Also serving the communities of De Luz, Rainbow, Camp Pendleton, Pala and Pauma

Supervisors declare county as Recovery Zone

Although the immediate effect was the ability to utilize Recovery Zone Facility Bonds for five projects in San Diego, Carlsbad, Oceanside and Alpine, the designation of the entire County of San Diego as a Recovery Zone makes the county eligible for Recovery Zone Economic Development Bonds and Recovery Zone Facility Bonds.

The San Diego County Board of Supervisors voted 5-0 March 23 to declare the county a Recovery Zone under the provisions of the American Recovery and Reinvestment Act of 2009 and to adopt a resolution approving the California Statewide Communities Development Authority’s issuance of Recovery Zone Facility Bonds to construct solar energy facilities on the roofs of three supermarkets and two department stores.

The supervisors made findings that the county’s entire geographic area is experiencing significant poverty, unemployment, home foreclosure rates and general distress. The designation of San Diego County as a Recovery Zone does not create any financial rights or obligations but allows businesses to compete for Recovery Zone bond allocations to fund projects within the county.

The borrower will be responsible for payment of all current and future costs associated with the bond issuance, and the bonds will be secured by the borrower’s operating revenues, so the county does not risk an obligation of indebtedness. Under

the provisions of the American Recovery and Reinvestment Act of 2009, a Recovery Zone is defined as any area designated as having significant poverty, unemployment, rate of home foreclosures, or general distress, any area designated as economically distressed by reason of the closure or realignment of a military base, or any area for which a designation as an empowerment zone or renewal community was in effect when the American Recovery and Reinvestment Act of 2009 was implemented.

The American Recovery and Reinvestment Act of 2009 included provisions for bond financing intended to promote economic recovery by providing tax incentives and low-cost financing for certain types of projects. Recovery Zone Economic Development

Bonds are taxable government bonds which provide either a direct federal subsidy to the issuer or a tax credit to the bondholder of 45 percent of the interest rate.

Recovery Zone Economic Development Bonds cannot be used to refinance existing debt, and proceeds must be used for expenditures which promote development or other economic activity in a recovery zone, including capital projects.

Proceeds from Recovery Zone Economic Development Bonds must be spent on governmental projects and are not available for non-profit or private activity.

Recovery Zone Facility Bonds are tax-exempt bonds intended to support trade or business in areas suffering from economic distress. Proceeds may be used on private activity which provides a public benefit but must be used to fund improvements constructed or renovated after the designation of a Recovery Zone.

The American Recovery and Reinvestment Act of 2009 set a cap for issuance authority of $10 billion for Recovery Zone Economic Development Bonds and $15 billion for Recovery Zone Facility Bonds. The U.S. Department of the Treasury designated allocations to states in proportion to the relative declines in employment from 2007 to 2008, and each state allocates its portion of the volume cap to counties and large municipalities with a population over 100,000.

California’s state allocation was $806 million for Recovery Zone Economic Development Bonds and $1.2 billion for Recovery Zone Facility Bonds, but the initial allocation excluded San Diego County and 27 other California counties. The state Treasurer’s Office is now re-distributing any waived allocation, and any county or municipality which was originally excluded may compete for the waived amount.

The anticipated re-allocation amounts are $94,394,000 for Recovery Zone Economic Development Bonds and $101,660,731 for Recovery Zone Facility Bonds.

A solar energy company called SunEdison, LLC, seeks to obtain the bonds to finance the solar facilities. SunEdison was founded in 2003 and is based in Beltsville, Maryland, and the company currently has 64 employees in three California locations. The facilities on the five San Diego County businesses will be owned and operated by SunEdison, which will sell the generated power to its clients at a fixed rate stated in a power purchase agreement.

The bonds will be issued by the California Statewide Communities Development Authority (CSCDA), a joint powers agency which was created to provide local governments, non-profit public benefit corporations and private entities with access to low-cost, tax-exempt financing for projects which create jobs, help communities

prosper, and improve the quality of life of local residents.

The CSCDA has statutory authority to issue bonds, notes, or other financing documents in order to promote economic development (including the provision and maintenance of multi-family housing), although in the case of a private or non-profit recipient the jurisdiction in which the project is located must approve the project and financing in order for the CSCDA to issue the financing mechanism. Since its inception the CSCDA has issued more than $44 billion of tax-exempt bonds.

The CSCDA was created in 1988 through efforts of the California State Association of Counties and the League of California Cities and now has more than 500 cities, counties, and special districts as members. Although CSCDA membership is not required to participate in programs, the County of San Diego is a member.

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