County’s Recovery Zone Designation Could Pay Off

By Beacon Staff

When Flathead County commissioners voted last week to designate Flathead County as a “recovery zone” for the American Recovery and Reinvestment Act, they did more than just provide a new name.

The designation could lead to millions of dollars for economic development, officials said.

As part of the ARRA, also known as the federal stimulus plan, Montana was allocated $130 million in federal recovery bonds. Two types of recovery bonds are available: economic development and facility.

According to the Montana Department of Administration, economic development bonds provide an increased subsidy for traditional government projects for job training and educational programs.

The facility bonds are tax-exempt bonds that can be used to fund nongovernmental projects, which would normally not qualify for tax-exempt financing. This means the money can be used by businesses in a designated recovery zone.

“It allows another pot of the stimulus money to be allocated to job creation projects,” said County Administrator Mike Pence. The money would be a shot in the arm for the local economy, Pence added.

The federal government decided how much each county in Montana would receive based on the unemployment percentages from 2007. Initially, Flathead County received nothing. Kellie Danielson, president and CEO of Montana West Economic Development, said this happened because the Flathead economy didn’t really crash until 2008.

However, as of Oct. 1, any bonds not claimed by other counties were up for redistribution. In order to apply for these unclaimed bonds, a county must be designated as a recovery zone.

Danielson said it was disappointing to learn that Flathead County had been initially denied any bonds, but she is working with the county to go after some of the unused money. She said Flathead County applied for $72 million worth of recovery bonds, even though she doesn’t expect to get the full amount.

“We are so limited in Montana without development tools that every little bit helps,” Danielson said.

The bonds would be used to finance manufacturing projects, Danielson said. Typically, a tax-exempt industrial bond for a fixed asset, such as property, has a capped maximum of $10 million. However, for the next year, the government lifted the cap for the stimulus bonds used for fixed assets.

This would help finance some major projects that the development authority has waiting, Danielson said. If the county does receive recovery bonds, it would issue them to financially stable companies. The company would take on the bond payment, leaving the county zero liability for payments, Danielson said.

The county is expecting a response to their application before the year’s end.

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