Supervisors to consider creating a countywide recovery zone

The Los Angeles County Board of Supervisors will be asked on Tuesday, Jan. 26, to designate the entire county as an economically-distressed “recovery zone,” paving the way for it to issue hundreds of millions of dollars’ worth of bonds to fund an array of projects under the American Recovery and Reinvestment Act (ARRA.)

The county is seeking to take advantage of a massive U.S. Treasury Department program that has allocated $25 billion to help state and local governments across the nation get projects moving in areas that have been hit hard by job losses. Los Angeles County’s allocation is nearly $181 million in economic development bonds and $271.5 million facility bonds, which can be made available to private entities for projects in the recovery zone.

To support the case for a countywide recovery zone designation, county analysts pored over economic data and found that more than 83% of Los Angeles County census tracts have “directly experienced significant levels of poverty, unemployment, home foreclosures, or general distress,” according to a letter to supervisors from the Chief Executive Office.

Since the rest of the county falls within an average worker’s 31-minute commuting range, that means all areas of the county have a “reciprocal impact” on each other and should be included in the designation, the letter said. The countywide designation would also give supervisors more flexibility in coming up with a final list of projects to be funded with the bonds.

The only project specifically mentioned in the board letter is the Martin Luther King Jr. Multi-Service Ambulatory Care Center. The CEO’s office said it has identified more than $1.1 billion in project proposals that meet the basic bond criteria—far more than the county’s bond allocation could cover. It currently is working with each supervisor’s office to develop a priority list of projects to be funded. The final list must be compiled by Aug. 15, 2010, and the bonds issued by Dec. 31, 2010.

The recovery zone economic development bonds come with a federal subsidy covering 45% of the interest. There is no federal subsidy with the facility bonds, which are tax-exempt and can be issued by the county and the funds loaned to private borrowers developing projects within the recovery zone.

The county also is authorized to issue $27,312,584 in Qualified Energy Conservation Bonds for energy-reducing or renewable energy projects in public governmental projects, with an additional $11,705,393 allocated to bonds for such projects in the private sector.

[Updated 1/26/10]: The supervisors, at their weekly meeting, approved the “recovery zone” designation. The CEO’s office will prepare quarterly briefings for the board on the project’s progress.