January 6, 2010 > Fremont's Slice of Federal Stimulus Funds
Fremont's Slice of Federal Stimulus Funds
By Steven Wyant
The City of Fremont received over $7.4 million in combined allocations of "Recovery Zone Bonds" as part of the American Recovery and Reinvestment Act of 2009 (ARRA). Bonds are available for both the city and for private businesses to spur job growth and economic stimulation.
Forty percent ($2,970,000) of the allocation is available for the city to use for certain infrastructure, job training and education programs. Called "Recovery Zone Economic Development Bonds" (RZEDBs), they feature a 45% interest rate reimbursement by the Federal Government. The remaining sixty percent ($4,456,000) is available for projects from private businesses, called "Recovery Zone Facility Bonds" (RZFBs). However, time is of the essence. Businesses that want a slice of the pie need to submit proposals to the city no later than January 15, 2010.
RZFBs are a new type of tax-exempt private activity bond that dramatically broaden financing opportunities for corporate, for-profit borrowers with capital infrastructure projects that traditionally have not qualified for tax-exempt financing. According to Fremont's Office of Economic Development, eligible projects include:
* Industrial facilities and equipment for manufacturers, assemblers, processors, warehouses, and distributors
* Hotels, convention centers, and entertainment
* Biomedical, research, and development facilities
* Environmental or energy efficiency companies
* Commercial retail development (e.g., shopping centers, office buildings, mixed-use, parking or other non-manufacturing projects)
Prohibited uses include:
* Land purchases
* Residential rental property
* "Sin" uses (e.g., gambling, liquor stores, golf courses, etc.)
The bonds must be issued no later than December 31, 2010, and businesses will have up to three years to spend the money after issuance.
Angela Tsui, Fremont's Economic Development Coordinator, stated that businesses interested in the program should fill out an application recently made available on the city's website, and provide "a project description, if they have some funding already, sufficient cash flow to cover the debt service, how many existing employees do they have, will this project retain those employees, and if the project will help generate new jobs."
To get the word out, she said that a couple of weeks ago the city did a mailing describing the program to approximately 100 larger development and more industrial business that may be ready to expand, and may need to purchase equipment. As of December 30th, she indicated that no applications had been received, but about a dozen calls had come in from businesses inquiring about the program.
Recovery Zone Bonds were created on February 17, 2009 when President Obama signed the ARRA. The purpose is to aid the revitalization of counties and cities across the nation. The total amount made available nationwide is $25 billion. California's allocation is just over $2 billion. According to the IRS, any city having a population greater than 100,000 or county that experienced a decline in total employment between 2007 and 2008 based on the U.S. Department of Labor Statistics data is eligible for an allocation. In Alameda County, Berkeley, Fremont, Hayward and Oakland all received allocations. However, the U.S. Treasury's website indicated that no city in Santa Clara County received an allocation.
According to Tsui, the city was first required to declare by formal resolution areas of the city as "Recovery Zones" before it could use its allocation, which the city council approved at the December 15th council meeting. Stated in an executive summary, "the citywide impact of the national recession on unemployment rates, declining sales tax revenue, high percentage of commercial building vacancies, rising home foreclosures, and the resulting overall distress to the local economy, the entire geographic region of the City of Fremont can be designated as a Recovery Zone". Tsui said "We felt that it would be best to have the entire geographic city limits area a recovery zone in order to best leverage the money for any business located in Fremont".
After the January 15th deadline, the city will have about two weeks to determine those projects that are eligible to receive the funding, and submit those projects to the California Debt Limit Allocation Committee (CDLAC), which has the authority to oversee the program. Once the projects are approved and funded, the city and the CDLAC are required to monitor projects' milestones and ensure that funds are utilized properly. As part of the ARRA, the federal government also set up a website with data and interactive maps related to Recovery Act spending. Available at www.Recovery.org, it's designed to let anyone "Track the Money".