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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
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3,810,000.00
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5,716,000.00
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9,526,000.00
|
|
Corson County, SD
|
-
|
-
|
-
|
|
Custer County, SD
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503,000.00
|
754,000.00
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1,257,000.00
|
|
Davison County, SD
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3,191,000.00
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4,787,000.00
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7,978,000.00
|
|
Day County, SD
|
-
|
-
|
-
|
|
Deuel County, SD
|
-
|
-
|
-
|
|
Dewey County, SD
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1,064,000.00
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1,596,000.00
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2,660,000.00
|
|
Douglas County, SD
|
-
|
-
|
-
|
|
Edmunds County, SD
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754,000.00
|
1,132,000.00
|
1,886,000.00
|
|
Fall River County, SD
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2,805,000.00
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4,207,000.00
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7,012,000.00
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|
Faulk County, SD
|
-
|
-
|
-
|
|
Grant County, SD
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1,257,000.00
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1,886,000.00
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3,143,000.00
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Gregory County, SD
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309,000.00
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464,000.00
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773,000.00
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Haakon County, SD
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155,000.00
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232,000.00
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387,000.00
|
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Hamlin County, SD
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677,000.00
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1,015,000.00
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1,692,000.00
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Hand County, SD
|
-
|
|
-
|
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Hanson County, SD
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561,000.00
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841,000.00
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1,402,000.00
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Harding County, SD
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-
|
-
|
-
|
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Hughes County, SD
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4,932,000.00
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7,399,000.00
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12,331,000.00
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Hutchinson County, SD
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812,000.00
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1,219,000.00
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2,031,000.00
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Hyde County, SD
|
-
|
-
|
-
|
|
Jackson County, SD
|
-
|
-
|
-
|
|
Jerauld County, SD
|
-
|
-
|
-
|
|
Jones County, SD
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116,000.00
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174,000.00
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290,000.00
|
|
Kingsbury County, SD
|
-
|
-
|
-
|
|
Lake County, SD
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3,308,000.00
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4,961,000.00
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8,269,000.00
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Lawrence County, SD
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1,547,000.00
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2,321,000.00
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3,868,000.00
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|
Lincoln County, SD - Residual
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2,495,000.00
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3,743,000.00
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6,238,000.00
|
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Lyman County, SD
|
-
|
-
|
-
|
|
McCook County, SD
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426,000.00
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638,000.00
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1,064,000.00
|
|
McPherson County, SD
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464,000.00
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696,000.00
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1,160,000.00
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Marshall County, SD
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-
|
-
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-
|
|
Meade County, SD
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1,818,000.00
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2,727,000.00
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4,545,000.00
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Mellette County, SD
|
-
|
-
|
-
|
|
Miner County, SD
|
-
|
-
|
-
|
|
Minnehaha County, SD - Residual
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2,785,000.00
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4,178,000.00
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6,963,000.00
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Moody County, SD
|
-
|
-
|
-
|
|
Pennington County, SD
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7,930,000.00
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11,896,000.00
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19,826,000.00
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Perkins County, SD
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503,000.00
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754,000.00
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1,257,000.00
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Potter County, SD
|
-
|
-
|
-
|
|
Roberts County, SD
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2,631,000.00
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3,946,000.00
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6,577,000.00
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Sanborn County, SD
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716,000.00
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1,074,000.00
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1,790,000.00
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|
Shannon County, SD
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3,965,000.00
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5,948,000.00
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9,913,000.00
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Spink County, SD
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1,799,000.00
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2,698,000.00
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4,497,000.00
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Stanley County, SD
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928,000.00
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1,393,000.00
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2,321,000.00
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|
Sully County, SD
|
-
|
-
|
-
|
|
Todd County, SD
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1,451,000.00
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2,176,000.00
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3,627,000.00
|
|
Tripp County, SD
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1,006,000.00
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1,509,000.00
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2,515,000.00
|
|
Turner County, SD
|
658,000.00
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986,000.00
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1,644,000.00
|
|
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
|
|
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
|
|
Ziebach County, SD
|
368,000.00
|
551,000.00
|
919,000.00
|
| |
90,000,000.00
|
135,000,000.00
|
|
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|
|
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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.
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