GOSHEN -- Elkhart County, the cities and towns here and companies interested in expanding or locating here now have nearly $75 million worth of low-interest bonding capacity at their disposal thanks to the federal stimulus package.
Yet another facet of the American Recovery and Reinvestment Act, the federal program meant to pull the nation's economy out of the doldrums, calls for "recovery zone" bonding authority as a means of spurring development and job creation. The legislation, which essentially makes it cheaper to borrow money, makes $29.9 million in low-interest bonding authority available to local governmental units here and another $44.8 million available to private ventures.
"It's good news for Elkhart County, good news for companies, good news for economic development," said County Commissioner Mike Yoder. The county has final say on which projects may tap into the bonding.
Notably, the bonding authority here, $74.7 million, is among the highest in the state, second only to the authority granted to Indianapolis and Marion County, $177.5 million, according to County Administrator Tom Byers. That stems in part from the high unemployment here.
The feds earmarked a total of $783.43 million in special bonding authority across Indiana, $313.81 million for local governmental units and $469.62 million for the private sector, Byers said.
ELCO, C.R. 17, THREE BUSINESSES
The county has yet to earmark bonding authority for any specific projects, but already there's talk.
City of Elkhart officials have approached their county counterparts about using such bonding to help finance the ongoing restoration of the Elco Theater in the city center, according to Yoder. If ARRA grant funding for the ongoing C.R. 17 upgrade doesn't materialize, he added, recovery zone bonding could be an alternative.
Three unnamed private businesses interested in potentially locating here -- two manufacturers and another in the tourism industry -- are also eyeing the bonding, Yoder said. Other cities and towns in Elkhart County, meanwhile, have also been advised and invited to apply for bonding authority.
With the base cost of a project still the responsibility of the developer, those granted recovery zone bonding authority hardly have a free ride.
"You still have to feel you can afford it," said Gordon Lord, the county's legal advisor. "It's still got to pass the economic smell test."
But tapping into such bonds will save 45 percent in interest costs, according to terms of the program. For example, if the interest rate on funds borrowed for a project total 6 percent, the feds will cover 2.7 percentage points worth of that, effectively lowering the rate for the developer, whether a governmental unit or business, to 3.3 percent.
A five-member advisory committee answerable to county commissioners has been named to consider requests from companies seeking recovery zone bonding authority. The body considers its first proposal on Oct. 13.
Proposals from governmental units would go directly to county commissioners for their consideration.