Recent Publications
June 24, 2009
Kentucky Recovery Zone Bond Allocations
William (Bill)
L.
Skees, Jr.
On Friday, June 12, 2009, the United States Treasury announced the Kentucky county-by-county allocations for Recovery Zone Economic Development Bonds and Recovery Zone Facility Bonds.
Recovery Zone Economic Development Bonds are bonds designed for local government projects in which the county (or other political subdivision in the county) may issue taxable bonds and receive a 45% subsidy of their interest costs from the federal government. This means for every dollar spent on interest costs, the United States government will pay the county forty-five cents. These bonds have a limited dollar amount of $10 billion throughout the United States and that amount has been allocated on a state-by-state and county-by-county basis by the United States Treasury. This 45% subsidy will result in major interest cost savings for local governments.
Recovery Zone Facility Bonds are tax-exempt bonds designed for private industry and greatly expand the uses for which bond proceeds may be spent. Currently, tax-exempt bonds for private industry are severely limited to things such as manufacturing solid waste disposal, etc. Recovery Zone Facility Bonds will permit private users, utilizing its city or county as a conduit issuer, to issue bonds for any capital projects other than residential rental property and certain uses that are always excluded such as gambling facilities, sun tan parlors, etc. This means, for example, if the local government so chooses it could award these bonds to commercial office buildings, restaurants, or other general commercial uses. Like Recovery Zone Economic Development Bonds, Recovery Zone Facility Bonds have a $15 billion limit, again, allocated on a state-by-state and county-by-county basis.
The amount of bonds that may be issued by each community will be limited by the amount of each county's allocation as it appears on the attached list of counties. Recovery Zone Economic Development Bonds and Recovery Zone Facility Bonds must be issued prior to December 31, 2010. It is not yet clear whether or not the Commonwealth of Kentucky will have any input in designating "Recovery Zones" in each allocated area or whether it will determine certain uses for each allocated area. The Kentucky Private Activity Bond Allocation Committee will be meeting on June 30, 2009 to consider those issues. We will keep you posted!
Click here to download the list of county allocations (PDF).
For more information as to how this program will operate, please contact
William L. Skees, 502-568-0301, or any other attorney in Frost Brown Todd's
Public Finance and Government Practice Group.