posted 05/19/10 | Banking
Among the billions in economic stimulus spending is a little-known opportunity for business owners. It’s called Recovery Zone Facility Bonds, a new type of tax-exempt private activity financing created by Congress as part of the 2009 American Recovery and Reinvestment Act to encourage capital investment in areas designated as recovery zones. Counties and metro areas across the U.S. have been allocated money for these bonds based on aggregate employment declines. St. Louis County, for example, has been appropriated $60 million.
Because of their tax-exempt nature, the Recovery Zone Facility Bonds offer lower cost financing opportunities for projects that historically would not qualify for traditional tax-exempt financing. To be eligible, bond proceeds must be used for Recovery Zone Property that is (1) subject to depreciation and (2) first used by the taxpayer receiving the bond proceeds. This excludes land and working capital as well as residential rental property and certain prohibited businesses. Some examples of eligible projects are: (a) purchase of new or used equipment, (b) renovation and/or expansion of existing real estate owned, and (c) new construction and/or leasehold improvements.
All bonds under this program must be issued by January 1, 2011. Minimum size is $500,000, and there are other restrictions. Contact Scott Hartwig, Senior Vice President, at 314.512.7217 or for more information.