Not-for-profit organizations that are planning major capital projects may be able to use triple tax-exempt bonds issued by the New York City Industrial Development Agency (NYCIDA) to finance the acquisition, construction, renovation, and equipping of their facilities.

Financing a project with triple tax-exempt bonds enables borrowers to initiate needed capital improvements at the lowest available cost and to better manage the timing of their capital investments.

To limit annual debt service, bonds can be repaid over a 20-30 year period with capital campaign receipts or other income.

In addition to triple tax-exempt bond financing, the NYCIDA can, for most borrowers, waive the mortgage recording tax on project mortgages that secure the bonds.

Compared with conventional loans, advantages of triple tax-exempt bonds can include reduced interest rates, longer financing terms, lower equity contributions, and, depending on the project, the ability to obtain construction and permanent financing in a single loan.

To assist borrowers in assessing the cost-effectiveness of financing their proposed projects with tax-exempt bonds, NYCIDA staff works with borrowers during their decision-making process prior to accepting applications. 

• Borrowers obtain lower interest rates due to the fact that purchasers of triple tax-exempt bonds receive exemptions from Federal, State and City income taxes on interest payments received. 
• The cost of the project and the organization's debt repayment capacity dictate the amount borrowed. Borrowings under $2 million may not be cost-effective. 
• Borrowers work with investment banks of their choosing to identify bond purchasers and to structure the proposed debt. 
• NYCIDA debt can be structured with variable, fixed, or auction interest rates. Maturities typically depend on the useful life of the asset to be financed. 
• Bond purchasers may require the debt to be secured by the organization's available collateral among other forms of security. NYCIDA debt is not an obligation of the City or the State, or any subdivisions of either. 
• Pooled bond structures may be available as a means to save on transaction costs by enabling an organization to join with others that are also undertaking capital projects. 
• Except for public offerings, NYCIDA does not require bond issues to be rated by bond credit rating agencies.
  

All NYCIDA benefits are discretionary. Selection considerations include need for financial assistance and the impact of the proposed project on New York City’s economy.

Transactions must comply with NYCIDA’s Not-for-Profit Guidelines (PDF 17 KB).

Applicants must provide financing commitments for their proposed projects.

The environmental condition of the project site(s) and the company’s liability and other insurance coverages must be satisfactory to the NYCIDA prior to closing. Insurance coverages must be maintained throughout the project term.