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Facility Bonds RFP

Download RFP for Projects Seeking Recovery Zone Facility Bond Financing

Federal Stimulus Act. Under the American Recovery and Reinvestment Act of 2009 (“ARRA”), signed into law on February 17, 2009, the Federal government has created two new categories of bonds designed to be used in “recovery zones” – (1) Recovery Zone Economic Development Bonds, and (2) Recovery Zone Facility Bonds. The U.S. Department of Treasury (the “Treasury”) and the Internal Revenue Service (the “IRS”) issued guidelines regarding the ARRA provisions affecting these types of bonds on April 3, 2009 in Notice 2009-26.

ARRA imposed volume cap limitations on both of these types of bonds. In determining the allocation of funding to cities and counties throughout the United States, the Federal Government used a formula based on increases in a jurisdiction’s unemployment rate. Over $1.2 billion in volume cap was allocated to cities and counties for the Recovery Zone Facility Bond Program and over $800 million for the Recovery Zone Economic Development Bond Program. Cattaraugus County has been allocated the following shares of the volume cap for these types of bonds:

Recovery Zone Facility Bonds

Private activity bonds. Recovery Zone Facility Bonds (“RZFBs”) are a type of tax-exempt bond that may be used by private businesses or non-profits in designated “recovery zones” to finance a broad range of depreciable capital projects. Because RZFBs are issued to benefit a private business, they are treated under the Code as “private activity bonds” (as opposed to the Recovery Zone Economic Development Bonds described above, which are bonds issued for a general governmental purpose, and are treated under the Code as “governmental bonds”). Although as a general rule interest on “private activity bonds” is not exempt from federal income tax, ARRA provides that RZFBs are classified as “exempt facility bonds” for Federal income tax purposes, and accordingly interest on RZFBs is exempt from federal income tax. The RZFB program would thus allow businesses in Cattaraugus County to access low-interest rate, tax-exempt revenue bonds.

Purposes for which RZFBs may be issued. Qualifying businesses include most trades or businesses, except for residential rental facilities and some prohibited uses such as golf courses, massage parlors, gambling facilities, liquor stores, etc. Land acquisition cannot be financed through these bonds.

Outside date for issuance. All RZFBs must be issued by December 31, 2010.

Volume cap. There is a volume cap on RZFBs, and the local allocation to Cattaraugus County is $3,507,000. The State can reallocate any unused RZFB volume cap, but, as indicated above, all RZFBs must be issued by December 31, 2010.

Cattaraugus County Industrial Development Agency
P.O. Box 1749, 3 East Washington Street
Ellicottville, New York 14731
Phone: (716) 699-2005
Fax: (716) 699-2942
E-Mail: Info@cattcoida.com