In a move meant to promote economic growth in areas hit with job losses in 2008, the federal government recently allotted $6.2 million in bond authority to Lincoln County.
A June 12 press release from Senator Tim Johnson’s office trumpeted the new bonds as a tool to offset job losses by allowing the county and private businesses to move forward on capital projects.
But county leaders said at least one high-priority public project for which the county needs financing is located in an area that has not been particularly hit hard by the economic downturn.
At the Lincoln County Commission’s last regular meeting on June 9, commissioners decided to put a road-widening project for a two-mile stretch of County Highway 106 on the back-burner because cost estimates came in too high.
The road runs from Interstate 90 into Tea and runs through the bustling Kerslake Industrial Park.
“In theory, you wouldn’t think of 106 as an area needing economic recovery,” Commissioner Jason Melcher said.
Forty-one counties and the city of Sioux Falls each received a share of the $225 million in additional bonding authority allotted to South Dakota through President Obama’s stimulus package, the American Recovery and Reinvestment Act of 2009.
The counties have wide range of options for determining which, if any, projects they borrow the additional money for, Johnson spokesman Jeff Gohringer said. The money can be used for capital projects, job training and/or education.
“If they choose to utilize the bonds, it’s up to them,” Gohringer said. “It’s meant to let local governments decide.”
The authority is split into two forms: Recovery Zone Economic Development Bonds and Recovery Zone Facility Bonds. Development bonds, of which Lincoln County may award $2.5 million, can be used for public projects. The rest of the bonding authority, $3.75 million, is available for private businesses.
The interest on facility bonds, which can be used to finance nearly any private project except rental property, is tax-free for investors. The U.S. Department of The Treasury will pay 45 percent of the interest on the development bonds.
The amount of bond money each county is allowed to issue is based on the number of jobs lost there in 2008. Lincoln County’s unemployment rate jumped from 2.5 percent in January of 2008 to 4.1 percent in January of this year.
In order to allow the county or businesses to borrow the money, counties will need to designate areas as “Recovery Zones.” Those zones, according to a Treasury Department Q&A on the program, can be so designated based on “significant poverty, unemployment, rates of home foreclosure rates or general distress.”
Projects using the bond money would need to target those areas.
As of last week, Lincoln County Commissioners had yet to hear about the additional bonding authority and had no plans to take action on the bonds at their regular meeting on June 23.
Commissioners did say that 2008 brought some hardship for county residents, however.
Canton, Lennox, Harrisburg and South Sioux Falls were all affected layoffs at Hutchinson Technology and other Sioux Falls-based manufacturing facilities in 2008. The plant’s January closing further hit the county’s population.
“We’ve had people in Lennox who lost their jobs when Hutchinson closed,” Commissioner Dennis Weeldreyer said.
Sioux Steel and Quaker Manufacturing also had to scale back operations in Lennox, he said.
Canton saw its fair share of job loss, as well, Commissioner Dave Gillespie said. Adams Thermal, Fast Tek and Bidwell Corporation all cut back, and the custom framing business Creative Memories closed its doors in June 2008.
While the losses haven’t been extreme, Gillespie said, the Canton area has been hit harder than the growth areas near Sioux Falls.
“The growth has been so huge up there in Tea and Harrisburg that they’ve been able to ride the storm out,” Gillespie said. “Canton’s a little off the beaten path.”
Business is beginning to return to Canton without assistance, Chamber of Commerce Community Coordinator Lisa Alden said. A heating/cooling system manufacturing business based in Orange City, Iowa called “Waters Hot” signed a lease for the Creative Memories building in May, she said, and the company will begin hiring soon.
There are also two new restaurants in town this year – Rail Haus Bakery and Lucky’s Café.
“I think we’ve been hit, but we haven’t been hit hard by any means,” Alden said.
There are no pressing needs for highway or bridge projects in Canton or Lennox, Highway Superintendent Allan Bonnema said. Highway 116 just north of Lennox, which is also known as the Klondike Road, was widened and resurfaced last year. A bridge rebuilding project near Hudson was also completed in the past year, he said.
Highway 106 is the only major project left for his department.
“That’s our priority at the moment and we’re trying to stay focused on that right now,” Bonnema said.