EDC to Issue Bonds for Sidetracked Projects

NEW YORK CITY-The Bloomberg administration says it will issue tax-exempt bonds, backed by funds from the American Recovery and Reinvestment Act, to help kick-start shovel-ready projects that have been stalled due to lack of financing. Eligible projects may include office buildings, large industrial facilities or retail complexes which have development costs between $20 million and $100 million and are located within designated “recovery zones” in the five boroughs.

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.