12/17/09 — County declares itself 'recovery zone'

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County declares itself 'recovery zone'

By Steve Herring
Published in News on December 17, 2009 1:46 PM

Wayne County commissioners' decision Tuesday morning to designate the county as a "recovery zone" was motivated by the possibility that a new business could locate a $4.5 million project here.

The designation opens the door for the business to use Recovery Zone Economic Development Bonds or Recovery Zone Facility Bonds. The bonds were authorized under the American Recovery and Reinvestment Act.

County Manager Lee Smith told commissioners at their Tuesday session that a business is considering the county, but that he could not provide any more information about it.

"We have been contacted by a developer as to a project in Wayne County that may seek to utilize some of these bonds if they choose to locate in Wayne County. That being the case, we have to have a resolution setting up a recovery zone for economic development bonds in Wayne County," Smith said.

Smith said the developer, because of a confidentiality clause, has not provided any information on the number of jobs involved or even what kind of business it would be.

The county would not be obligated for the bonds, Smith said.

Rather, the county would be a "pass through" between the company and a third-party bond agency, he said.

"Right now with conventional financing so cheap I would be surprised if they did go through bonds," he said. "This (vote) is just to try to keep the door open."

Smith said he had spoken with Wayne County Development Alliance officials and they did not know of anyone else seeking the designation.

"We don't have any specific information or details," said Alliance President Joanna Helms. "We are just trying to get the process in place so that if we have the opportunity or situation with a company we have that in place. We are trying to take the initial steps to position ourselves if and when the opportunity arises."

A recovery zone is described as an area of "significant poverty, unemployment, rate of home foreclosures and general distress."

Qualifying economic development purposes include promoting development or other economic activity in a recovery zone including capital expenditures for property located in the zone or expenditures for public infrastructure and construction of public facilities.

Recovery Zone Facility Bonds may be used to finance construction, renovation or acquisition of depreciable property by a private taxpayer of a qualified business in the zone. A qualified business includes any trade or business other than residential rental properties.

Smith said the process required the county to first notify the North Carolina Association of County Commissioners that in turn had to notify the state that there may be some interest in facilities bonds as well, he said.

"We have done that, I think, as of yesterday (Monday), but we need this resolution just in case," Smith said. "I don't know what the odds are the company will be landed, but this private contractor has contacted us.

"We need this resolution just in case. We talked to the state Local Government Commission yesterday and they gave us this resolution and said this needs to approved. It is just a blanket resolution so in case they need these dollars. If we don't do it, they can't even seek the dollars."

The LGC said the resolution was "appropriate" and County Attorney Borden Parker had looked at it, Smith said.

"They are like industrial revenue bonds, but they can use them for more things than you could purely industrial revenue bonds," Parker said. "It will not affect the credit of the county."

The zones and bonds were was initially set up to help in Katrina ravaged areas and has since gone nationwide, he said.

Commissioner J.D. Evans wanted to know what it would cost the county.

Parker said the only cost would be the cost of advertising for any public hearings concerning the bonds.