Getting Projects Back On Track

Bdc Plans To Use Stimulus Funds To Cover Tax-exempt Interest On Municipal Bonds

August 04, 2009|By Lorraine Mirabella | Lorraine Mirabella,

Baltimore Development Corporation officials said Monday that they are seeking proposals for office buildings, hotels, business parks or other projects that might have stalled amid the recession and might qualify for some of more than $30 million in federal stimulus funds allocated to the city.

The city plans to dole out $30.8 million in recovery zone bonds made available through the federal stimulus legislation - the American Recovery and Reinvestment Tax Act - for new construction, expansion or rehabilitation of commercial projects.

With financing all but cut off for many commercial projects, city economic development officials said they hope to jump-start development by issuing bonds with tax-exempt interest, thus making them more attractive to potential investors. The city's financing comes from a pool of $15 billion in recovery zone bonds available nationally for eligible private-sector projects.

"I think it's something that's going to be very helpful to the city," said Kim Clark, the BDC's executive vice president. "We've had contact with several different developers whose financing had fallen through. It's going to be helpful to see some of these stalled projects move forward."

To qualify, a project must be located in a designated "recovery zone." The City Council last month rushed through legislation to designate more than half the city a recovery zone, which includes areas already designated as empowerment zones and enterprise zones and also includes areas with high rates of foreclosure, poverty or unemployment.

The city hopes to find projects that can show a likelihood to repay both the principal and the interest on the bonds without city assistance, that create jobs and housing and that generate taxes or revenue for the city.

Besides office, hotel and business park projects, the bonds could help finance manufacturing plants, shops, restaurants and mixed-use projects.

Developers' proposals are due to the BDC by Sept. 1. Depending on the number of proposals, the city could decide to use the bonds to finance a single large project or several smaller projects, Clark said. A decision is expected by the end of the year, she said.

City officials are also reviewing the best use for an additional $20 million in recovery bonds that are earmarked for infrastructure, for which the federal government pays 45 percent of the interest. City officials are considering using those bonds to finance the redevelopment of Westport, a formerly industrial waterfront along the Middle Branch that developer Patrick Turner plans as a $1.4 billion community of offices, shops, homes and a hotel.

In December, the City Council authorized Baltimore officials to issue $130 million in bonds to build sewers, roads and water mains for the project, but so far, investors have not shown interest and the bonds have not sold.

"We're reviewing a list of potential projects that would qualify and talking with bond counsel and consultants," Clark said. "Westport seems to be an area that would qualify."

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