New Castle County will soon be offering financing for three construction projects it hopes will create jobs and contribute to the state's economic recovery.
Called "Recovery Zone Bonds" by the federal government, the county has been authorized to offer $76 million in construction bonds to local developers looking for an incentive to build now in areas of the county that need the economic growth the most.
It's a win-win for the county and the applicants, said Karl Kalbacher, who heads the county's Redevelopment Office.
The bonds are tax-free, which will allow a borrower to save a few percentages of interest on their bank loans, Kalbacher said. And the county also stands to benefit financially, as the government will take in a half a percent of what is borrowed.
The county's initial allocation spreads $30 million among the three projects, which means
roughly $150,000 in revenue for the county, Kalbacher said.
The county assumes no risk, as the borrowers are responsible for paying off their own debts.
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Recovery Zone Bonds Counties and cities with populations over 100,000 are eligible for these federally-designated bonds. Divided between the three counties and two types of bonds, Delaware has been given authority to issue $209 million in bonds. New Castle County: Kent County: Sussex County: |
The projects include:
- The construction of a six-story, 120-room hotel at 56 Old Baltimore Pike, Newark: 200-plus construction jobs; 38 full-time positions. ($8.2 million in bonds)
- The restoration and renovation of the historic Gibraltar Mansion at 1301 Greenhill Ave., Wilmington, and construction of 6,500-square-feet of office space there: 100-150 construction jobs, 57 full-time positions. ($9 million in bonds)
- The expansion of Citrosuco North America's terminal at the Port of Wilmington: 120 construction jobs; 10-15 full-time positions. ($15.7 million in bonds)
Each of the projects falls within the county's designated Recovery Zone, which includes most of the county. Only western Brandywine Hundred, Greenville, Hockessin, parts of Newark and some areas south of the Chesapeake & Delaware Canal are excluded from the zone.
In addition to the $76 million in conduit bonds the county can offer, the county can purchase up to $50 million in tax-exempt bonds for its own projects. To entice the county to spend that money, the feds are offering to subsidize nearly half of the interest payments on it.
The bonds must be issued by Dec. 10, 2010 and Kalbacher said the county is actively soliciting additional projects.
"People can come and talk to us and if they feel they have a project that qualifies, they can at any time submit a proposal," he said. We have $32 million on the street, so that leaves us another $44 million to provide as pass through financing."
To qualify, projects must be located within the Recovery Zone, be shovel-ready and produce long-term employment opportunites.
