Opportunity knocks to promote economic recovery
Congress has changed the terms on income tax free bonds sold for local government projects such as water line extensions and incentives to attract restaurants and other retail businesses to communities like Lewisburg and Marshall County.
It's part of the economic recovery program and Lewisburg-based attorney Bob Binkley has explained it to at least three local panels: the city's Economic Development Board; the county's Budget Committee, which is recommending it to the County Commission for a vote Monday; and the Marshall County Board of Public Utilities.
Binkley was clear with his message. He's not perfectly sure the low-interest financing program will work for local projects, but steps must be taken to make this area eligible to participate. Deadlines are looming, he said. Commitments are needed by spring to use the opportunity. Bonds must be sold by the end of 2010.
Tennessee was authorized by Congress to permit local governments to issue millions of dollars in recovery bonds, Binkley said. The state set a limit for each county. Marshall's share is about $1.5 million. If that share isn't used, it goes back to the state.
Two financing plans in the economic recovery act have been explained.
One was presented to the utility board Tuesday as a way to reduce the cost of extending water mains to rural areas and obtain a 45 percent rebate on the interest costs. Chapel Hill Town Administrator Mike Hatten has indicated this might work for the town's sewerage project, Binkley said.
The other financing plan makes use of industrial development revenue bonds available for restaurants, groceries and other businesses.
Applebee's, T.G.I. Friday's and other such "sit down" chain restaurants have been mentioned as prospective businesses here, Binkley noted. And Cornersville Mayor Amos Davis advocates development of a grocery in his town, Binkley said.
Such private enterprises would need to find bond buyers or venture capitalists to provide money for the loans made through bond sales and those investors would bear the risk of the revenue bonds sold for the businesses that, previously, were not eligible for income tax free bonds. Investors buy those securities because they're usually seen as a low-risk investment and the interest income earned is not subject to income taxes. Like the federal government, Tennessee has an income tax on interest and stock dividend payments.
Revenue bonds, those with debt repaid by income generated by the business or a public project like a toll bridge or utility, had previously been used for industrial development such as auto assembly plants like Saturn and Nissan. Congress changed the restriction so these bonds can be sold to develop groceries and restaurants.
To use the opportunities made available by the economic recovery act, county commissioners must vote to create development districts. Two kinds are suggested by Binkley and have become part of the resolution awaiting a commission vote Monday.
The commission meets at 6 p.m. in the Courthouse Annex on the southeast corner of Lewisburg's public square.