Federal Recovery Zone Bonds

The Recovery Act earmarks $10 billion of Recovery Zone Economic Development Bonds (RZEDBs). These are governmental bonds to be used for governmental purposes that will allow the County or a large municipality to borrow at a lower cost than traditional tax-exempt financing.

Guidelines & Restrictions

• RZEDBs may be issued for purposes of promoting development or other economic activity including:
  • Public infrastructure
  • Construction of job training, educational and public facilities
• Development must be in an area that has been designated by the County or a large municipality as a “recovery zone”
• RZEDBs are taxable bonds

The Recovery Act earmarks $15 billion of Recovery Zone Facility Bonds (RZFBs). RZFBs permit counties or large municipalities to provide tax-exempt financing for projects that historically would not qualify:

• Large manufacturing plants
• Distribution centers
• Hotels
• Research parks

Guidelines & Restrictions

• RZFBs are private activity bonds and are classified as "exempt facility bonds" for tax purposes
• RZFBs may be issued for any depreciable property that meets the following:
  • Property was acquired after the date of designation of a "recovery zone"
  • The original use of which occurs in the recovery zone
  • Substantially all of the use of the property is in the active conduct of a "qualified business"