The Legislature’s Business, Research and Economic Development Committee, of which I am a member, recently approved important economic development legislation that will facilitate low-cost financing statewide. The bill will help Maine businesses, counties and others access tax-exempt bond financing for economic development projects. The legislation implements federal American Recovery and Reinvestment Act of 2009 provisions and ensures that Maine will be able to take advantage of these one-time opportunities.

L.D. 1530, An Act to Facilitate Recovery Zone Facility Bonds, Recovery Zone Economic Development Bonds and Qualified Energy Conservation Bonds, was sponsored by Senate President Libby Mitchell at the request of the Finance Authority of Maine. The BRED Committee worked closely with various stakeholders, including FAME, the Maine Municipal Bond Bank, and Maine counties, to reach consensus and not miss out on this crucial economic development opportunity.

The ARRA authorized two types of recovery zone bonds: recovery zone facility bonds (for private purposes) and recovery zone economic development bonds (for public purposes). The federal government allocated $135 million to Maine for the issuance of facility bonds. The bonds are tax-exempt bonds for private economic development purposes and may be used to finance certain private projects within Maine. The federal government also allocated $90 million to Maine for the issuance of economic development bonds. The bonds are to be used to finance certain “qualified economic development purposes” such as capital expenditures for public infrastructure and facilities, as well as job training and education programs. The interest on these bonds is taxable, but an issuer receives a subsidy of 45 percent of the payable interest. Finally, the government allocated $13.6 million to Maine for issuance of qualified energy conservation bonds. All together, a total of $238.6 million in bonding will be available to Maine for these economic development opportunities.

The purpose of the ARRA and the bonds is to provide immediate economic benefit and stimulus to the states. These opportunities (except for QECBs) expire Dec. 31, 2010. Along with Maine counties, FAME and the Maine Municipal Bond Bank will help facilitate these low-cost opportunities for financing economic development. FAME and the Bond Bank will use their experience and expertise in the issuance of bonds.

Each Maine county received an allocation determined by the U.S. Treasury Department. The legislation directs the entire state’s allocations to FAME and the Bond Bank, which must obtain the endorsement of the county in which the project is located prior to bond approval. The short window of opportunity for these projects means that deals need to be shovel-ready and in a strong financial position to take advantage of the legislation.

Although the bill is still pending in the Legislature, it is expected to be enacted soon in order to provide maximum benefit to our communities. Anyone interested in more information may contact the Finance Authority of Maine (for private projects) at 800-228-3734 or the Maine Municipal Bond Bank (for public projects) at 800-821-1113. This is a good economic development opportunity for Maine that should not be missed.

Sen. Christopher Rector, R-Thomaston, represents Senate District 22 in the Maine Legislature.