TITLE
Recommendation to receive and file a report on the Recovery Zone and support efforts by the Redevelopment Agency to explore the use of Recovery Zone Economic Development Bonds for public bond financing related to various public improvement projects in all Redevelopment Project Areas. (Citywide)
DISCUSSION
As part of the American Recovery and Reinvestment Act (ARRA), Congress added new provisions to the Internal Revenue Code (Code) for the establishment of Recovery Zones that enable state and local governments to provide additional capacity for public and private bond financing. On November 3, 2009, the City Council held a public hearing and adopted a Resolution designating the City of Long Beach Recovery Zone (Zone) per applicable sections of the Code. The Long Beach Bond Finance Authority took a similar action on December 3, 2009, and the Redevelopment Agency designated the Recovery Zone on December 7, 2009.
Recovery Zone Bonds consist of two categories: Economic Development (RZEDB) and Facility Bonds (RZFB). Economic Development Bonds are taxable governmental bonds that can be utilized for the promotion of economic development in areas such as construction of infrastructure, public facilities and various other economic development purposes. The City’s allocation of RZEDB is $22,235,000. RZFBs are tax-exempt, private activity bonds that allow issuers to provide tax-exempt financing for private business development and improvement projects. The City’s allocation of RZFB is $33,353,000. The ability to take advantage of these debt financing opportunities is ultimately dependent upon the existence of a revenue stream to support the related debt service payments once the debt is issued. In addition, qualified projects for both RZEDBs and RZFBs must be “shovel ready”, have entitlements in place and must be prepared to issue bonds by December 2010, at which time the Zone designations are set to expire under rules promulgated by Congress.
In order to...
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