Clock ticking on county’s use of low-interest stimulus money

The clock is ticking on Davison County’s access to nearly $8 million in low-interest, federally backed bonds, the county commissioners learned Tuesday at the courthouse.

John Claggett told fellow commissioners during an informal conversation that the county is being asked by the state to use or lose nearly $8 million in bonding authority for economic-development projects. If the bonding authority goes unused, it would be returned to a state pool so it can be used to finance other projects in communities around the state.

The county received notice in June that it was part of the $225 million recovery-zone bonds program awarded to South Dakota counties under the Obama administration’s economic stimulus package, but no plans have been made to take advantage of that federal program.

“We need to figure out a vision for what we want to do,” Claggett said.

The county will demolish the Tower building at the north end of the Miller Avenue public safety complex this winter or spring, but no plans have been made for a county building to replace that structure.

Commission Chairman Jerry Fischer said during Tuesday’s discussion that it will be two years before the county is ready to build.

That may be too long to wait, if the county hopes to use federally backed funds.

“We’re not trying to pressure any county to give their (bonding) allocation to the state,” Jason Dilges, commissioner of the state Bureau of Finance and Management, said in a phone interview. “We’re asking them to use whatever allocation they may have for projects that exist, or to consider projects jointly with the city, school district or other opportunities in the county, based on the requirements of the recovery zone.”

But counties must first designate a recovery zone before those funds can be used, Dilges said.

To date, Davison County commissioners have not designated or discussed the establishment of such a recovery zone. There is a Dec. 31, 2010, deadline for use of the recovery-zone bonds.

If there are no identified projects, said Dilges, “We’re asking such counties to consider waiving that allocation back to the state so we can go to counties, cities and school districts with more projects than (bonding) allocation, and re-distribute the allocation.”

“The worst thing that could happen is that we don’t use that allocation and projects don’t get done,” he said.

Dilges said the bonds can be used by nonprofit organizations for tax-exempt purposes, or by for-profit companies, which would be able to take a taxable bonding rate and change it to a tax-exempt bonding rate.

The county’s bonding authority includes:

- $3.191 million in Recovery Zone Economic Development Bonds, which are designed to help tax-exempt local governments obtain financing at lower borrowing costs for economic-development projects, including public infrastructure or construction of public facilities in designated recovery zones.

While counties will still have to sell bonds to raise the needed funds for a project, the federal government will reimburse 45 percent of the interest paid on the bonds.

- $4.787 million in Recovery Zone Facility Bonds, which are tax-exempt, private activity bonds that may be used by the county to provide financing for a broad range of private capital projects that typically would not qualify for such funds. These might include manufacturing plants or research parks that could be used by active businesses. Projects like private, residential rental units, gambling facilities or golf courses wouldn’t qualify for this money.

The county recently retired bond debt on the county jail and will pay off a $917,698 long-term debt for county buildings at the fairgrounds on Sept. 15, 2011. Auditor Susan Kiepke said the county will have to borrow funds to build a new county building, but it is in a sound financial condition to assume more debt.

In other business Tuesday, the commissioners:

- Approved the renewal of liquor licenses for the Kongo Klub and the Wild Oak Golf Club.

- Briefly considered approving the purchase of an oil spreader and truck. Highway Superintendent Rusty Weinberg found an Illinois-based $23,000 oil sprayer, but it was attached to a $16,200 truck. Money was available to purchase both pieces of equipment, but purchases over $25,000 must be put to public bid, said Kiepke. The commissioners directed Weinberg to continue looking for equipment that meets those requirements or to develop bid specs that can be advertised.

- Approved a five-year lease with the Department of Game, Fish and Parks for about $235 a month for storage space in the county’s Public Safety Building. The rent will increase 3 percent a year during the leasing period.

- Accepted a sealed bid of $1,250 submitted for the year-old furnace and air-conditioning system at the county-owned house formerly leased by Stepping Stones. The system must be removed by Nov. 30. The house will be demolished with the Tower building.

Tags: news, local, stimulus