I-Bank’s proposal was first presented to cities and counties in a conference call held this summer. The fully-developed proposal was presented by an I-Bank RZEDB team in a conference call held on Thursday, Nov. 19. I-Bank Executive Director Stan Hazelroth conducted the call. 

The team used the conference call to explain eligible uses of RZEDBs, and present the case for why a pooling of bonding authority makes sense for cities and counties. Some of the key presentation points were that a larger bond offering resulting from the pooling would produce a larger and more attractive bond package to key investors, lower transaction and administrative costs, and potentially faster delivery of project funds as a result of working with an already-assembled, experienced bond team.

The American Recovery and Reinvestment Act (ARRA) of 2009 created RZEDBs as a new financing option available to cities with a population of over 100,000 and counties that have designated a “recovery zone” within their jurisdiction. The recovery zone could include any area designated by such a city or county as having significant poverty, unemployment, home foreclosure rates, or general distress, or any area designated by a city or county 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. 

Bonds under this category may be issued by qualifying cities and counties as “taxable.” RZEDBs provide a direct federal subsidy to the issuer equal to 45 percent of the interest. Issuers must be in control of “recovery zone” designations.

For more details, see page 25 of the League’s City Funding Book, on the League’s Web site. Information is also available through the IRS Web site.

Interested cities should contact I-Bank via e-mail as soon as possible.

The RZEDB team hopes to organize one or more pooled bond offerings during the first half of 2010. They also hope that cities and counties that have been allocated funds in excess of project needs, will inform I-Bank, so that those funds can be made available for other California projects. All bonds must be issued by the end of 2010. 

I-Bank will have information available about the proposal on their Web site, as well as on the Web site for the California Debt Limit Allocation Committee.

I-Bank and the California Debt Limit Allocation Committee are housed in the State Treasurer’s Office. I-Bank is the state’s only general purpose financing authority with broad statutory powers to issue revenue bonds, make loans, and provide credit enhancements for a wide variety of public infrastructure and economic development projects.