'Recovery' bonds could cut interest costs for businesses
St. Croix and Pierce counties are beginning the process to allow private companies to access low-interest loans under federal economic stimulus legislation.
"We see this as an opportunity," said Bill Rubin, executive director of the St. Croix County Economic Development Corporation.
"Ultimately it's $5 million that can be brought into the county," agreed St. Croix Administrative Coordinator Chuck Whiting.
Rubin said the county allocations could be used for one project or spread over several.
Both counties have declared themselves Economic Recovery Zones, starting the process for themselves, their municipalities or local businesses to borrow money with lower interest costs.
Two types of bonds are allowed under the federal legislation: Recovery Zone Economic Development Bonds, available to counties and municipal governments; and Recovery Zone Facility Bonds, intended for private businesses.
The Facility Bonds can help private developers move ahead with projects, said Joe Murray, a Springsted Inc. vice president.
St. Croix County has been allocated a little over $5 million in Facility Bonds. Pierce County's allocation is $2.548 million.
The allocations would allow qualifying businesses in each county to borrow that amount at tax-exempt interest rates.
Murray said typically that would mean an interest rate about 25 percent lower than otherwise available.
The Facility Bonds are "conduit bonds" and would be issued by a city, village or town, but the responsibility for repaying the loan lies with the business.
Murray said municipalities have no obligation to repay the debt or to ensure that a proposed project is sound. He said the counties can allocate the bonds on a first-come first-served basis or ask for applications.
Rubin will draft a memorandum of understanding which, if approved by the County Board, would give the EDC's loan review committee authority to screen Facility Bond applications.
Work has begun on the MOU, and it's expected it will be presented to the St. Croix County Board during its January meeting.
The topic is on the agenda for the Pierce County Board's Dec. 15 meeting.
Businesses that could qualify for the bonds are nearly any trade or business except rental housing, golf courses, massage parlors, hot tub or sun tan facilities, racetracks, casinos and liquor stores.
Under Wisconsin law, counties can't be conduits for the Facilities Bonds, but they may sub-allocate the bonds to cities, village and towns that can.
Murray suggested the counties start spreading the word to communities about the bonds, which must be issued by the end of 2010.