CHICAGO - Oakland County, Mich., at the epicenter for the domestic auto industry's woes, is moving quickly to put its share of bonding authority from the federal government's new recovery zone programs to work to redevelop auto plants and boost efforts to lure a new General Motors Corp. facility.
The infusion of federal help comes in the form of $25 billion of recovery zone bonds - including $10 billion of recovery zone economic development bonds and $15 billion of recovery zone facility bonds included in the federal stimulus program enacted in February.
State and local Michigan officials were among those eagerly awaiting the government's announcement Friday of specific allocations for states, counties, and large municipalities as well as the interim guidance for the programs aimed at promoting economic development in distressed areas.
The state's unemployment rate is the highest in the nation at 12.9% and Michigan has lost a half million jobs this decade.
"In this market where credit is so hard to come by, this help could mean the difference between a project moving forward or not moving forward," said Doug Smith, director of economic development for Oakland County.
The county is looking at using its economic development allocation to support transportation-related projects and has a list of facility-related redevelopment involving auto plants that are now shuttered or slated for closure.
The affluent county, located north of Detroit, has been exceptionally hard-hit by General Motors' recent bankruptcy, since the company is its top employer. The state overall faces the potential loss of up to 8,900 jobs at plants slated for closure. That comes on top of an overall contraction in the domestic auto industry that has impacted local Ford Motor Co. facilities and Chrysler LLC, which recently emerged from bankruptcy. Oakland County is already home to Chrysler's headquarters.
Oakland County - working with the state on an incentive package - expects to offer up some piece of its private-activity facility-related bonds under the new programs as part of its efforts to persuade GM to use its Orion township plant to assemble the new small car it is planning for the future. GM currently uses the facility to assemble several mid-size Chevrolet models but it is on the list of plants to be shuttered in September and placed on standby.
"This new authorization will really allow us to sweeten our package as we finalize it," Smith said. The township has offered up $44 million in tax breaks. The state is in competition with Tennessee and Wisconsin for the new facility.
The county already has committed $30 million of the private-activity authorization to support a redevelopment project in the works for GM's shuttered Centerpoint Campus in Pontiac that housed its trucks facility. The redevelopment project calls for Motown Motion Picture Studios LLC - supported by Raleigh Studios and Endeavor Talent Agency - to build a 600,000-square-foot movie studio at the plant to serve as both a studio and home to a production company.
The county also is looking at using the authorization to develop a redevelopment plan for the shuttered Ford plant in Wixom and to redevelop the site of the shuttered Silverdome, former home of the National Football League's Detroit Lions.
Every state was ensured of at least 0.9% of the national volume cap for both types of bonds under the stimulus law, but allocations above that level were based on the increases in unemployment in municipalities and counties when compared to the national unemployment increase during 2008.
Michigan received more funds than others based on a per capita comparison. Oakland and Wayne counties and Detroit were among the top 10 recipients.
Michigan will receive a total of $773 million from the $10 billion authorization of economic development bonds and $1.16 billion under the $15 billion facility bond program. Vice President Joe Biden came to Michigan on Friday to announce the state's allocation alongside Gov. Jennifer Granholm. Oakland County's authorization includes $104 million of economic development bonding and another $155 million of private-activity borrowing for facilities.
The $10 billion recovery zone economic development bonds are like the Build America Bond program, which permits municipal issuers to sell taxable debt and receive a federal interest subsidy, although the new program will pay a 45% subsidy for qualified projects in designated recovery zones, up from the 35% subsidy for BABs.
The $15 billion recovery zone facility bonds provide the issuer with authority to grant a tax exemption to private-activity bonds to support qualified projects in recovery zones that meet standards tied to significant poverty, unemployment, home foreclosures, or general distress. The deadline for issuance is January 2011.