Federal Recovery Zone Bonds

$10 Billion in Economic Development Bonds
The Recovery Act earmarks $10 billion of Recovery Zone Economic Development Bonds (RZEDBs). These are governmental bonds to be used for governmental purposes that will allow the County or a large municipality to borrow at a lower cost than traditional tax-exempt financing.

Guidelines & Restrictions
  • RZEDBs may be issued for purposes of promoting development or other economic activity including:
    • Public infrastructure
    • Construction of job training, educational and public facilities
  • Development must be in an area that has been designated by the County or a large municipality as a “recovery zone”
  • RZEDBs are taxable bonds

$15 Billion in Facility Bonds
The Recovery Act earmarks $15 billion of Recovery Zone Facility Bonds (RZFBs). RZFBs permit counties or large municipalities to provide tax-exempt financing for projects that historically would not qualify:
  • Large manufacturing plants
  • Distribution centers
  • Hotels
  • Research parks

Guidelines & Restrictions
  • RZFBs are private activity bonds and are classified as "exempt facility bonds" for tax purposes
  • RZFBs may be issued for any depreciable property that meets the following:
    • Property was acquired after the date of designation of a "recovery zone"
    • The original use of which occurs in the recovery zone
    • Substantially all of the use of the property is in the active conduct of a "qualified business"