Not-for-profit organizations that are planning major capital projects may be able to use triple tax-exempt bonds issued by the Build NYC Resource Corporation 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.

Eligibility and Selection Consideration

Eligible borrowers will include not-for-profit corporations with federal 501(c)(3) status which are either incorporated in New York State or otherwise qualified to do business within the State.

Build NYC approves proposed financing projects on a discretionary basis. Selection considerations include (but not limited to):

• retain or create jobs;
• continue or augment services to a needy population;
• promote a purpose that would not be feasible if undertaken on a for-profit basis;
• provide a service that will reduce the City's cost of providing that service, thus promoting efficiency and resulting in cost savings to the City;
• continue or enhance the quality of cultural life in the City; or
• encourage substantial employment and capital investment in geographic areas in which the City seeks to promote economic development.

Eligible borrowers must provide financing commitments for their proposed projects.

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

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.

To assist borrowers in assessing the cost-effectiveness of financing their proposed projects with tax-exempt bonds, Build NYC 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 $5 million may not be cost-effective.
• Borrowers work with investment banks or institutional lenders of their choosing to identify bond purchasers and to structure the proposed debt.
• Build NYC 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. Build NYC 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, Build NYC does not require bond issues to be rated by bond credit rating agencies.