Posted: Wednesday, February 10, 2010 11:28 am

To encourage economic growth, Rutherford County may make low-interest laons available to local cities and businesses.

Part of the American Recovery and Reinvestment Act allows state governments to allocate funds for Recovery Zone bonds. Rutherford County has access to more than $12.7 million in these stimulus bonds.

These bonds are available to local governments and businesses in counties that had one or more of the following factors: significant poverty, unemployment, rate of home foreclosures or general distress.

Rutherford County qualifies as a Recovery Zone because of increased unemployment and significant drop in the number of building permits issued over the last two years.

Recovery Zone bonds come in two forms: Recovery Zone Development Bonds and Recovery Zone Facility Bonds.

Recovery Zone Development Bonds are issued to local governments for public infrastructure projects like water and sewer, roads, or any kind of public project to help stimulate recovery in the county.

The second type of bond is Recovery Zone Facility Bonds. They are a form of private activity bonds, similar to the kind of bonds that Industrial Development Boards issues for the benefit of private businesses.

But these bonds can only be used to buy equipment and renovate buildings. Businesses can use them to defray costs associated with expansion, but not to buy land.

The only catch is the bonds must be issued by the end of the year and Rutherford County must declare itself a Recovery Zone before local cities and businesses can apply for the loans.

The Rutherford County Commission will vote at its regular monthly meeting Thursday night to create a Recovery Zone to make the county eligible for the stimulus bonds.