Thursday, June 3, 2010

DOLA Allocated $1.2 million in Recovery Zone Facilities Bonds (RZFBs)

On May 21, the Colorado Commission on Higher Education (CCHE) allocated the remaining unused volume cap of $1,199,238 to DOLA for allocation to any qualifying project, not just those benefiting institutions of higher education. Under The American Recovery and Reinvestment Act (ARRA), the RZFB volume cap will expire on December 31, 2010.

RZFBs are tax exempt bonds for public or privately-owned projects in a designated economic recovery zone. They are very like Private Activity Bonds and Exempt Facility Bonds, but with a much longer list of potential projects.

Additional Information:

The American Recovery and Reinvestment Act (ARRA) provided $148,527,000 in RZFB volume cap to the State of Colorado. Under state enabling legislation (HB-09-1346), most of this cap was allocated to projects approved by the Colorado Commission on Higher Education (CCHE), for the benefit of institutions of higher education and their surroundings.

Federal guidance on June 12, 2009 notified the state of this allocation and its initial distribution among counties and large municipalities (populations exceeding 100,000). This distribution was a proportionate allocation to counties and large municipalities based on employment decline between December 2007 and December 2008. Under HB09-1346, counties and large municipalities had until November 11, 2009 to use their allotted volume cap for higher education capital construction projects, projects which must receive CCHE approval. On November 11, the unused volume cap reverted to the CCHE. On May 21, CCHE allocated the remaining unused volume cap of $1,199,238 to DOLA for allocation to any qualifying project, not just those benefiting institutions of higher education. Under ARRA, the RZFB volume cap will expire on December 31, 2010.

RZFBs are tax exempt bonds for public or privately owned projects that can include public-private partnerships. These projects must be in a designated economic recovery zone. Otherwise, they are very like Private Activity Bonds and Exempt Facility Bonds. The difference is that they can be used for virtually any business – except they cannot be used for residential rental property, golf courses, country clubs, massage parlors, hot tub facilities, suntan facilities, racetracks, gambling facilities, or for liquor stores.

The following are three examples of projects that received RZFB volume cap from CCHE to privately finance projects benefiting the University of Colorado Denver:

o Fitzsimons Village Full Service Hotel and Conference Center benefiting the University of Colorado Denver This project would construct a 200 room full service hotel with 20,000 square feet of conference space located immediately across Colfax Avenue southeast of the campus. Benefits of this project to the University include much needed hotel space near campus for visitors to the hospital including those attending conferences and seminars on campus, expanded meeting space for University functions, and positive economic development in a blighted area across the street from campus. Overall the Fitzsimmons Village project will also provide needed residential and retail development that will support the campus.

o Colorado Science + Technology Park at Fitzsimons, Hyatt Place Hotel benefiting the University of Colorado Denver This project would construct a 163 room limited service hotel with 7,500 square feet of meeting space located on Montview Boulevard and Ursula Drive. Benefits of this project to the University include hotel space near campus, positive economic development on campus and the fact that the taxes paid by this hotel will contribute to the overall Tax-Increment Financing on the Fitzsimmons campus which will fund needed public infrastructure including near term improvements to Montview Boulevard immediately adjacent to the University campus. This street improvement is high on the University's wish list for public infrastructure improvements.

o Denver Health and Hospital Authority Pavilion M Project benefiting the University of Colorado Denver This project would construct a new 78,480 square foot facility located at Denver Health for adolescent psychiatry. The facility will also house an outpatient dialysis function and an outpatient surgery center. Overall the facility would provide expanded opportunities for residents and nurses in training. Currently, Denver Health provides training to 165 medical residents and 300 medical students each year. This facility would enable more medical students and residents to train at Denver Health.