Creation of Recovery Zone AreaMasterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Creation of a Recovery Zone to Facilitate the Use of Recovery Zone
Facility Bonds and Recovery Zone Economic Development Bonds
DATE: June 16, 2010
Dubuque
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2007
Dubuque County has two allocations of Recovery Zone bonds; $6.545 million in
Recovery Zone Facility Bonds and $4.363 million in Recovery Zone Economic
Development Bonds. Dubuque County has agreed to allow the City of Dubuque to use
the State allocation that has been assigned to Dubuque County.
Recovery Zone Facility Bonds are tax - exempt bonds which may be issued for private
activity purposes. These may be used for a wide range of private purposes within a
Recovery Zone identified by the bond issuer. Davis Bacon wage requirements would
not apply to the project.
Recovery Zone Economic Development Bonds are taxable bonds but have a 45%
interest subsidy from the federal government. Davis -Bacon would apply to any City
projects. These bonds can only be used for projects in the designated area and can
only be issued for projects where tax - exempt bonds could be issued. Eligible projects
include capital expenses for property in a recovery zone; expenses for public
infrastructure; and expenses for job training and education.
A recovery Zone Area must be designated prior to issuing the bonds. The entity issuing
the bonds must define the Recovery Zone Area. Eligible Recovery Zones are those that
include significant poverty, unemployment, foreclosures and job distress.
The City's bond attorney, Bill Noth, has notified the City that, as a result of recent
legislation, the County's bonding allocations will be deemed lost on July 1, 2010 if the
County does not submit a letter of intent to IFA to use the funds prior to that date. After
that date, any unused allocation will be reallocated by IFA and any local use would be
as a competitive application with other areas of the state. Dubuque County has agreed
to allow the City of Dubuque to use the State allocation that has been assigned to our
county.
There are opportunities to fund existing projects and take advantage of the interest
subsidy associated with these bonds. Authority to issue Recovery Zone Bonds ends on
December 31, 2010.
Enterprise Zones are a state economic development program started in the late 1990's
to help revitalized blighted areas. Dubuque has two Enterprise Zones (1A and 2A)
which generally encompass the Downtown, Port of Dubuque, Historic Millwork District,
Kerper Boulevard, and the Upper Central Avenue area. These zones have previously
been identified by the City Council as blighted areas and would meet the definition of a
Recovery Zone as an area that includes significant poverty, unemployment,
foreclosures and job distress.
Economic Development Director David Heiar recommends City Council approval of the
creation of a Recovery Zone which encompasses the previously designated Enterprise
Zones.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
ichael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David J. Heiar, Economic Development Director
Masterpiece on the Mississippi
TO: Michael Van Milligen, City Manager
FROM: David J. Heiar, Economic Development Director
SUBJECT:
DATE: June 15, 2010
BACKGROUND
Dubuque County has two allocations of Recovery Zone bonds; $6.545 million in
Recovery Zone Facility Bonds and $4.363 million in Recovery Zone Economic
Development Bonds.
Dubuque
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2007
Creation of a Recovery Zone to facilitate the use of Recovery Zone Facility
Bonds and Recovery Zone Economic Development Bonds
INTRODUCTION
This memo outlines a resolution to create a Recovery Zone to facilitate the use of
Recovery Zone Facility Bonds and Recovery Zone Economic Development Bonds.
Recovery Zone Facility Bonds are tax - exempt bonds which may be issued for private
activity purposes. These may be used for a wide range of private purposes within a
Recovery Zone identified by the bond issuer. Davis Bacon wage requirements would
not apply to the project.
Recovery Zone Economic Development Bonds are taxable bonds but have a 45%
interest subsidy from the federal government. Davis -Bacon would apply to any City
projects. These bonds can only be used for projects in the designated area and can
only be issued for projects where tax - exempt bonds could be issued. Eligible projects
include capital expenses for property in a recovery zone; expenses for public
infrastructure; and expenses for job training and education.
A Recovery Zone Area must be designated prior to issuing the bonds. The entity
issuing the bonds must define the Recovery Zone Area. Eligible Recovery Zones are
those that include significant poverty, unemployment, foreclosures and job distress.
The City's bond attorney, Bill Noth, has notified the City that, as a result of recent
legislation, the County's bonding allocations will be deemed lost on July 1, 2010 if the
County does not submit a letter of intent to IFA to use the funds prior to that date. After
that date, any unused allocation will be reallocated by IFA and any local use would be
as a competitive application with other areas of the state. Dubuque County has agreed
to allow the City of Dubuque to use the State allocation that has been assigned to our
county.
DISCUSSION
Enterprise Zones are a state economic development program started in the late 1990's
to help revitalized blighted areas. Dubuque has two Enterprise Zones (1A and 2A)
which generally encompass the Downtown, Port of Dubuque, Historic Millwork District,
Kerper Boulevard, and the Upper Central Avenue area. These zones have previously
been identified by the City Council as blighted areas and would meet the definition of a
Recovery Zone as an area that includes significant poverty, unemployment,
foreclosures and job distress.
There are opportunities to fund existing projects and take advantage of the interest
subsidy associated with these bonds. Authority to issue Recovery Zone Bonds ends on
December 31, 2010.
RECOMMENDATION /ACTION STEP
I recommend approval of the attached resolution establishing a Recovery Zone within
the City of Dubuque with the boundaries of the two Enterprise Zones within the City of
Dubuque. This is the first step in the process to allow the city to take advantage of
Recovery Zone Bonds.
F: \USERS \Econ Dev \Recovery Zone Bonds\20100615 Memo approving Recovery Zone.doc
Dubuque Enterprise Zones
1 inch = 2,000 feet
RESOLUTION NO. 201 -10
A RESOLUTION APPROVING THE ESTABLISHMENT OF A RECOVERY ZONE AREA
WITHIN THE CITY OF DUBUQUE.
Whereas, the County of Dubuque has received two allocations of Recovery Zone
Bond volume cap under the authority of Section 1400U-1(a) of the internal Revenue code of
1986, as amended, relating to the issuance of Recovery Zone Facility Bonds and Recovery
Zone Economic Development Bonds, which if not committed by July 1, 2010 shall be
recaptured and allocated by the Iowa Finance Authority (IFA) under House File 2487 enacted
by the Iowa General Assembly; and
Whereas, the City of Dubuque, Iowa has received permission from the County to
utilize the foregoing Bond allocations; and
Whereas, a Recovery Zone area must be established to facilitate the use of the
Bonds; and
Whereas, eligible Recovery Zones are those areas designated by the issuer as having
significant poverty, unemployment, rate of home foreclosures or general distress; and
Whereas, Enterprise Zone 1A and Enterprise Zone 2A of the City were established
November 15, 2007 and fit the definition as a Recovery Zone.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
DUBUQUE, IOWA:
Section 1. A Recovery Zone is hereby established within the City of Dubuque,
pursuant to Section 1400U-1(b)(1) of the internal Revenue Code of 1986, as amended,
having the boundaries of existing Enterprise Zone 1A and Enterprise Zone 2A within the City
and including all of the territory located therein.
Section 2. The City Manager is hereby directed to notify the Iowa Finance Authority
of the creation of the Recovery Zone, to file such applications with IFA as may be necessary
or appropriate to receive allocations of Recovery Zone Bond volume cap, and to take such
other actions as may be necessary or desirable to carry out the provisions of this resolution
and to assure compliance with federal laws relating to the issuance of Recovery Zone Bonds.
Passed, approved and adopted this 21 day of June 2010
Attest:
a- /Z./I,. , (. - - t - - - --( .//(1', .C-c&
eanne F. Schneider, City Clerk
I oy D. Buol, Mayor
F: \USERS \Econ Dev \Recovery Zone Bonds\20100621 Recovery Zone Reso.doc
Donna L. Smith
dsmith @dbeco.org
Eric Mantemach
emanternach @dbeco.org
Wayne Demmer
wdemmer @dbq.org
June 14, 2010
Michael C. Van Milligen
City Manager
City Hall
50 West 13 St.
Dubuque, IA 52001 -4864
Dear Mike;
At a recent meeting, we reviewed and approved your request to authorize the allowance for the
City of Dubuque to utilize the Recovery Zone Facility Bonds in the amount of $6.545 million and
Recovery Zone Economic Development Bonds in the amount of $4.363 targeted for Dubuque
County. We had made an exception to consider requests from other eligible municipalities, but as
of this date no requests have been made.
Sincerely,
Eric Manternach, Chairperson
Dubuque County Board of Supervisors
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.tau lue Canty
e oa,c L ci Su erviiori
COURTHOUSE - 720 CENTRAL AVENUE
DUBUQUE, IOWA 52001 -7079 Phone: 563 -589 -4441
www.dubuquecounty.org Fax: 563 -587 -3836
Donna L. Smith
dsmith @dbqco.org
Eric Manternach
emantemach@dbqco.org
Wayne Demmer
wdemmer @dbq.org
June 14, 2010
Lori Beary
Iowa Finance Authority
Green Building
2015 Grand Avenue
Des Moines, IA 50312
Dear Ms. Beary;
At a recent meeting, we reviewed the City of Dubuque's request to authorize the utilization of the
Recovery Zone Facility Bonds in the amount of $6.545 million and Recovery Zone Economic
Development Bonds in the amount of $4.363 targeted for Dubuque County. We had made an
exception to consider requests from other eligible municipalities, but as of this date no requests
have been made.
Sincerely,
Eric Manternach, Chairperson
Dubuque County Board of Supervisors
EM /mas
ccN Mike Van Milligen, City Manager
Dave Heiar, City Economic Development Director
Dubuque County Auditor
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COURTHOUSE - 720 CENTRAL AVENUE
DUBUQUE, IOWA 52001 -7079 Phone: 563 -589 -4441
www.dubuquecounty.org Fax: 563 -587 -3836