|
Recovery Zone Facility Bonds |
|
Recovery Zone Facility Bonds
|
|
|
Recovery Zone Facility Bonds are a new type of private activity bond created by the American Recovery and Reinvestment Act, passed by Congress in February 2009. They may be used to finance certain kinds of business development activities in areas of significant economic distress.
Q. Who is eligible to issue Recovery Zone Facility Bonds (RZ-FBs), and what can they be used for?
A. Under this program, counties and Sioux Falls are eligible to issue taxable bonds called “Recovery Zone Facility Bonds” to finance certain kinds of facilities in Recovery Zones. In effect, this program temporarily expands the definition of “Exempt Facility Bond” to include any bond issued for certain kinds of facilities within a Recovery Zone. Because Exempt Facility Bonds are considered private activities (i.e. they benefit businesses or individuals), they are not tax-exempt unless they are issued under the traditional state Bond Cap Allocation Program, or under this RZ-FB program.
A Recovery Zone is defined as an area having significant poverty, unemployment, home foreclosures, or general distress; or an area that has already been federally designated as an Empowerment Zone or Renewal Community. In addition to the federally designated areas, the county or municipality may designate areas within their jurisdiction as Recovery Zones.
RZ-FBs may be used by taxpayers engaged in certain types of businesses to finance the purchase of depreciable property within a Recovery Zone, provided the taxpayer acquires the property after the area has received the Recovery Zone designation. Some kinds of property specifically do not qualify under this program, including land, rental property, and property used for certain kinds of activities such as golf courses, country clubs, and several others listed in federal tax regulations.
Important Note: This program allocates the authority to issue tax-exempt bonds to bond investors in order to finance Recovery Zone facilities; it is not a direct funding program that allocates public dollars.
Q. How much bond issuing authority is available?
A. A total of $135 million in bond issuing authority is available statewide. It will be divided among the counties based on the rate of employment declines in each county during the period from December 2007 and December 2008.
Q. Where, how and when do I apply for an allocation of RZ-FB authority?
A. If you are a business or taxpayer with a qualifying project, you will need to work through your city or county to have a bond issued to finance the project. Counties and Sioux Falls may create their own processes for projects within their jurisdictions. Bonds must be issued prior to January 1, 2011.
Q. What are the allocations?
A. The allocations are as follows:
|
Issuer
|
Recovery Zone Economic Development Bonds
|
Recovery Zone Facility Bonds
|
Combined
|
|
South Dakota - State Totals
|
90,000,000.00
|
135,000,000.00
|
225,000,000.00
|
| |
|
|
|
|
Sioux Falls city, SD
|
13,288,000.00
|
19,933,000.00
|
33,221,000.00
|
| |
-
|
|
-
|
|
Aurora County, SD
|
-
|
-
|
-
|
|
Beadle County, SD
|
-
|
-
|
-
|
|
Bennett County, SD
|
658,000.00
|
986,000.00
|
1,644,000.00
|
|
Bon Homme County, SD
|
1,122,000.00
|
1,683,000.00
|
2,805,000.00
|
|
Brookings County, SD
|
-
|
-
|
-
|
|
Brown County, SD
|
7,795,000.00
|
11,693,000.00
|
19,488,000.00
|
|
Brule County, SD
|
406,000.00
|
609,000.00
|
1,015,000.00
|
|
Buffalo County, SD
|
348,000.00
|
522,000.00
|
870,000.00
|
|
Butte County, SD
|
-
|
-
|
-
|
|
Campbell County, SD
|
-
|
-
|
-
|
|
Charles Mix County, SD
|
-
|
-
|
-
|
|
Clark County, SD
|
-
|
-
|
-
|
|
Clay County, SD
|
-
|
-
|
-
|
|
Codington County, SD
|
3,810,000.00
|
5,716,000.00
|
9,526,000.00
|
|
Corson County, SD
|
-
|
-
|
-
|
|
Custer County, SD
|
503,000.00
|
754,000.00
|
1,257,000.00
|
|
Davison County, SD
|
3,191,000.00
|
4,787,000.00
|
7,978,000.00
|
|
Day County, SD
|
-
|
-
|
-
|
|
Deuel County, SD
|
-
|
-
|
-
|
|
Dewey County, SD
|
1,064,000.00
|
1,596,000.00
|
2,660,000.00
|
|
Douglas County, SD
|
-
|
-
|
-
|
|
Edmunds County, SD
|
754,000.00
|
1,132,000.00
|
1,886,000.00
|
|
Fall River County, SD
|
2,805,000.00
|
4,207,000.00
|
7,012,000.00
|
|
Faulk County, SD
|
-
|
-
|
-
|
|
Grant County, SD
|
1,257,000.00
|
1,886,000.00
|
3,143,000.00
|
|
Gregory County, SD
|
309,000.00
|
464,000.00
|
773,000.00
|
|
Haakon County, SD
|
155,000.00
|
232,000.00
|
387,000.00
|
|
Hamlin County, SD
|
677,000.00
|
1,015,000.00
|
1,692,000.00
|
|
Hand County, SD
|
-
|
|
-
|
|
Hanson County, SD
|
561,000.00
|
841,000.00
|
1,402,000.00
|
|
Harding County, SD
|
-
|
-
|
-
|
|
Hughes County, SD
|
4,932,000.00
|
7,399,000.00
|
12,331,000.00
|
|
Hutchinson County, SD
|
812,000.00
|
1,219,000.00
|
2,031,000.00
|
|
Hyde County, SD
|
-
|
-
|
-
|
|
Jackson County, SD
|
-
|
-
|
-
|
|
Jerauld County, SD
|
-
|
-
|
-
|
|
Jones County, SD
|
116,000.00
|
174,000.00
|
290,000.00
|
|
Kingsbury County, SD
|
-
|
-
|
-
|
|
Lake County, SD
|
3,308,000.00
|
4,961,000.00
|
8,269,000.00
|
|
Lawrence County, SD
|
1,547,000.00
|
2,321,000.00
|
3,868,000.00
|
|
Lincoln County, SD - Residual
|
2,495,000.00
|
3,743,000.00
|
6,238,000.00
|
|
Lyman County, SD
|
-
|
-
|
-
|
|
McCook County, SD
|
426,000.00
|
638,000.00
|
1,064,000.00
|
|
McPherson County, SD
|
464,000.00
|
696,000.00
|
1,160,000.00
|
|
Marshall County, SD
|
-
|
-
|
-
|
|
Meade County, SD
|
1,818,000.00
|
2,727,000.00
|
4,545,000.00
|
|
Mellette County, SD
|
-
|
-
|
-
|
|
Miner County, SD
|
-
|
-
|
-
|
|
Minnehaha County, SD - Residual
|
2,785,000.00
|
4,178,000.00
|
6,963,000.00
|
|
Moody County, SD
|
-
|
-
|
-
|
|
Pennington County, SD
|
7,930,000.00
|
11,896,000.00
|
19,826,000.00
|
|
Perkins County, SD
|
503,000.00
|
754,000.00
|
1,257,000.00
|
|
Potter County, SD
|
-
|
-
|
-
|
|
Roberts County, SD
|
2,631,000.00
|
3,946,000.00
|
6,577,000.00
|
|
Sanborn County, SD
|
716,000.00
|
1,074,000.00
|
1,790,000.00
|
|
Shannon County, SD
|
3,965,000.00
|
5,948,000.00
|
9,913,000.00
|
|
Spink County, SD
|
1,799,000.00
|
2,698,000.00
|
4,497,000.00
|
|
Stanley County, SD
|
928,000.00
|
1,393,000.00
|
2,321,000.00
|
|
Sully County, SD
|
-
|
-
|
-
|
|
Todd County, SD
|
1,451,000.00
|
2,176,000.00
|
3,627,000.00
|
|
Tripp County, SD
|
1,006,000.00
|
1,509,000.00
|
2,515,000.00
|
|
Turner County, SD
|
658,000.00
|
986,000.00
|
1,644,000.00
|
|
Union County, SD
|
3,211,000.00
|
4,816,000.00
|
8,027,000.00
|
|
Walworth County, SD
|
1,780,000.00
|
2,669,000.00
|
4,449,000.00
|
|
Yankton County, SD
|
5,648,000.00
|
8,472,000.00
|
14,120,000.00
|
|
Ziebach County, SD
|
368,000.00
|
551,000.00
|
919,000.00
|
| |
90,000,000.00
|
135,000,000.00
|
|
| |
|
|
|
| |
|
|
|
A. Each County will be required to track projects and monitor bond issuances to ensure that it and the state do not exceed their total allowable amount of bond issuing authority.
Q. Are there any other rules or obligations I need to know about?
A. Specific federal tax regulations apply to projects financed under this program. Bond issuers will need the advice of qualified bond counsel and tax counsel in order to ensure the project and the bond issuance are in compliance with all applicable federal bond and tax regulations.
|
If a county intends to waive its Recovery Zone Economic Development Bond or Recovery Zone Facility Bond allocation, it must do so with a formal action, a motion, and execution of the waiver for book keeping purposes. The following are examples of the same.
Motion to waive the ______________________ County’s volume cap allocation for recovery zone bonds pursuant to 26 USCA § 1400U-1(a)(3)(A) in the following amounts:
|
ALLOCATION TYPE
|
ALLOCATION
|
AMOUNT WAIVED
|
|
Recovery Zone Economic Development Bonds
|
|
|
|
Recovery Zone Facility Bonds
|
|
|
WAIVER OF VOLUME CAP ALLOCATION FOR RECOVERY ZONE BONDS
As per a motion passed _____________, 2009, ______________________, South Dakota does hereby pursuant to 26 USCA § 1400U-1(a)(3)(A) and Internal Revenue Service Notice 2009-50 waive the following allocations:
|
ALLOCATION TYPE
|
ALLOCATION
|
AMOUNT WAIVED
|
|
Recovery Zone Economic Development Bonds
|
|
|
|
Recovery Zone Facility Bonds
|
|
|
___________________________
Chairman
ATTEST:
__________________________
County Auditor
Jason Dilges
Commissioner
Bureau of Finance and Management
500 East Capital Avenue
Capital Building
Pierre, SD 57501-5070 |
|
|
Qualified School Construction Bond |
|
What is a Qualified School Construction Bond?
Internal Revenue Code Section 54F(a) defines a “qualified school construction bond” to mean any bond issued as part of an issue if –
(1) 100 percent of the available project proceeds of such issue are to be used for the construction, rehabilitation, or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed with part of the proceeds of such issue,
(2) the bond is issued by a State or local government within the jurisdiction of which such school is located, and
(3) the issuer designates such bond for purposes of this section.
|
|
Qualified Energy Conservation Bond |
|
What is a Qualified Energy Conservation Bonds?
Internal Revenue Code Section 54D(a) defines a “qualified energy conservation bond” to mean any bond issued as part of an issue if –
(1) 100 percent of the available project proceeds of such issue are to be used for one or more qualified conservation purposes,
(2) the bond is issued by a State or local government, and
(3) the issuer designates such bond for purposes of this section.
Section 54D(f) defines the term “qualified conservation purpose” to mean any of the following:
(A) Capital expenditures incurred for purposes of (i) reducing energy consumption in publicly-owned buildings by at least 20 percent, (ii)implementing green community programs (including the use of loans,grants, or other repayment mechanisms to implement such programs),(iii) rural development involving the production of electricity from renewable energy resources, or (iv) any qualified facility (as determined under section 45(d) without regard to paragraphs (8) and (10) thereof and without regard to any placed in service date).
(B) Expenditures with respect to research facilities, and research grants, to support research in (i) development of cellulosic ethanol or other nonfossil fuels, (ii) technologies for the capture and sequestration of carbon dioxide produced through the use of fossil fuels, (iii) increasing the efficiency of existing technologies for producing nonfossil fuels, (iv) automobile battery technologies and other technologies to reduce fossil fuel consumption in transportation, or (v) technologies to reduce energy use in buildings.
(C) Mass commuting facilities and related facilities that reduce consumption of energy, including expenditures to reduce pollution from vehicles used for mass commuting.
(D) Demonstration projects designed to promote the commercialization of (i) green building technology, (ii) conversion of agricultural waste for use in the production of fuel or otherwise, (iii) advanced battery manufacturing technologies, (iv) technologies to reduce peak use of electricity, or (v) technologies for the capture and sequestration of carbon dioxide emitted from combusting fossil fuels in order to produce electricity.
(E) Public education campaigns to promote energy efficiency.
|
|
|
Davis-Bacon Labor Standards Provisions
Pursuant to the American Recovery and Reinvestment Act, Division B, section 1601, Davis-Bacon labor standards must be applied to projects financed with the proceeds of the following tax-favored bonds:
-
Any new clean renewable energy bond (as defined in section 54C of the Internal Revenue Code of 1986) issued after February 17, 2009,
-
Any qualified energy conservation bond (as defined in section 54D of the Internal Revenue Code of 1986) issued after February 17, 2009,
-
Any qualified zone academy bond (as defined in section 54E of the Internal Revenue Code of 1986) issued after February 17, 2009,
-
Any qualified school construction bond (as defined in section 54F of the Internal Revenue Code of 1986), and
-
Any recovery zone economic development bond (as defined in section 1400U–2 of the Internal Revenue Code of 1986).
The Davis-Bacon contract clauses stated in 29 CFR 5.5(a)(1) through (10) must be incorporated into covered contracts for construction, alteration, or repair work. Additional information regarding the application of Davis-Bacon labor standards is available at the U.S. Department of Labor Wage and Hour Division website at www.dol.gov/esa/whd/recovery/
|
|
Recovery Zone Economic Development Bonds |
|
Recovery Zone Economic DevelopmentBonds
|
|
|
Recovery Zone Economic Development Bonds are a new type of taxable bond created by the American Recovery and Reinvestment Act, passed by Congress in February 2009. They may be used to finance certain kinds of business development activities in areas of significant economic distress.
Q. Who is eligible to issue Recovery Zone Economic Development Bonds (RZ-EDBs), and what can they be used for?
A. Under this program, South Dakota Counties and Sioux Falls are eligible to issue a new type of tax credit bond called a “Recovery Zone Economic Development Bond” to finance economic activities in a Recovery Zone. A Recovery Zone is defined as an area having significant poverty, unemployment, home foreclosures, or general distress; or an area that has already been federally designated as an Empowerment Zone or Renewal Community. In addition to the federally designated areas, a county or municipality may designate areas within their jurisdiction as Recovery Zones.
Economic development activities qualified under this program include:
- Capital expenditures paid or incurred for property in Recovery Zones.
- Expenditures for public infrastructure and construction of public facilities.
- Expenditures for job training and educational programs.
Private activities, defined as those in which a substantial portion of the bond or tax credit proceeds benefit a private business or individual, may not be financed with this program.
Important Note: This program allocates the authority to issue bonds and sell tax credits to bond and tax credit investors in order to finance economic development activities; it is not a direct funding program that allocates public dollars.
Q. How much bond issuing authority is available?
A. A total of $90 million in bond issuing authority is available statewide. It will be divided among the counties based on the rate of employment declines in each county during the period from December 2007 and December 2008.
Q. Where, how and when do I apply for an allocation of RZ-FB authority?
A. If you are a business or taxpayer with a qualifying project, you will need to work through your city or county to have a bond issued to finance the project. Counties and Sioux Falls may create their own processes for projects within their jurisdictions. Bonds must be issued prior to January 1, 2011.
Q. What are the allocations?
A. The allocations are as follows:
|
Issuer
|
Recovery Zone Economic Development Bonds
|
Recovery Zone Facility Bonds
|
Combined
|
|
South Dakota - State Totals
|
90,000,000.00
|
135,000,000.00
|
225,000,000.00
|
| |
|
|
|
|
Sioux Falls city, SD
|
13,288,000.00
|
19,933,000.00
|
33,221,000.00
|
| |
-
|
|
-
|
|
Aurora County, SD
|
-
|
-
|
-
|
|
Beadle County, SD
|
-
|
-
|
-
|
|
Bennett County, SD
|
658,000.00
|
986,000.00
|
1,644,000.00
|
|
Bon Homme County, SD
|
1,122,000.00
|
1,683,000.00
|
2,805,000.00
|
|
Brookings County, SD
|
-
|
-
|
-
|
|
Brown County, SD
|
7,795,000.00
|
11,693,000.00
|
19,488,000.00
|
|
Brule County, SD
|
406,000.00
|
609,000.00
|
1,015,000.00
|
|
Buffalo County, SD
|
348,000.00
|
522,000.00
|
870,000.00
|
|
Butte County, SD
|
-
|
-
|
-
|
|
Campbell County, SD
|
-
|
-
|
-
|
|
Charles Mix County, SD
|
-
|
-
|
-
|
|
Clark County, SD
|
-
|
-
|
-
|
|
Clay County, SD
|
-
|
-
|
-
|
|
Codington County, SD
|
3,810,000.00
|
5,716,000.00
|
9,526,000.00
|
|
Corson County, SD
|
-
|
-
|
-
|
|
Custer County, SD
|
503,000.00
|
754,000.00
|
1,257,000.00
|
|
Davison County, SD
|
3,191,000.00
|
4,787,000.00
|
7,978,000.00
|
|
Day County, SD
|
-
|
-
|
-
|
|
Deuel County, SD
|
-
|
-
|
-
|
|
Dewey County, SD
|
1,064,000.00
|
1,596,000.00
|
2,660,000.00
|
|
Douglas County, SD
|
-
|
-
|
-
|
|
Edmunds County, SD
|
754,000.00
|
1,132,000.00
|
1,886,000.00
|
|
Fall River County, SD
|
2,805,000.00
|
4,207,000.00
|
7,012,000.00
|
|
Faulk County, SD
|
-
|
-
|
-
|
|
Grant County, SD
|
1,257,000.00
|
1,886,000.00
|
3,143,000.00
|
|
Gregory County, SD
|
309,000.00
|
464,000.00
|
773,000.00
|
|
Haakon County, SD
|
155,000.00
|
232,000.00
|
387,000.00
|
|
Hamlin County, SD
|
677,000.00
|
1,015,000.00
|
1,692,000.00
|
|
Hand County, SD
|
-
|
|
-
|
|
Hanson County, SD
|
561,000.00
|
841,000.00
|
1,402,000.00
|
|
Harding County, SD
|
-
|
-
|
-
|
|
Hughes County, SD
|
4,932,000.00
|
7,399,000.00
|
12,331,000.00
|
|
Hutchinson County, SD
|
812,000.00
|
1,219,000.00
|
2,031,000.00
|
|
Hyde County, SD
|
-
|
-
|
-
|
|
Jackson County, SD
|
-
|
-
|
-
|
|
Jerauld County, SD
|
-
|
-
|
-
|
|
Jones County, SD
|
116,000.00
|
174,000.00
|
290,000.00
|
|
Kingsbury County, SD
|
-
|
-
|
-
|
|
Lake County, SD
|
3,308,000.00
|
4,961,000.00
|
8,269,000.00
|
|
Lawrence County, SD
|
1,547,000.00
|
2,321,000.00
|
3,868,000.00
|
|
Lincoln County, SD - Residual
|
2,495,000.00
|
3,743,000.00
|
6,238,000.00
|
|
Lyman County, SD
|
-
|
-
|
-
|
|
McCook County, SD
|
426,000.00
|
638,000.00
|
1,064,000.00
|
|
McPherson County, SD
|
464,000.00
|
696,000.00
|
1,160,000.00
|
|
Marshall County, SD
|
-
|
-
|
-
|
|
Meade County, SD
|
1,818,000.00
|
2,727,000.00
|
4,545,000.00
|
|
Mellette County, SD
|
-
|
-
|
-
|
|
Miner County, SD
|
-
|
-
|
-
|
|
Minnehaha County, SD - Residual
|
2,785,000.00
|
4,178,000.00
|
6,963,000.00
|
|
Moody County, SD
|
-
|
-
|
-
|
|
Pennington County, SD
|
7,930,000.00
|
11,896,000.00
|
19,826,000.00
|
|
Perkins County, SD
|
503,000.00
|
754,000.00
|
1,257,000.00
|
|
Potter County, SD
|
-
|
-
|
-
|
|
Roberts County, SD
|
2,631,000.00
|
3,946,000.00
|
6,577,000.00
|
|
Sanborn County, SD
|
716,000.00
|
1,074,000.00
|
1,790,000.00
|
|
Shannon County, SD
|
3,965,000.00
|
5,948,000.00
|
9,913,000.00
|
|
Spink County, SD
|
1,799,000.00
|
2,698,000.00
|
4,497,000.00
|
|
Stanley County, SD
|
928,000.00
|
1,393,000.00
|
2,321,000.00
|
|
Sully County, SD
|
-
|
-
|
-
|
|
Todd County, SD
|
1,451,000.00
|
2,176,000.00
|
3,627,000.00
|
|
Tripp County, SD
|
1,006,000.00
|
1,509,000.00
|
2,515,000.00
|
|
Turner County, SD
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658,000.00
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986,000.00
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1,644,000.00
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Union County, SD
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3,211,000.00
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4,816,000.00
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8,027,000.00
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Walworth County, SD
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1,780,000.00
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2,669,000.00
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4,449,000.00
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Yankton County, SD
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5,648,000.00
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8,472,000.00
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14,120,000.00
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Ziebach County, SD
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368,000.00
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551,000.00
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919,000.00
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90,000,000.00
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135,000,000.00
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A. Each County will be required to track projects and monitor bond issuances to ensure that it and the state do not exceed their total allowable amount of bond issuing authority.
Q. Are there any other rules or obligations I need to know about?
A. Specific federal tax regulations apply to projects financed under this program. Bond issuers will need the advice of qualified bond counsel and tax counsel in order to ensure the project and the bond issuance are in compliance with all applicable federal bond and tax regulations.
Federal Davis-Bacon prevailing wage rules apply to projects financed with RZ-EDBs.
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Q. What happens if the County does not use or waive their allocation?
A. On January 1, 2011, it is lost.
Q. Can a County waive there allocation?
A. If a county intends to waive its Recovery Zone Economic Development Bond or Recovery Zone Facility Bond allocation, it must do so with a formal action, a motion, and execution of the waiver for book keeping purposes. The following are examples of the same.
Motion to waive the ______________________ County’s volume cap allocation for recovery zone bonds pursuant to 26 USCA § 1400U-1(a)(3)(A) in the following amounts:
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ALLOCATION TYPE
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ALLOCATION
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AMOUNT WAIVED
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Recovery Zone Economic Development Bonds
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Recovery Zone Facility Bonds
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WAIVER OF VOLUME CAP ALLOCATION FOR RECOVERY ZONE BONDS
As per a motion passed _____________, 2009, ______________________, South Dakota does hereby pursuant to 26 USCA § 1400U-1(a)(3)(A) and Internal Revenue Service Notice 2009-50 waive the following allocations:
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ALLOCATION TYPE
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ALLOCATION
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AMOUNT WAIVED
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Recovery Zone Economic Development Bonds
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Recovery Zone Facility Bonds
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___________________________
Chairman
ATTEST:
__________________________
County Auditor
Jason Dilges
Commissioner
Bureau of Finance and Management
500 East Capital Avenue
Capital Building
Pierre, SD 57501-5070
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