Briefing: Recovery Zone Program
Gov. Deval Patrick recently signed an executive order that will open Massachusetts’ Recovery Zone Bond Program. The bonds, which have been authorized as a part of the American Recovery and Reinvestment Act (ARRA), support both public and private development by offering favorable borrowing rates for projects within designated zones.
What are the recovery zones?
The executive order identified existing Economic Target Areas (ETAs) across the state as recovery zones, which brings the total to 209 communities. Of those 209 communities, 55 are located in Central Massachusetts. Going forward, the Secretary of Housing & Economic Development also may choose to name additional recovery zones.
How does the bond program work?
Bond allocation is split between “economic development” ($222 million) and “private facilities” ($334 million). Economic development bonds are taxable and provide 45 percent interest forgiveness for municipalities for public infrastructure improvements, site remediation or acquisition to support economic development. Priority will be given to those that are most likely to lead to private investment.
Private facilities bonds are tax-exempt and available only to private entities for construction, renovation or reconstruction of private facilities, so long as those projects create new jobs.
Where is the money coming from?
ARRA authorized a national volume cap of $10 billion for economic development bonds and $15 billion in private facility bonds. Each state received a minimum of 0.9 percent of the national volume cap, with additional funds granted to states that saw greater employment declines in 2008.
How were the bonds distributed?
The state allocated the bonds to counties and cities with populations greater than 100,000. Declines in 2008 employment also factored into the allocation decisions.
How is Central Massachusetts affected?
The city and surrounding areas of Worcester received approximately $5.6 million in economic development bonds and approximately $8.5 million in private facility bonds. All of Worcester County received more than $23.5 million in economic development bonds and more than $35.3 million in private facility bonds.
Click here to learn more about the Recovery Zones Program.
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