Rep. Pete Hoekstra has asked the Treasury Department whether a manufacturer in his western Michigan district can relocate operations from abroad to the United States and take advantage of the recovery zone bond program.
In a one-page letter sent to the Treasury on June 16, the Republican said a manufacturer in his district is considering relocating some of its overseas operations if it can make use of of the recovery zone program, which was created as part of the American Recovery and Reinvestment Act.
Although Hoekstra did not identify the manufacturer, he said it is a "significant employer" in his district.
"I hope that Treasury will work with the manufacturer during this difficult period," he wrote.
The program permits states, counties, and large municipalities to issue two new types of bonds to finance economic development projects in areas hit particularly hard by unemployment - $10 billion of recovery zone economic development bonds and $15 billion of recovery zone facility bonds.
Recovery zone economic development bonds, or RZEDBs, are like the direct-pay Build America Bond program. That program permits municipal issuers to sell taxable debt and receive a cash payment from the federal government equal to 35% of their interest costs.
RZEDBs differ in that they provide issuers with payments equal to 45% of interest costs and must be used to finance "qualified economic development purposes" within designated recovery zones. Recovery zone facility bonds, or RZFBs, function similarly to exempt facility private-activity bonds, but must be used to finance "recovery zone property" in recovery zones.
According to the Treasury notice detailing the allocations, Hoekstra's district is slated to receive at least $47.6 million of RZEDBs and $71.7 million of RZFBs.
Meanwhile, Treasury Secretary Timothy Geithner told Rep. Mike Doyle, D-Pa., that he will take into account Doyle's criticisms of how qualified school construction bonds have been allocated when the next $11 billion are allocated for 2010. Geithner said in a one-page letter dated June 22 that he would "consider your recommendations carefully as we move forward."
The QSCB program, created by the federal stimulus package in February, authorizes $22 billion of tax-credit bonds in 2009 and 2010 for states and localities to finance the construction, rehabilitation, or repair of public schools.
ARRA requires the Treasury to allocate 40% of the authorization directly to the 100 largest school districts in the country. But when the department provided allocations for the first $11 billion of the program in April, it treated the District of Columbia, Hawaii, and Puerto Rico as large school districts rather than as states, a move Doyle says knocked the Pittsburgh School District that he represents out of the running for a direct allocation.
