Known as Recover NYC, the program is being administered by the New York City Economic Development Corp. via the NYC Industrial Development Agency and NYC Capital Resource Corp. It will offer access to triple tax-exempt bond financing authorized under what the Bloomberg administration expects to be more than $200 million in stimulus funds provided through ARRA.
According to the NYCEDC, triple-tax exempt bond financing allows borrowers to obtain lower rates and longer and more flexible terms because investors in the bonds are not subject to federal, state or city income tax on the earnings on their investment. Through the program, developers work with financial advisors of their choosing to identify bond purchasers and to structure the proposed debt. Debt can be structured with variable, fixed or auction interest rates. Maturities typically depend on the useful life of the asset to be financed. To limit the annual debt service, the bonds can be repaid over a period of 20 to 30 years.
Eligible projects must also demonstrate the ability to utilize the federal bond allocation by the time the allocation expires at the end of 2010, according to the NYCEDC. Therefore, the developer has to have underwriter and all permits and approvals in place when applying for the program. Applications are now available.
Along with shovel-readiness, additional selection criteria include a project's return to the city, job creation potential and economic and environmental impact on the community, according to the NYCEDC. Projects requiring less than $20 million may be considered if their return to the city or impact on the community is deemed significant.
Projects will ultimately require approval by the IDA or CRC board. Applications for the program will also be evaluated to determine eligibility for other NYCEDC programs.
"Anyone who has a project that is stalled due to current economic challenges should apply for this program," says Seth Pinsky, president of NYCEDC, in a release. "We intend to use this program to attract applications for a diverse array of projects. EDC can offer financial assistance in a variety of ways, including tax-exempt bond financing, sales, mortgage recording and real estate tax incentives and discounted energy rates. This new program is being offered on top of other programs available for smaller projects."
In announcing the program, the Bloomberg administration compares it to the New York Liberty Bond Program, which was developed after 9/11 and was administered by the NYCEDC and the Empire State Development Corp. The Liberty Bond Program provided low-cost bond financing, primarily for projects south of Canal Street in Lower Manhattan.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
