Recovery Zone Financing Available in Chester County

Posted by on March 29, 2010

Recovery Zone Financing Available

Chester County Industrial Development Authority and Chester County Economic Development Council Announce Availability of Recovery Zone Financing

Background

The American Recovery and Reinvestment Act of 2009 (ARRA) includes a new low-interest economic development financing tool called Recovery Zone Bonds.   Through ARRA, the Bonds were allocated to each county in the U.S., which was then responsible for identifying its own recovery “zones.” The County of Chester designated the 15 Boroughs and the City of Coatesville as Recovery Zones in January, 2010.  Only projects located within the designated recovery zones can access this financing.

$9,617,000 is available for Chester County projects, separated into two categories;

* Facility Bonds (Private Use) – Volume Cap: $5,770,000
* Economic Development Bonds (Municipal Use) – Volume Cap: $3,847,000

The Chester County Commissioners have authorized the Chester County Industrial Development Authority (CCIDA) to administer the program.  The Chester County Economic Development Council (CCEDC), who provides the staff to the CCIDA, will collaborate with the CCIDA Board to implement the program.

Eligibility Uses of Funds

* Project must be located in a recovery zone
* Borrower must certify they will close on financing before December 31, 2010
* Only project costs incurred after January 27, 2010, the date of “Recovery Zone” designation, are eligible

Facility Bonds (Private Use) – Facility Bonds may be used to finance depreciable property actively used in a qualified business within a Recovery Zone, provided the property is acquired after the Recovery Zone designation.

Economic Development Bonds (Municipal Use) – Economic Development Bonds may be used to finance economic activities, including capital expenditures paid or incurred for property in a Recovery Zone, expenditures for public infrastructure and construction of public facilities and expenditures for job training and educational programs.

Minimum and Maximum Loan Amounts?

Because of the limited amount of recovery zone financing available, the maximum amount of allocation for any one project is $2 million.  There is no minimum allocation.

Loan Terms and Rate?

The rate and term of the loan is established by the bank for mortgages.  If bond financing is used, the rate and term are determined by the pricing of the bonds, the letter of credit fee and other costs associated with the bond issue.

Application Process

Borrowers wishing to apply for recovery zone financing should contact Gary Smith, Mike Grigalonis or Kathy Field at the Chester County Economic Development Council (610-458-5700) to obtain an application.   The application is also available at http://www.cceconomicdevelopment.com

Applications must be submitted to CCIDA by July 1, 2010.  Applications must meet the “Basic Requirements” identified in the application packet to be considered.  Applications will be reviewed at the July 21st Board meeting of the CCIDA.  Allocation awards for both “Facility Bonds” and “Economic Development Bonds” will be announced during the week of July 26th.  If there is still allocation remaining following the application and review cycle, the remaining allocation will be awarded on a “first come, first serve” basis.  As with the initial application and review cycle, all “Basic Requirements” must be met to be considered for allocation.