Eligible Borrowers and Projects

Private companies developing transportation or related facilities located on docks and wharves or solid waste recycling facilities are eligible to use triple tax-exempt bonds to finance the construction, renovation and equipping costs associated with these projects. 

Recycling companies may also be able to use triple tax-exempt bond financing for site acquisition.

Companies generally apply prior to entering into facility lease, acquisition, or renovation contract unless contingent upon NYCIDA assistance.

Program Benefits

Triple Tax-Exempt Financing

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.

• 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.
• Due to transaction costs associated with bond issuances, New York City Industrial Development Agency (NYCIDA) assists borrowers to assess the cost-effectiveness of financing their proposed projects with NYCIDA bonds prior to accepting applications.
• 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 typically require the debt to be secured by the company’s available collateral and a guarantee of the principals among other forms of security.
• NYCIDA debt is not an obligation of the City or the State, or any subdivisions of either.
• NYCIDA does not require bond issues to be rated by bond credit rating agencies.

Other Benefits

Requests for other benefits, including waivers of mortgage recording and sales taxes, will be evaluated based on need.

Special Requirements for Dock & Wharf Facilities Projects

• The facility must be owned by a governmental entity.
• The facility must serve the general public or be available for public use on a regular basis. If the facility is located in a public port, it will be deemed to satisfy the public use requirement.
• The lessee must make an irrevocable election (binding on the lessee and all successors in interest under the lease) not to claim depreciation or an investment credit with respect to financed assets.
• The term of the lease and of management and operating contracts may not exceed 80 percent of the reasonably expected economic life of the property.
• The lessee may not have an option to purchase the property or to extend the lease terms other than at fair market value as of the time such option is exercised.
• Bond proceeds may be used to finance office space within the project, but only to the extent such office space is related to the day-to-day operations of the facility.
• Bond proceeds may be used to finance retail space but only to the extent such retail space is necessary to serve users of the facility.
• Dock and wharf bond proceeds may not be used for manufacturing facilities.

Special Requirements for Solid Waste Recycling Facilities Projects

• Facilities financed must be in receipt of all applicable federal, state and city permits relating to their development and environmental impact.
• At least 65 percent by weight or volume of the raw material input must be valueless solid waste matter.
• Only the portion of the plant used for first-phase conversion of waste material into a project with market value may be financed. Portions of the plant or equipment used for second-phase activities that add value to the initial product may not be financed.
• Financings will be subject to the availability of State Bond Volume Cap unless the facility is owned by a governmental unit and lease and option restrictions similar to those for dock and wharf facilities are satisfied.

Selection Considerations

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.

Companies must request NYCIDA assistance prior to entering into any facility lease, acquisition or renovation contracts, unless such contracts are contingent upon NYCIDA assistance.

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 NYCIDA prior to closing.

Transaction Structure

To convey the above-described benefits, approved companies must lease their properties to NYCIDA, which leases the site(s) back to the company for the term of the bond financing. For solid waste recycling projects, this ‘lease-back’ structure should not prevent companies from obtaining federal tax depreciation benefits if the property is owned.