Local officials preparing plans to get federal funds

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Local officials are speeding through a series of steps to access more than $16 million in federal bonds, if they can determine what to use the money for in time to meet a rigid timetable set by the government.

The money would come from the federal stimulus package which included $25 billion in “Recovery Zone Bonds,” which could pay for new public buildings and repairs to infrastructure. To ensure local governments and developers could get the money the Calhoun County Commission had to declare the area a recovery zone by Feb. 26. They did that in a meeting last week.

But their next deadline is fast approaching. By March 1, anyone who wants to use the federal bond money has to have their project development plans reported to the state, which means they have to gather their plans in short order.

“I’m just seeing many problems with this program,” said Ken Joiner, county administrator. “We have to have shovel-ready projects.”

Joiner said although county officials have not identified any specific county projects to be funded with the money, local government bodies and private developers have asked the county about the money. The commission can allocate a portion of the money to fund the proposed projects.

“We’ll just have to sit down and put all the potential projects on the table and decide which ones are the most viable,” Joiner said this week.

A portion of the bond money may be issued to government agencies for government building projects and for job creation. Another portion of the bonds may be disbursed to private developers for projects, giving them the advantage of paying back the money at a lower interest rate, according to a press release from the U.S. Department of the Treasury.

The economic development bond for governments comes with a 45 percent rebate from the federal government on any interest paid. The bonds being offered to private developers are tax-free, which will help ensure they receive a lower interest rate, the release also stated.

“The bottom line is you have some interest savings,” Joiner said. “…You have to pay back 100 percent, and some interest.”

In Calhoun County, about $6.4 million has been designated for use by local governments, and about $9.8 million has been designated for private development, according to the Treasury Department. The amount of money given to each local government was based on the rise in unemployment in each area since 2008. Calhoun County also received additional consideration because the qualifications included a provision for any area affected by a military base closure.

By the next deadline, which is Dec. 31, those who hope to access the program must have the bonds issued. For private developers to that means they must first have the project approved by the County Commission.

In order for private developers to secure the tax-exempt bonds, which are usually only available for government agencies, they must turn to industrial boards, which are appointed by local municipalities and serve as conduit issuer for the bond. After the bond is secured, the money passes from the bond holders, though a bank and to the private developers, said Blake Dunn, an investment banker in Montgomery.

Anniston, Oxford and Jacksonville each have industrial boards, though Anniston’s is currently inactive because they have not had any recent projects to consider.

“There is little activity in industrial development right now,” Mayor Gene Robinson said. “But if we had put a board together, we could do one in a reasonable length of time.”

However, if the city could not reactivate the board in time to meet the federal government’s timetable for applying for the Recovery Zones money, private investors could turn to the Calhoun County Economic Development Council, which can also serve as a bond issuer said Don Hopper, executive director.

The money could be used to encourage development in the area for a number of private projects. Among them is the Watermark Tower. The building’s owners, the Anniston Water Works and Sewer Board, is turning to the Recovery Zone Bond option.

“ It may be our last attempt at developing a public-private partnership,” said General Manger Jim Miller. “We’re not giving up on the project; we’ll just have to take another direction.”

Area municipalities are also reviewing the Recovery Zone Bonds as a form of possible funding for needed capital projects. Anniston City Manager Don Hoyt said the city may use the bonds to pay for costly infrastructure projects.

“I’m not, at this point, able to say which projects will be considered by the council as the highest priority,” Hoyt said. “We have so many projects that need to be done that we can’t use money in the regular budget to get done.”

Hoyt said there were two major city projects being discussed; the replacement of the jail and improvements to the city’s drainage system, in addition to several smaller projects.

“ We have looked at Recovery Zone Bonds as a potential source for funding. However, that is not the only one,” Hoyt said.

Phillip Pearson, a member of Jacksonville’s industrial board, said he would support funding projects by accessing the money.

“We’re in the exploratory stages,” Pearson said. “If we can get some bond money, we should go for it.”

Contact Staff Writer Laura Johnson at 256-2353544.