PROVIDENCE, RI – May 13, 2010 – (RealEstateRama) — General Treasurer Frank T. Caprio announced that Wednesday’s sale of Rhode Island General Obligation (G.O.) bonds was a tremendous success. The $144.7 million sale included $80 million of recovery zone economic development bonds.
“Offering the taxable recovery zone bonds in place of traditional tax exempt bonds will save the state $13 million in interest costs over the life of the bonds,” said Caprio.
The sale is the first time ever an entire state has been designated a “Recovery Zone” and becomes the second largest recovery zone deal in the nation behind Chicago’s $133.2 million January offering. The recovery bonds will be used in Rhode Island for statewide transportation projects, with additional funds from the bond sale targeted for housing development.
The recovery zone designation was created under the American Recovery and Reinvestment Act of 2009. Issuers are provided with a 45% federal subsidy on interest costs for capital projects in areas designated as recovery zones due to high unemployment, foreclosures and economic distress.
“Many times individual counties in a state will sell recovery bonds, declaring specific geographic areas as recovery zones based on need, so it is unique that an entire state would fit into this category,” said Caprio.
Counties in Rhode Island exist largely for geographic purposes and do not have a governmental structure capable of issuing bonds.
Last month, the General Assembly passed legislation that allowed the state to take over recovery zone designation from individual counties, enabling Rhode Island to take full advantage of the recovery bonds in a single state-wide bond sale.
“The sale of these recovery bonds will help get our economy moving in the right direction by enabling projects to move forward and companies to hire additional employees or bring back workers previously laid off,” said Caprio.
Barclays Capital was senior manager on the bond offering transaction.
