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	$19,000,000 $15,000,000
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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History

STAFF REPORT

June 24, 2009: Council accepted a presentation and overview of the structure and highlights of the RZF and RZED bond programs.

July 15, 2009: Council accepted a presentation from Andy Artusa, Nevada State Bank, regarding the implementation of projects that could be financed with RZF and RZED bond proceeds.

August 19, 2009: Council accepted a list of public and private projects that could potentially be funded through RZF and RZED bonds.

September 9, 2009: Council accepted a revised list of public and private projects that could potentially be funded through RZF and RZED bonds and directed staff to initiate outreach to developers and private entities interested in accessing RZF bond authority for private activity projects.

September 23, 2009: Council accepted the staff report regarding potential projects that could be funded through RZF bonds and directed staff to develop a strategy for publicizing the RZF bond program to the general public

October 28, 2009: Council accepted an update on the status of staff’s outreach efforts.

December 16, 2009: Council approved the concept of forming a new intergovernmental RZF subcommittee comprised of elected officials from the Cities of Reno and Sparks and Washoe County for the evaluation and recommendation of RZF allocations for private activity projects.

January 20, 2010: Council selected Mayor Robert A. Cashell. Sr., and Councilman Pierre Hascheff to represent the City of Reno on the new intergovernmental RZF subcommittee.

February 24, 2010: Council approved the Memorandum of Understanding with Washoe County and the City of Sparks that authorized the intergovernmental RZF subcommittee, outlining the process for the joint evaluation and recommendation of RZF allocations for private activity projects.