Last week, Congressman Andrews announced over $107 million in new federal funding for South Jersey economic development projects. Congressman Andrews' announcement follows the White House press conference where Treasury Secretary Tim Geithner stated that $25 billion in new bond authority will be released nationwide under the Recovery Zone Bonds program. Created under the American Recovery and Reinvestment Act (ARRA), Recovery Zone Bonds are designed to target areas hit especially hard by the current economic downturn. The program will help local governments obtain the financing needed to boost their local economy and cut down on borrowing costs, while creating an immediate demand for redevelopment and construction jobs.

Specifically, Recovery Zone (RZ) Bonds are not direct grants or appropriations like other stimulus programs; rather, they allow State and local governments to borrow funds for eligible projects at lower borrowing costs based on Federal tax incentives. RZ Bonds come in two different types. The first, known as RZ Economic Development Bonds, are conventional taxable bonds which allow States and localities to obtain financing at lower borrowing costs because the Treasury Department pays the State or locality a direct payment subsidy equal to 45 percent of the coupon interest on the bonds. The second, known as RZ Facility Bonds, are traditional tax-exempt bonds which have lower interest rates because the interest is tax-exempt to the investors for Federal tax purposes.

Burlington, Camden, and Gloucester Counties are eligible to receive a total of $106,974,000 from the two bond programs combined. These bonds are to be issued to the county government directly and can only be used in designated recovery zones, mainly areas with significant poverty, unemployment, home foreclosures, or general distress. For more information on RZ Bonds and their direct economic effects, please visit http://www.irs.gov/pub/irs-drop/n-09-50.pdf.