RZ Bonds Get One Agency

Vermont last week centralized its allocations of recovery zone facility bonds to be issued through a state authority rather than by individual counties, Gov. James Douglas announced. The federal government allocated $135 million of bonding authority under the program to eleven counties in the state.

State officials authorized the Vermont Economic Development Authority to issue the bonds after Attorney General William Sorrell said that counties did not have the authority to issue them, according a press release.

Although counties could not issue the bonds, county judges could waive their counties’ allocations which passed them to the state.

State officials secured the waivers from counties and the state’s Emergency Board, which includes the governor and the chairs of the Legislature’s four financial committee, approved the issuance of the bonds through VEDA. The plan reserved for counties half of the allocation they each received through March 2010.

It also reserved through March 2010, a $20 million allocation for the Vermont Telecommunications Authority, which was created by the state Legislature in 2007 to facilitate the development of mobile phone and Internet access infrastructure. The $47.5 million allocation that was not reserved can be used anywhere in the state as can any allocation that is unused after March.

“It is gratifying that all of the key players, from the governor and County Judges to the Legislature and VEDA have worked so cooperatively and quickly to get this initiative off the ground,” Treasurer Jeb Spaulding said in a press release. “This is one piece of the stimulus program that I am confident will spur new economic development projects around the state.”

The tax-exempt private activity bond program, created by Congress as part of the American Recovery and Reinvestment Act, allows bonds to be sold for certain construction or renovation projects in areas designated by state and local issuers as having significant poverty, unemployment, home foreclosures or economic distress. The federal government allocated $15 billion of the bonds to the states to use through the end of next year.

Another ARRA economic development bonding program, Recovery Zone Economic Development Bonds, is going through a similar reallocation in Vermont. The state’s counties were allocated $90 million of the bonds, which are taxable bonds that a municipality can issue for an array of economic development related projects in designated recovery zones.

Issuers can receive a subsidy equal to 45% of interest costs from the U.S. Treasury for the bonds. Vermont’s county judges have waived their allocations and the Legislature’s Joint Fiscal Committee will consider a plan to allow the state to use the allocation.

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