise zone communities and public investment communities (see Table 1 below).
Awarding of Allocation:
RZFBs will be self-sustaining with no recourse to the state or CDA in the form of guarantee or by other means.
As a result, projects will need to meet the following preliminary criteria prior to proceeding with a full review:
1. Demonstrate availability of any necessary additional funding from private sector institutions.
2. Demonstrate that the project meets federal program and tax criteria.
3. Demonstrate that all project funding will be in place and the bonds sold by December 31, 2010.
4. The project must be in areas eligible to be designated as recovery zones.
Table 1: RZFB Bonding allocation breakdown by municipality/county is as follows:
|
Bridgeport |
$ 6,004,000 |
|
Hartford |
$ 1,509,000 |
|
New Haven |
$ 3,371,000 |
|
Stamford |
$ 6,642,000 |
|
Waterbury |
$ 8,079,000 |
|
Fairfield County |
$ 40,255,000 |
|
Hartford County |
$ 14,903,000 |
|
Litchfield County |
$ 2,693,000 |
|
Middlesex County |
$ 4,050,000 |
|
New Haven County |
$ 28,187,000 |
|
New London County |
$ 9,689,000 |
|
Tolland County |
$ 2,916,000 |
|
Windham County |
$ 6,702,000 |
|
TOTAL |
$ $135,000,000 |
Connecticut Recovery Zone Areas:
(Recovery Zone Bonding Communities Map)
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