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Managing editor

Approval has been given by both the Anoka County Board and the Anoka County Housing and Redevelopment Authority (HRA) to issue bonds for the first project under the bonding authority given to the county through the 2009 American Recovery and Reinvestment Act.

The federal stimulus package allocated $11,466,000 in recovery zone economic development and $17,200,000 in recovery zone facility bonding authority to the county.

The HRA has jurisdiction over applications for $17,200,000 in recovery zone facility bonds, which are targeted at business owners who want to expand or relocate their companies.

Following a public hearing Nov. 24, the county board approved the issuance of recovery zone bonds totaling $12 million for Premier FMC, LLC to build a new medical center next to Unity Hospital in Fridley and the HRA followed suit by approving a resolution authorizing the sale of the bonds.

The project is for a 60,000 square-foot building on some six acres of vacant land at the intersection of Osborne Road and Fifth Street adjacent to Unity Hospital.

According to Karen Skepper, county community development manager, closing on the project is anticipated Dec. 17 with construction scheduled to start right away and be completed in September-October 2010.

The new medical office will replace an existing, 1960s-era building adjacent to Unity, which will be demolished, with the land set aside for additional parking for both the hospital and new medical building, Skepper said.

The project meets the top two criteria established by the HRA for bonding approval - job creation and retention as well as improved access to health care, she said.

The project will create 120 construction jobs, which will pay as much as $45 an hour plus benefits, Skepper said.

Once completed 150 high paying jobs, including doctors, nurses and other medical staff, will move from the existing medical office building and another 50-plus new jobs will be created at the new facility, according to Skepper.

“This is exciting,” Skepper said.

The total project cost is estimated at $14 million with Premier FMC, LLC paying the balance, said Scott McLinden of Oppenheimer, which is the bond underwriter on the project.

With the bonding approval for this project, the HRA will have some $5.2 million left to allocate under the recovery zone facility bonding authority.

No other formal applications have yet been received, but inquiries have come from four of five prospective applicants, Skepper said.

The applications will not be recommended for bonding approval on a first come, first serve basis, she said.

“We will look at each project request on its merits and how it meets our top criteria of job growth and retention and health-related projects,” Skepper said.

The county plans to use the Central Minnesota Development Company (CMDC) to look at the feasibility of smaller projects and make a recommendation on whether bonding approval should be given, she said.

CMDC does similar reviews for projects seeking federal Small Business Administration (SBA) funding approval, Skepper said.

What makes these recovery zone facility bonds attractive are their tax exempt status, which means they have a lower interest cost than a traditional business loan/mortgage, according to information provided to the county by Mark Ruff and Jon North of Ehlers & Associates Inc.

These bonds “are intended to spur business development that wouldn’t otherwise happen,” Ruff and North said.

Under the federal regulation governing the bonding authority, the county has to sell the bonds by Dec. 31, 2010.

That applies to both the recovery zone facility bonds which are under the HRA’s wing as well as the recovery zone economic development bonding authority earmarked for public projects, which is under the jurisdiction of the county board’s Finance and Capital Improvements Committee.

The set of criteria approved by the county board for those bonds is identical to the HRA’s criteria, including the communities in the county where the bonds would be eligible.

Establishing a recovery zone was the first step in the bonding authority process, according to Skepper.

This could be any area of the county with significant poverty, unemployment, home foreclosures or general distress, Skepper said.

Factored in were the county’s Neighborhood Stabilization Program areas of greatest need, as defined by zip code and census blocks with a high rate of foreclosure, high risk mortgages and housing vacancies.

The unemployment data for each city was provided by the Minnesota Department of Employment and Economic Development (DEED), using what Skepper called a “snapshot in time.”

Using that information, the approved recovery zone in which projects are eligible for both sets of bonds includes all communities in the county except for Linwood Township and the cities of Columbus and Lino Lakes, Skepper said.

The criteria to be used in reviewing applications for both sets of bonds and weight to be given to each are:

• Job creation and retention, 30 percent.

• Improved access to health care, 25 percent.

• Regional significance, 15 percent.

• Financing plan, 15 percent.

• Project feasibility, 10 percent.

• Contribution to tax base, 5 percent.

Land acquisition is not eligible under these bonds, Skepper said.

The recovery zone economic development bonds, which are specifically earmarked for public purposes such as roads or government buildings, are likely to be used by both the county and its cities.

The availability of those bonds was announced to the cities at a quarterly meeting of officials from the county and its cities last month, Skepper said.

“So far we have had some nibbles but no bites,” she said.

But that could change when the state makes known its latest revenue forecast this month and if Gov. Tim Pawlenty announces more unallotments to deal with another, anticipated state budget deficit, according to Skepper.

And an application for these bonds could well come from the city of Ramsey, if that city is chosen by the Veterans Administration for its new outpatient medical clinic in the north metro, Skepper said.

Under these bonds, interest earned by investors is subject to income tax, meaning that the bond buyers will require a higher interest for an acceptable yield.

But, according to the Ehlers report, borrowing costs are reduced through a direct 45 percent federal subsidy to the bond issuer, payable every six months over the life of the bonds.

“Therefore, if the county pays 5 percent interest to the investor, the 45 percent federal subsidy equals 2.25 percent and the effective interest rate is 2.75 percent,” Ruff and North wrote in the report.

Peter Bodley is at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it