Monday, 02 11, 2013
Combined funding sources to help reconstruct areas damaged from devastating March 2012 storm and tornadoes
WEST LIBERTY, Ky. – Governor Steve Beshear and Congressman Hal Rogers today joined federal, state and local officials to announce a unique $29.3 million funding effort to help Morgan County rebuild from the disastrous storm and tornado damage suffered in March 2012. The funds, supported by both public and private sectors, will support the reconstruction of five major building projects in the county – projects that are critical to stabilizing services and restoring a sense of permanency to the community.
“The destruction I witnessed in Morgan County last spring was unlike anything I have ever seen. I can tell you that Kentucky’s heart was broken by what our fellow citizens experienced,” said Gov. Beshear. “Immediately, we joined forces with our local and federal partners, and together, we began to restore services and rebuild West Liberty and Morgan County. But what will really make West Liberty and Morgan County feel like home again is reconstructing those key places that mark a hometown, like the courthouse. When complete, these projects will serve as symbols to citizens of better things to come.”
"This multimillion dollar project represents hope for the future of Morgan County and applauds the resiliency of Kentuckians," said Congressman Rogers. "Organizations from across the Commonwealth and people of all ages, Boy Scouts and Disabled American Veterans alike have been a part of the recovery process in West Liberty, volunteering time, food and various resources to get this community back on its feet. Together, we join in celebration for the progress of Morgan County and look forward to revisiting the new, improved West Liberty very soon."
The March tornadoes caused vast devastation in Kentucky, with the brunt of damage falling on West Liberty and Morgan County. Statewide, 25 people were killed, and more than 4,500 homes were affected; 671 of those were destroyed and 588 had major damage. The Federal Emergency Management Agency has provided $10.3 million in housing and other assistance to individuals. Kentucky cities and counties have requested $29 million to repair and replace infrastructure, buildings and equipment, of which $16.8 million has been obligated to date by FEMA.
This inclusive recovery effort sets to rebuild much of the damage in Morgan County by utilizing several different funding sources from the federal, state, local and private sectors. The overall recovery effort includes the construction and reconstruction of five building projects in Morgan County. Those projects include:
- Construction of the new Morgan Co. Recovery Center - $9.4 million
- Reconstruction of the Morgan Co. Office Building and Community Center - $6 million
- Reconstruction of the old Morgan Co. Courthouse - $2.4 million
- Construction of the new Morgan Co. Extension Office - $2.3 million
- Construction of the new Morgan Co. Parking Structure - $3.8 million
The new courthouse under construction at the time of the tornadoes will be rebuilt using insurance proceeds, so other dedicated funding was not necessary. Some project funding from the Administrative Office of the Courts will be used for furnishings and fixtures for the building.
“I am grateful for the collaborative effort made by all involved,” said Sen. Robert Stivers. “It’s a testament to the people of Morgan how they have bounced back, and I acknowledge them for those great strides and also commend both local and state officials who have shown how all levels of government can work together, regardless of party or title.”
“I want to thank everyone who partnered in today’s announcement – federal, state, county, and city officials – and especially Governor Steve Beshear,” said Rep. John Will Stacy. “This is a great step, but we need to continue to focus on creating good paying, permanent jobs for citizens in Morgan, Menifee and other affected counties.”
“The residents of West Liberty have shown an awe-inspiring resilience through this unspeakable tragedy,” said West Liberty Mayor Jim Rupe. “I am truly proud to be a part of this courageous community and am greatly thankful for all of the first responders, community organizers, local, state and federal officials who have joined together to help West Liberty recover and come back better than ever.”
“On March 2, 2012, we witnessed firsthand the worst disaster that Morgan County has ever seen. On that day, we vowed that we would see the recovery of this community through to the end,” said Morgan County Judge-Executive Tim Conley. “This day marks a significant step in the recovery process, and I want to thank Governor Beshear, Congressman Rogers and all of the federal, state, and local officials and residents who are working together to rebuild this community.”
Bond Capacity Increased through Transportation Support
Before any of these projects could move forward, Morgan County needed more bonding capacity. In order to accelerate the rebuilding, the Kentucky Transportation Cabinet stepped in and satisfied $2.8 million in old road bonds owed by the county. This move allowed the county to finance the major projects at one time.
The combined funding for these projects is comprised of New Market Tax Credits, federal grants, state grants, and a small amount of new debt.
New Market Tax Credits
In particular, the availability of New Market Tax Credits has been instrumental in securing and leveraging complete funding for this recovery effort. This funding source accounts for 30 percent of the total funding available.
The New Markets Tax Credits program is a federal tax credit administered by the U.S. Treasury. The credit is a 39 percent tax credit spread over 7 years, and it is designed to provide private capital in areas of the country that would not normally see that type of investment, such as rural distressed regions. Each year, the U.S. Treasury allocates credits to organizations around the country called Community Development Entities (CDE’s).
In developing this project, it was necessary to find credit allocations from CDE’s and identify investors to purchase the credits in order to provide capital to the project. JP Morgan Chase and U.S. Bancorp agreed to purchase the credits for this project, creating a $9 million investment for the rebuilding effort.
This investment by JPMorgan Chase and U.S. Bancorp enabled all of the various building projects to proceed because the funds helped leverage the other needed financing that was provided through grants and bonding.
The funding sources and amounts for these projects include:
- Insurance Proceeds to Morgan County from KACO - $10.5 million
- New Markets Tax Credits proceeds - $9 million
- Morgan County Extension Office contribution - $2 million
- Kentucky Administrative Office of the Courts - $1.65 million
- Morgan County Fiscal Court bond proceeds - $1.5 million
- FEMA Mitigation Grant - $1.5 million
- LKLP, Inc. (Federal Transit Grant) - $1 million
- Multi-county coal severance - $1 million
- Kentucky Infrastructure Authority (City of W. Liberty) - $900,000
- Appalachian Regional Commission - $750,000
- Community Development Block Grant - $500,000
The remaining funds will be used for development and closing fees; compliance and audit fees and reserve accounts.