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Projects with Development Costs Ranging from $20 to $100 Million May Be Eligible for Tax-Exempt Financing Made Possible by the American Recovery and Reinvestment Act
Leveraging Federal Dollars to Spur Development and Create Jobs throughout the
City is Part of the Administration’s Five Borough Economic Opportunity Plan
Mayor Michael R. Bloomberg today announced the creation of the Recovery Zone Facility Bond Program to provide financial assistance to commercial and industrial projects in all five boroughs that are unable to get traditional financing due to current economic conditions. The program, to be administered by New York City Economic Development Corporation, will be funded by what is expected to be more than $200 million in funding made available through the American Recovery and Reinvestment Act (ARRA). Eligible projects may include the construction of office buildings, large industrial facilities or retail complexes.
“The Recovery Zone Facility Bond Program is another tool the City will use to help get stalled projects back on track and jump-start those on hold due to lack of adequate financing,” said Mayor Bloomberg. “This program will be tremendously helpful in ensuring long-term growth for the future, and building more attractive and livable neighborhoods and creating jobs for New Yorkers. We urge anyone with a project they think might be eligible to apply for this timely financing assistance. New York City’s Congressional delegation deserves credit for helping create the program, particularly Senator Schumer and Congressman Rangel.”
“Anyone who has a project that is stalled due to current economic challenges should apply for this program,” said EDC President Seth W. Pinsky. “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.”
The Recovery Zone Facility Bond Program will offer financial assistance in the form of triple-tax-exempt private activity bonds issued through New York City Industrial Development Agency or the New York City Capital Resource Corporation. Triple-tax exempt bond financing allows borrowers to obtain lower rates and longer and more flexible terms than more typical forms of financing because investors in the bonds are not subject to federal, state or city income tax on the earnings on their investment. Recovery Zone Facility Bonds must be issued by December 31, 2010.
To allow for quick action when the funds are allocated, the Industrial Development Agency and Capital Resource Corporation Boards gave preliminary approval to amend their Uniform Tax Exempt Policy to accommodate the program. The Boards also approved designated Recovery Zones in the five boroughs, which are made up of economically distressed areas lying within existing Empowerment Zones and Empire Zones, and areas that are currently eligible for Industrial Development Agency and New Market Tax Credit benefits. Applications for the program will be available starting today. Because the bonds must be issued by the end of 2010, applications for projects that can begin or be re-started immediately will be processed first, followed by projects with longer lead times.
To be eligible for the program, projects must be located in a designated Recovery Zone, have the ability to move forward and obtain all required permits and approvals quickly and require financing between $20 and $100 million. Projects requiring less than $20 million may be considered if their return to the City or impact on the community is deemed significant. Additional selection criteria include a project’s return to the City, job creation potential, and economic and environmental impact on the community. Projects will ultimately require approval by the Industrial Development Agency or Capital Resource Corporation Boards. Applications for the Recovery Zone Facility Bond Program will also be evaluated to determine eligibility for other Economic Development Corporation programs.
The Recovery Zone Facility Bond Program is available to private development in a manner similar to the New York Liberty Bond Program, which was developed following the events of September 11, 2001, and was administered by EDC and Empire State Development Corporation. The Liberty Bond Program provided low cost bond financing for major projects that contributed a great deal to the revitalization of Lower Manhattan and ensured the City’s long-term economic health.
The program is the newest tool available to the Industrial Development Agency and Capital Resource Corporation to help New York City companies prosper and grow in the City, create and retain jobs, and make the City’s neighborhoods more livable. Since January 2002, they have closed on 330 transactions, leveraging approximately $11.8 billion in private financing, with 85,212 jobs retained in New York City as a result. This past year has presented businesses of all sizes with unparalleled challenges. However, despite this difficult climate in fiscal year 2009, Industrial Development Agency and Capital Resource Corporation incentives helped facilitate the private investment in New York City from private companies of approximately $392 million. These private investments are being used to acquire, renovate, furnish and equip industrial, manufacturing and other facilities throughout the five boroughs. These projects are retaining and creating approximately 8,550 full-time equivalent jobs.
To apply for the Recovery Zone Facility Bond Program, call 311, or visit www.nyc.gov.
To maintain accountability and transparency in the City’s use of stimulus funding, all such funding allocated to New York City can be closely tracked at www.nyc.gov/stimulustracker. ARRA dollars can be tracked from initial allocation through project completion. In addition, the public can track key performance measures – such as jobs created – showing how these projects and programs benefit the City.
The City’s Five Borough Economic Opportunity Plan is a comprehensive strategy to bring New York City through the current economic downturn as fast as possible. It focuses on three major areas: creating jobs for New Yorkers today, implementing a long-term vision for growing the city’s economy, and building affordable, attractive neighborhoods in every borough. Taken together, the initiatives that the City has launched to achieve these goals will generate thousands of jobs and put New York City on a path to economic recovery and growth. To learn more about the plan, visit www.nyc.gov. Recently, the City has announced:
New York City Economic Development Corporation is the City's primary vehicle for promoting economic growth in each of the five boroughs. NYCEDC's mission is to stimulate growth through expansion and redevelopment programs that encourage investment, generate prosperity and strengthen the City's competitive position. NYCEDC serves as an advocate to the business community by building relationships with companies that allow them to take advantage of New York City's many opportunities. Find us on Facebook or follow us on Twitter, or visit our blog to learn more about NYCEDC projects and initiatives.