Rhode Island plans to sell $87 million of recovery zone economic development bonds this year instead of tax-exempt general obligation bonds under a bill signed last week by Gov. Donald Carcieri.

The so-called super-BABs were created under the American Recovery and Reinvestment Act of 2009 and provide a 45% federal subsidy for capital projects in areas suffering from high unemployment, foreclosures and economic distress.

The law, H. 7139, designates the entire state as a recovery zone. Rhode Island’s five counties ceded their allocations of the bonds to the state, which estimates it will save $10 million by using the RZEDBs in place of tax-exempt bonds for its annual GO deal, according to a press release.

Providence will keep its $13.9 million RZEDB allocation.

The law also established the Rhode Island Facilities Corp. as the issuer for $130.5 million of recovery zone facility bonds for new private construction or expansion projects. As with the RZEDBs, Rhode Island’s counties ceded their RZFB allocations to the state. Recovery zone facility bonds were created under ARRA as a tax-exempt private-activity bond program.

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