Title
Resolution Designating Citywide Recovery Zone
Memorandum
Recommended for Council is a Resolution Designating City of Ann Arbor Recovery Zone for Purposes of the American Recovery and Reinvestment Act of 2009 (“ARRA”), pursuant to which all areas within the City’s boundaries are designated as a “recovery zone”.
ARRA provides significant federal tax incentives for the financing of projects undertaken within a “recovery zone”, through the issuance, prior to January 1, 2011 (subject to possible extension by federal legislation yet to be enacted), of Recovery Zone Economic Development Bonds (“RZEDBs”) for public infrastructure and facilities and Recovery Zone Facility Bonds (“RZFBs”) for qualifying commercial and industrial private activity projects, each subject to bond issuance volume cap limits. Under ARRA the City is permitted to issue up to $11,511,000 of RZEDBs and up to $17,266,000 of RZFBs (subject to possible increases under federal legislation yet to be enacted).
The first step toward issuance of any RZEDBs or RZFBs is for the City to designate the City’s “recovery zone” for purposes of ARRA. Because one or more of the necessary ARRA conditions for designation of a recovery zone exist throughout the City (“significant poverty, unemployment, rate of home foreclosures, or general distress”), it is recommended that the entire City be designated as a “recovery zone,” which is the approach that has been taken by most municipalities in Michigan and elsewhere in the country, due to the pervasive impact of the financial and economic crisis that began in 2008.
The Resolution authorizes the Chief Financial Officer to take necessary actions to facilitate the issuance of RZEDBs and RZFBs. Issuance of such bonds would remain subject to required statutory procedures, including approvals by the City Council and other municipal bodies, as necessary.
The City’s bond counsel, Dykema Gossett, prepared this Resolution with further review by the City Attorney.
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