Arizona stimulus money pooled

Five cities and five counties have returned $78 million in federal stimulus bonds to the Arizona Department of Commerce, which has pooled the bonds for a lottery Monday for a few eligible private and public projects in the state.

The eight cities and seven counties that received the $225 million in federal Recovery Zone Bonds under the American Recovery and Reinvestment Act of 2009 have until Jan. 1, 2011, to award their bonds to public and private construction projects.

The federal government has a use-it-or-lose it policy on this money, which means the state will have to return it if it is not awarded by deadline.

Some city and county officials said the federal eligibility requirements are nearly impossible for developers to fulfill with only a few months before the deadline - unless they already have financing and land.

To keep the money in the state, the Commerce Department sent letters earlier this year asking the 15 cities and counties to return all unused bonds so it could award them to other qualified projects.

As of Thursday, five cities and five counties had returned all or the bulk of their Recovery Zone Bonds.

Tight restrictions

Officials in Tempe and Pinal County said they have returned all of their Recovery Zone Bonds, $7.7 million and $7 million, respectively.

Cities and counties had to designate geographic areas as recovery zones that needed the economic stimulus. That was the easy part; some recipients, such as Phoenix, declared their entire city or county as a recovery zone to ensure they would not exclude any projects that could potentially qualify for the bonds.

Tempe City Manager Charlie Meyer said the federal criteria for eligible projects were stringent.

The bonds came in two forms. "Economic-development bonds" are earmarked for city or county government projects, such as new government buildings or property purchases. They are taxable bonds.

The others, "facility bonds," are meant for private-led projects, such as a new factory or hotel, and the bond interest was tax exempt.

Projects qualified for the federal bonds if they were "shovel-ready," which became the biggest sticking point.

This meant the developers already had to have financing and property for their projects so they could break ground.

Meyer said Tempe staff met with various developers about project ideas, including a hotel, but none of the projects were eligible because they weren't shovel-ready.

Pinal County spokeswoman Heather Murphy said the county staff called upon various cities and the Central Arizona Regional Economic Development Foundation to seek projects that might qualify for the bonds, but had no luck.

"We had a lot of interest," Murphy said. "But we had no projects that met the criteria for the bond funding."

David Drennon, a spokesman with the state Department of Commerce, has declined to provide a list detailing the amount that the five cities and five counties returned to the state, despite repeated requests and a formal public-records request by The Arizona Republic.

Bond projects

Five of the 15 recipients - Chandler, Mesa, Phoenix and La Paz and Yavapai counties - have kept the full amount.

Yavapai County records show the Board of Supervisors used $22 million to complete construction of a $310 million cement plant owned by Drake Cement LLC.

Phoenix allocated its $21 million in economic-development bonds for construction of the PHX Sky Train, the driverless train that will link travelers at the light-rail stop at 44th Street to Phoenix Sky Harbor International Airport's Terminal 4 and to the airport rental-car center.

Phoenix also gave $30 million to the expansion of the W.L. Gore & Associates' medical-product-manufacturing site in north Phoenix and about $2 million to the construction of a Dunn-Edwards Corp. paint factory in south Phoenix. Maricopa County kicked in its $5.5 million to help pay for construction of the 304,000-square-foot plant.

Chandler and La Paz County officials did not return phone calls seeking comment.

Monday's lottery

The federal criteria for the projects are the same. Projects must be shovel-ready to be entered in the Commerce Department lottery.

Big projects already under construction, such as Phoenix's CityScape hotel, are eligible. So Phoenix is bidding high. It submitted its application for $57 million to help pay for RED Development's 250-room Hotel Palomar.

The hotel is already under construction at CityScape, a $900 million office, retail and hotel development that spans two blocks in downtown Phoenix.

Phoenix is also competing for $30 million to complete construction of the Dunn-Edwards paint plant.

Maricopa County is trying to help with construction of the plant.

For the lottery, it applied for nearly $22 million in facility bonds for Dunn-Edwards.

Maricopa County officials said they also submitted an application for $6 million in facility bonds for Paloma Dairy, a dairy-farm operation in Gila Bend.

The lottery will be Monday at 1 p.m. at the Department of Commerce, 1700 W. Washington St., in the sixth-floor conference Room 6A.

by Emily Gersema The Arizona Republic Oct. 17, 2010 12:00 AM



Arizona stimulus money pooled