Recovery Zone Faciltiy Bonds

ALERT!

"The City of Chicago is announcing an extension of the deadline to apply for Recovery Zone Facility Bonds (RZFBs). The City of Chicago designated the entire boundary of the city as a Recovery Zone in November of 2009 in order to distribute its allocation of $199,770,000 in bonding authority it received from the Federal Government.

While originally agreeing to accept applications until March 31, 2010, the City's Department of Community Development has decided to continue accepting applications beyond this date in order to consider new projects that will maximize economic impact. Projects considering using RZFBs must be "shovel ready" and issuance of the bond proceeds must occur by December 31, 2010. Applications will continue to be accepted until further notice."

Recovery Zone Facility Bonds (RZFB) are traditional tax-exempt bonds which have lower interest rates because the interest is tax-exempt to the investors for Federal tax purposes. This is a new category of tax exempt private activity bonds authorized under the American Recovery and Reinvestment Act to stimulate economic recovery.

This authorization allows state and local governments to issue bonds on behalf of qualified borrowers for eligible projects at lower borrowing costs. These bonds are not direct grants or appropriations.

A total of $15 billion in bond issuing authority is available nationwide. The City of Chicago’s allocation is $199,770,000 for bonds issued by December 31, 2010.

Recovery Zone Facility Bonds may be issued to finance certain capital projects (e.g., buildings and equipment) for the benefit of a qualified business located in or to be located in a designated Recovery Zone.

A “Qualified Business” means any trade or business, covering a wide range of office, commercial, retail, industrial/manufacturing, and hotel uses, with the following limited exceptions: residential rental property, any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other gambling facility, or any store the principal business of which is the sale of alcoholic beverages for off premises consumption.

It is anticipated that the City of Chicago’s Recovery Zone will be designated on or about November 18, 2009. As proposed, Chicago’s Recovery Zone will include the entire city of Chicago.

Applications will be accepted from November 2, 2009 until March 31, 2010 and will be prioritized on a first-come, first-serve basis, but ultimately based on its merits.

A non-refundable application fee of $1,500 will be due upon approval of a bond issuance by the City Council of the City of Chicago.

A financing fee will be due when the bonds are issued. The financing fee will be .77% of the bond amount.

Download the RZFB application.