The Recovery Bond allocation was split between two types of bonds: Recovery Zone Economic Development Bonds (RZEDB) and Recovery Zone Facility Bonds (RZFB). Michigan received authorization for approximately $773 million of RZEDB, out of a national allocation of $10 billion. We have also received approximately $1.16 billion of RZFB volume allocation from a national allocation of $15 billion.
RZEDBs are to be issued as taxable Build America Bonds, eligible for a 45% interest subsidy paid to the issuer. Economic development bonds are intended to allow state and local governments to finance projects such as infrastructure improvements and job-training programs.
RZFBs are private activity bonds issued on behalf of private companies. These bonds are similar to Private Activity Bonds, but have more flexibility. RZFBs allow tax-exempt financing for projects which historically would not qualify either due to type or size of project (large manufacturing plants, distribution centers, hotels, research parks, etc.). Tourism and redevelopment of Brownfields are two major areas that might be targeted for this financing.
It should be noted that this allocation authorizes the issuance of reduced interest rate bonds, it does not provide guarantees. Bonds must be marketable, meaning that an identified and secure source of repayment must be identified.
A presentation on this program is available online: http://mediasite.mihealth.org/mediasite/Viewer/?peid=a220a72d6a8e4cd693cc1fa74ca8a73a
Contact us for a list of allocations by county for the State of Michigan.