Loading...
HomeMy WebLinkAboutRecovery Zone Bonds MemoDepartment of Administrative Services Dave Kanner, County Administrator September 30, 2009 TO: Board of Commissioners FROM: Dave Kanner RE: Recovery Zone Bonds MINN 1300 NW Wall St, Suite 200, Bend, OR 97701-1960 (541) 388-6570 - Fax (541) 385-3202 www.co.deschuUts.orus As part of the America Reinvestment and Recovery Act (commonly called the federal stimulus program), Congress created two new kinds of municipal bonds intended to stimulate public infrastructure and economic development projects in 2010. These bonds are Recovery Zone Economic Development Bonds (RZEDBs) and Recovery Zone Facility Bonds (RZFBs). The RZEDBs are for projects that would qualify for tax exempt municipal bonds. These bonds are instead issued as taxable bonds with the federal government providing a subsidy of 45% of the taxable interest amount. The County has been allocated $10,795,000 in bonding authority for RZEDBs. The RZFBs can provide tax-exempt financing for projects that would otherwise have to be built with taxable bonds. The County has been allocated $16,192,000 in bonding authority for RZFBs. The County can then suballocate the bonding authority to other jurisdictions in the County. As the intent of the program is to fund construction projects in 2010, bonds must be issued by January 1, 2011. At your August 20 work session with the Bend City Council, City staff presented a request for some of this bonding capacity. The projects listed by the City would have consumed more than the total bonding authority that has been allocated to the County. The Board directed me to contact other jurisdictions to see if there were other governmental units that could make use of these bonds. I heard back from two other jurisdictions that requested a portion of the bonding capacity: Rural Fire Protection District #2 and the City of Sisters. The County, meanwhile, can use $1.4 million of the bonding capacity for RZFBs to build the secure residential treatment facility that is currently in the planning stage. The staff recommendation, shown on the attached spreadsheet, is that we provide to Sisters and RFPD #2 the allocations they have requested, keep $1.4 million for ourselves, and provide the remainder of the bonding authority to the City of Bend. Enhancing the Lives of Citizens by Delivering Quality Services in a Cost -Effective Manner C n O E Q c a) E a) > 0 0 E co =Q D o N _ (DE 0c o Q - c E a)•— ca) _ c E a) m a. ) C ca0 _ 'in c c co Q - 4_, N c c O c o 5 co Q 17) c a) c 2 m E 4--, lQ N a) }' I— W L0 O U) CO O (O CO O (O I` N O O 11') N— N N CO Fire District #2 4E' a) E 0. 0 a) > a) a) a) a) m O c a) E 0 0 T) > a) a) 0) E a) 0. c CO a) a) O O O a) 0 I— • -a LL -t o W L- W •Q O O O O O O O N O O) Nil N- , ol N 609 > c D 0 0 -0 c c a) a) ▪ m O 0 m ❑ 0 710 WALL STREET P.O. BOX 1458 BEND, OR 97709 [541] 388-5515 TEL [541] 388-5519 FAX www.ci.bend.or.us KATHIE ECKMAN Mayor MARK CAPELL Mayor Pro Tem JIM CLINTON City Councilor JODIE BARRAM City Councilor JEFF EAGER City Councilor TOM GREENE City Councilor ORAN TEATER City Councilor ERIC KING City Manager SONIA ANDREWS Finance Director SANDRA L BAXTER Police Chief LARRY HUHN Fire Chief PATRICIA STELL City Recorder August 20, 2009 County Commissioners Deschutes County 1100 NW Wall Street Bend, OR 97701 Re: Request for Recovery Zone Bond Allocations Dear County Commissioners, As you are already aware, the American Recovery and Reinvestment Act of 2009 provided volume cap allocations for Recovery Zone Bonds to the County through the State. In our recent conversations with County staff, we understand that the County currently does not have any plans to utilize these allocations and would consider sub - allocating a portion or all of its volume cap allocations to the City. The County's volume cap allocations are $10,795,000 for economic development bonds and $16,192,000 for facility bonds. We are very pleased to submit this letter as a request for sub -allocation for your consideration. The City plans to issue bonds before 2011 for expansion of the sewer facilities, construction of water facilities and accessibility improvements. Bonds may also be issued for infrastructure improvements at the Bend Municipal Airport and at Juniper Ridge. Our bond counsel and financial advisor have advised us that these projects qualify for the Recovery Zone Bonds. As you will see in the attached description of these projects, the amount of bonds the City plans to issue exceed the volume cap allocations available. However any portion of the bonds that can be issued as recovery zone bonds will provide significant benefit to the City and the citizens of Bend. Our bond counsel has also provided the attached sample resolution that the County would need to adopt to designate the County as a recovery zone. Thank you for your consideration. We look forward to working in partnership with the County. Sincerely, Eric King City Manager 693-2165 c. Marty Wynne CITY OF BEND Projects Qualifying for Recovery Zone Bonds Sewer Secondary Treatment Expansion and Sewer Interceptors and Trunk Lines The treatment expansion project will provide additional capacity to the primary and secondary treatment processes at the Sewer Treatment Plant. These processes are currently nearing capacity and must be expanded to ensure the City meets permitted treatment requirements and also to provide for future economic development and population growth. This project is estimated to cost $22.7 million over 5 years with $6 million to be incurred in 2009-10 & 2010-11. In addition to the treatment expansion, new sewer interceptors and trunk lines will be necessary to convey sewage for population growth. Included in the City's 5 year CIP is $16.8 million for interceptors, trunk lines and regional pump stations of which $11.8 million is included in the 2009-11 biennial budget. The City has budgeted to issue $14 million in bonds to finance sewer infrastructure over the 2009-11 biennium. These bonds qualify as recovery zone economic development bonds. Water Infrastructure The City's 80 year old transmission main that carries water from Bridgecreek to the Outback well site is aging and in poor condition. The City plans to construct a new transmission main within the next 2 years. In addition, EPA compliance requires treatment for Cryptosporidium to be constructed and in service by 2012. Costs of the transmission main and treatment facility are estimated to be $60 million over the next 5 years. We have included about $7 million in the 2009-11 biennial budget for these projects which will be financed with bonds. Accessibility Improvements The City plans to issue up to $3.2 million in bonds to finance accessibility improvements throughout the City. These improvements include sidewalks, curb ramps and bus stop improvements to meet accessibility standards. The bonds would qualify as recovery zone bonds. Infrastructure Development at Airport and Juniper Ridge The City plans to continue development of Juniper Ridge in the near term to provide commercial/industrial land needed for economic development. These developments include roadways, sewer and water infrastructure as well as improvements to the Hwy 97 and Cooley intersection. No bond issues are currently planned as we continue to work on studying alternatives and developing funding options. However, should events develop such that the City is in a position to issue bonds for infrastructure to service Juniper Ridge and the north end of Bend, these bonds would qualify for recovery zone bonds. The City also plans to construct a taxiway at the airport. FAA grant funds will be requested for construction of the runway and the match requirement will be financed through bonds. The match requirement is expected to be $200,000 to $300,000. Facility Development at Old Bulletin Land Site The City also desires to sell or lease the old bulletin site to a development that would provide an economic benefit to the community as a whole. The City plans to actively market the property within the next year and would like to offer a public/private partnership which may involve issuing Recovery Zone Facility Bonds to provide low cost financing to attract qualified projects. In order for the City to provide such an incentive to qualified projects, the City would need to obtain a Recovery Zone Facility Bond allocation from the County. BEFORE THE BOARD OF COUNTY COMMISSIONERS OF DESCHUTES COUNTY, OREGON A Resolution Authorizing the Creation of a Recovery Zone under the Provisions of the American Recovery and Reinvestment Act of 2009 for the Purpose of Issuing Recovery Zone Economic Development Bonds; Designation of the Local Suballocation of the Volume Cap with respect to the Recovery Zone Economic Development Bonds to the City of Bend, Oregon; and related matters. RESOLUTION NO. 2009 - WHEREAS, Section 1401 of Title I of Division B of the American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, 123 Stat. 115 (2009) ("ARRA"), added §§ 1400U- 1 through 1400U-3 to the Internal Revenue Code of 1986 (the "Code"), authorizing state and local governments to issue recovery zone economic development bonds ("Recovery Zone Economic Development Bonds"); and WHEREAS, Recovery Zone Economic Development Bonds may be issued by each state and counties and large municipalities within each state before January 1, 2011 under §§ 1400U-2 of the Code, as provided in § 1400U-1 of the Code to finance certain "qualified economic development purposes" for use within designated "recovery zones," as described; and WHEREAS, for purposes of §§ 1400U-1 and 1400U-2 of the Code, the term "recovery zone" means: (1) any area designated by the issuer as having significant poverty, unemployment, rate of home foreclosures, or general distress; (2) any area designated by the issuer as economically distressed by reason of the closure or realignment of a military installation pursuant to the Defense Base Closure and Realignment Act of 1990; and (3) any area for which a designation as an empowerment zone or renewal community is in effect as of the effective date of ARRA, which effective date is February 17, 2009; and WHEREAS, Section 1400U -2(c) of the Code defines the term "qualified economic development purpose" for purposes of § 1400U-2 of the Code to mean any expenditures for purposes of promoting development or other economic activity in a recovery zone, including (1) capital expenditures paid or incurred with respect to property located in the recovery zone, (2) expenditures for public infrastructure and construction of public facilities, and (3) expenditures for job training and educational programs; and WHEREAS, eligible issuers of Recovery Zone Economic Development Bonds include States and political subdivisions as defined for purposes of § 103 of the Code; and WHEREAS, §1400U -1(b) of the Code requires, in part, that issuers "designate" eligible recovery zones based on certain specified criteria; and WHEREAS, I.R.S. Notice 2009-50 ("Notice 2009-50") provides that for this purpose, any state, county, or large municipality that receives a volume cap allocation for Recovery Zone Economic Development Bonds may make these designations of recovery zones in any reasonable manner as it shall determine in good faith in its discretion; and WHEREAS, due to an approximate % reduction in the volume of construction activity and an approximate % reduction in over the last two years, Deschutes County, Oregon (the "County") has suffered significant general economic distress; and WHEREAS, Section 1400U-1(a)(1)(A) of the Code provides that, subject to § 1400U- 1(a)(1)(B) of the Code (relating to minimum allocations), generally, the Secretary of the Treasury (the "Secretary") shall allocate the $10 billion national volume cap for Recovery Zone Economic Development Bonds among the states in the proportion that each state's 2008 State employment decline bears to the aggregate of the 2008 State employment declines for all of the states; and WHEREAS, Section 1400U-1(a)(3)(A) of the Code provides generally that each state with respect to which an allocation is made under 1400U -1(a)(1) of the Code is required, without discretion, to reallocate such allocation among the counties and large municipalities in such state in the proportion that each county's or municipality's 2008 employment decline bears to the aggregate of the 2008 employment declines for all the counties and municipalities in such state (the "Volume Cap"); and WHEREAS, for purposes of § 1400U-1(a)(3)(A) of the Code, the term "large municipality" means a municipality with a population of more than 100,000; and WHEREAS, pursuant to Notice 2009-50, the Department of Treasury ("Treasury") and the Internal Revenue Service undertook to determine these required local suballocations of Volume Cap; and WHEREAS, pursuant to Notice 2009-50, the local suballocation of volume cap determined by the Treasury to apply to the County is $10,795,000; BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF DESCHUTES COUNTY, OREGON, as follows: Section 1. All of the recitals herein contained are true and correct and the Board of County Commissioners of the County (the "Board") so finds. Section 2. The Board hereby finds that the entire geographic area of the County is experiencing significant poverty, unemployment, rate of home foreclosures, or general distress for purposes of § 1400U -1(b) of the Code. 2 Section 3. The entire geographic area of the County is hereby designated as a recovery zone for purposes of §1400U -1(b) of the Code. Section 4. [$ J of the $10,795,000 representing the local suballocation of Volume Cap determined by the Treasury to apply to the County is hereby allocated to the City of [ 1 (the "City") for the purposes of issuing recovery zone economic development bonds (the "Bonds") to finance a [ 1 project located within the City and/or other qualifying capital projects located within the City (the "Project"). The Board hereby determines that the Bonds may be issued by the City, as the ultimate beneficiary of the Project. Section 5. The Board hereby finds that the Project will promote development or other economic activity in such recovery zone. Section 6. This Resolution shall take effect immediately upon its adoption. DATED this day of 2009. ATTEST: By: Recording Secretary 3 BOARD OF COUNTY COMMISSIONERS OF DESCHUTES COUNTY, OREGON TAMMY BANEY, Chair DENNIS R. LUKE, Vice -Chair ALAN UNGER, Commissioner DEschutEs County Rural FirE ProtEction District #2 9� m e' �z (541) 318-0459 11212 SW Simpson Ave. BEnd, OR 97702 1 Fax (541) 322-6320 1 tfay@dcrfpd2.com FA's IN pckcs September 24, 2009 Dave Kanner Deschutes County Administrator 1300 NW Wall St. Suite 200 Bend, OR 97701-1960 Dear Dave, I am receipt of your letter regarding the Recovery Zone Bonds program. This letter is to inform you of the Deschutes County Rural Fire Protection District #2 (DCRFPD #2) interests in these bonds. The DCRFPD #2 needs to replace the Tumalo Fire Station. Since the completion of the construction project five years ago that built four new stations, the DCRFPD #2 has recognized that the Tumalo station was deficient in a number of areas. It is too small and cannot accommodate mixed male and female crews. The station was originally built to accommodate one or two people, but now staffing goals have been set at three people per crew. There are also not enough bays to accommodate the needs of a typical station operated by Bend Fire & Rescue. Although the station has had some issues in the past with maintaining staffing levels, the Tumalo crew is an integral part of the operating plan for the entire district as well as the city of Bend. For the station to shoulder its share of the workload, changes need to take place. The district has recently purchased adjoining property as a first step in expanding the capabilities of the station. The district has also applied for money in the form of a grant from the Federal Emergency Management Administration. Money was provided to FEMA through legislation authorizing stimulus money specifically for construction of fire stations throughout the nation. Announcements for the FEMA funds will occur in December and are very competitive. If the funds do not become available through FEMA the district will need to consider other forms of financing. It's possible these types of bonds would be a benefit. The total cost of the station is estimated to be $2,374,335 with the districts contribution of $300,000; the financing needs are $2,074,335. Should you need detailed information on the project I can provide you with the ten page narrative of the grant request which outlines our needs and our calculations for determining those needs. We have received letters of support from Oregon Representative Greg Walden and State Legislators Judy Stigler and Gene Whisnant. I will be out of town until October 12, 2009, but would be happy to discuss this issue with you when I return. If you need to speak to someone from the district prior to October 12 please contact board chairman Al Dertinger at (541) 548-6124. Thank you for your consideration quest. Thomas W. Fay Manager DCRFPD #2 cc. Al Dertinger Page 1 of 1 Dave Kanner Subject: FW: Re: Recovery Zone Bonds Program From: Eileen Stein[mailto:estein©ci.sisters.or.us] Sent: Wednesday, September 30, 2009 9:21 AM To: Dave Kanner Cc: bgrimm©ci.sisters.or.us; 'Lon Kellstrom' Subject: RE: Re: Recovery Zone Bonds Program Dave, This is in follow up to the phone message I left. Brad Grimm and I discussed projects this morning, and then talked with Jonas Biery (SIM Securities) our financial advisor about this. Jonas is going to run some figures for us, comparing these bond programs to a regular tax-exempt financing. He's going to try to get that info to us by the end of the week, bat some of their staff will also be at the LOC Conference, so they're short-handed this week. Anyhow, we gave him a couple of projects to run figures on. The first is a sewer project we developed for earlier ARRA funds through the SRF program, but we didn't make the cut. It's $1,975,000 and involves building the effluent transmission trunk line from our main wastewater treatment plant to our new parcel on the Lazy Z that we purchased for effluent disposal. The project also involves upgrading the pumps at our primary pump station. A second project is the construction of a new PW Maintenance Shop building, also located at our wastewater treatment plant. This is estimated to be $550,000. Jonas raised a couple of questions for you...whether the County intends to do a pooled financing this winter or is it simply assigning allocations to interested local governments. He also mentioned these programs require financings be done in 2009 and 2010. Does the County intend to do another financing in 2010? As I mentioned in my phone message, Brad and I will be taking off for LOC early this afternoon. I'm going to stay ire touch via e-mail or you can call me at 541-480-9186. Eileen Stein City Manager City of Sisters P.O. Box 39 Sisters, OR 97759 (541) 549-6022, Ext. 205 (541) 323-5205 - Direct (541) 549-0561 - Fax estein©ci.sisters.or.us 9/30/2009