Massachusetts Gov. Deval Patrick last week signed an executive order to implement the state’s $556.6 million recovery zone bond program, with Boston and local governments in Middlesex County receiving the largest distribution of bonds.
The program uses recovery zone bonds that federal lawmakers created through the American Recovery and Reinvestment Act to help spark economic growth and development. Congress granted Massachusetts $556.6 million of such bonding capacity.
The state will now divide the allocation between $334 million of tax-exempt recovery zone facility bonds to help finance capital projects for private entities where such development creates new employment. The RZF bonds are similar to private-activity bonds.
Another $222.6 million of taxable recovery zone economic development bonds will help support public infrastructure needs in areas designated as recovery zones, or areas in need of economic renewal. The taxable RZED bonds offer issuers a 45% interest cost subsidy from the federal government.
“Recovery zone bonds are a significant resource to the commonwealth to stimulate economic activity, increase employment opportunities, and mitigate the harmful effects of the national recession in areas with significant poverty, unemployment, rate of home foreclosures, or general distress,” Patrick said in the executive order.
The Massachusetts Development Finance Agency will issue the RZF bonds while local governments and municipalities will issue the RZED debt. Criteria was based on counties and municipalities with populations of 100,000 or more and based on employment declines in 2008.
Cities and towns in Middlesex County, located in the northeastern part of the state, received the largest allocation, $60.7 million of RZF bonds and $40.4 million of RZED bonds.
The state will administer the debt within the county, as the entity does not have administrative powers since the legislature abolished the county government in 1998.
There are six other non-active counties — Berkshire, Essex, Franklin, Hampden, Hampshire, and Worcester — which also received RZB allocations and are located in the northern and western parts of Massachusetts.
The southeastern active counties include Barnstable, Bristol, Dukes, Nantucket, Norfolk, Plymouth, and Suffolk, which includes Boston. Of those locations, cities and towns in Bristol received the largest allocation, $40.2 million of RZF bonds and $26.8 billion of RZED bonds.
The seven active counties may opt to have the state administrator the program or allocate bond capacity within their counties themselves.
The executive order allows for $44.9 million for Boston, with $26.9 million of RZF bonds and $17.9 million of RZED bonds.
“The Executive Office of Housing and Economic Development, in concert with the Executive Office for Administration and Finance will be responsible for the allocation of the bonds to all non-active and participating counties,” according to a press release. “Priority for economic development bonds will be given to municipal projects that are likely to result in private investment.”