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IRS Releases Recovery Zone Bond Allocations Under the American Recovery and Reinvestment Act of 2009

Real Estate Alert Michael J. Ostermeyer, Isaac J. Roang

We recently presented information regarding opportunities for real estate developers to finance new development projects using Build America Bonds and Recovery Zone Bonds under the American Recovery and Reinvestment Act of 2009 ("ARRA") - that article can be accessed here. At that time, we were still awaiting guidance from the IRS regarding Recovery Zone Bonds and the allocation of the $25 billion authorized nationally by the ARRA for the two Recovery Zone Bonds programs.

Recovery Zone Bonds Allocations

On Friday, June 12, 2009, the IRS issued interim guidance on the two Recovery Zone Bonds programs: Recovery Zone Economic Development Bonds ("RZEDBs") and Recovery Zone Facility Bonds. The IRS also released the state-by-state allocations of the $10 billion for RZEDBs and the $15 billion for Recovery Zone Facility Bonds, which were based on 2008 employment declines on the state and local level.

A detailed chart of all allocations, broken down by state, county and large municipalities, can be accessed here or by following the "IRS Releases Guidance on ARRA Bond Provisions" link on the following IRS Web site: http://www.irs.gov/taxexemptbond/index.html.

Please see the following list of allocations for selected states, counties and cities in which we practice:

State/County/City

Economic Development 
Bond Allocations
(in dollars)

Recovery Zone Facility 
Bond Allocations
(in dollars)

 Arizona

 

90,000,000 

 135,000,000

 

 City of Phoenix

 21,347,000

 32,019,000

 

 City of Tucson

 0

  0

 

 Maricopa County*

 3,664,000

 5,496,000

 

 Pima County*

 0

  0

 Florida

 

 538,485,000

 807,727,000

 

City of Tampa

8,045,000

12,068,000

 

City of St. Petersburg

6,227,000

9,340,000

 

Collier County

14,184,000

21,276,000

 

Pinellas County*

13,609,000

20,413,000

Pasco County

9,584,000

14,376,000

Illinois  

666,972,000

1,000,457,000

City of Chicago

133,180,000

199,770,000

City of Rockford

11,076,000

16,614,000

City of Aurora

9,164,000

13,745,000

City of Naperville

7,977,000

11,965,000

City of Joliet

7,104,000

10,657,000

City of Elgin

5,680,000

8,520,000

City of Peoria

1,466,000

2,198,000

Cook County*

131,209,000

196,814,000

DuPage County*

46,036,000

69,054,000

Lake County

39,721,000

59,581,000

Will County*

27,424,000

41,137,000

Kane County*

16,820,000

25,230,000

Winnebago County*

11,631,000

17,447,000

Peoria County*

1,021,000

1,532,000

Wisconsin

 

158,811,000

238,217,000

City of Milwaukee

17,286,000

25,930,000

City of Madison

8,112,000

12,168,000

Waukesha County

13,745,000

20,618,000

Milwaukee County*

12,307,000

18,461,000

Dane County*

8,533,000

12,799,000

Racine County

6,475,000

9,712,000

Kenosha County

4,911,000

7,367,000

* Denotes residual amount after allocation to large municipalities.

Sources: I.R.S. Notice 2009-50 (to appear in IRB 2009-26, dated June 29, 2009); www.irs.gov (last accessed June 12, 2009).

Next Steps

Recovery Zone Facility Bonds offer direct opportunities for private real estate development, and the RZEDB program also has the potential to catalyze projects that involve private real estate development. Now that the IRS has issued guidance on these two programs, real estate developers should be poised to apply for financing as counties and large municipalities begin designating "Recovery Zones" and developing application procedures. Indeed, we are aware of some local governments that have already begun taking applications.

* * *

For additional information regarding these and other real estate development financing options, please contact . . .

Michael J. Ostermeyer
Real Estate Practice Group
414-277-5521 / michael.ostermeyer@quarles.com

Jeffrey D. Peelen
Public Finance Practice Group
414-277-5773 / jeff.peelen@quarles.com

Ann K. Comer
Tax-Assisted Development Team
414-277-5509 / ann.comer@quarles.com