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Recovery Zone Facility Bond Potential Recipients to go to Council

Wow this has been a looong process. Those of you who are hardcore readers on this site have tracked the progress of these bonds since the beginning.

As recently reported, the Intergovernmental Recovery Zone Facility Bond (RZF) Subcommittee held two hearings in March and April, and received applications for Recovery Zone Facility Bonds from 13 applicants on 14 projects. The RZF Subcommittee developed a prioritized ranking of the projects with a specific allocation of the aggregate RZF bonding capacity of the City of Reno and Washoe County. Below, you can see the recommended projects. All in all I am pretty excited about these bonds helping private developers in a tax exempt way. To clear some things up, these bonds are NOT a handout to developers...they are simply a tax-exempt financing mechanism and are not like Tax Increment Financing and STAR Bonds. The bonds are part of the larger American Recovery and Reinvestment Act of 2009. There is $15 billion nationally in Recovery Zone Facility Bonds. The bonds were allocated to local governments with a population over 100,000 based on the decrease in employment between 2007 and 2008. As you can imagine, we more than qualified for them. The bonds must be issued by December 31, 2010.

So what are Recovery Zone Facility Bonds? They are different than the Recovery Zone Economic Development Bonds, of which were allocated previously by the Council to improve schools and help UNR build its new medical center. Recovery Zone Facility Bonds offer tax-exempt rates for private projects that otherwise would be financed on a taxable basis. The tax-exempt rate allows issuers to realize lower debt service costs.They are available to local governments, non-profits, and private developers. Washoe County has been authorized to issue up to $59,648,000 in RZF’s and the City of Reno has been authorized to issue up to $65,604,000 in RZF’s. For more information, Click here.

The Subcommittee held two hearings where presentations were made by 13 applicants on a total of 14 projects. During this process, four applicants withdrew from consideration. The end result is the ranking of projects in the table below.

The Washoe County Board of Commissioners will hear this item on April 26, 2010, and the Sparks City Council will hear it on April 27, 2010. Once approved, the ranking will be used by the County and City of Reno to notify the developers and request formal applications along with a filing fee of $50,000 to reimburse the agencies for the necessary due diligence work in processing the applications.

Washoe County

Reno

$59,648,000

$65,604,000

Selected Projects

Castaways MRF

$20,040,000

Freight House Phase 3

$20,600,000

Titan Solar Panel Manufacturing

$5,000,000

IMG Energy Gasification Plant

$30,000,000

Vista Hills Hotels

$30,000,000

Tessera Office Project

$15,000,000

GA-SNC – Stead Wastewater Treatment

$4,600,000

Totals

$59,640,000

$65,600,000

Alternate Projects

Requested

GA-SNC – Airport

$19,000,000

$15,000,000

Cobalt Manufacturing

Potential Reallocation Equally To

Freight House Phase 3
Up to $50,000,000 (Reno)

 

 

 

IMG Energy Gasification Plane
Up to $90,000,000 (Washoe or Reno)

Tessera Office Project
Up to $50,000,000 (Reno)

If the seven projects ranked the highest cannot act on their RZF allocations, the alternate projects’ rankings place them in the next positions to receive this financing. The alternate projects are eligible to receive RZF allocations through either Washoe County or Reno. If there is any other RZF allocation available after the primary and alternate project lists have been exhausted, the allocations will be divided equally and offered to the Freight House Phase 3, IMG Energy Gasification Plant and Tessera Office Project, up to the amounts that were originally requested.

So there you go! I am most excited about the gasification plant, which I reported on previously, and the Tessera Office Project, of which I am assuming is part of their larger plan for the area between Virginia Street and Evans Avenue and 6th Street and the freeway. It will be nice to see the Freight House District expand as well, it seems to be one of downtown's few new developments.

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