NYCCRC Passes Amendment to Allow Refinancing of Tax - Exempt Bonds For Not - For - Profits
The Board of Directors of the New York City Capital Resources Corporation (CRC) today unanimously passed a resolution to amend CRC’s Certificate of Corporation to allow the corporation to assist not-for-profit organizations to refinance tax-exempt debt previously issued by the New York City Industrial Development Agency (IDA). In January 2008, CRC and IDA’s ability to provide financial assistance to “Civic Facilities,” which are generally not-for-profit organizations such as health care institutions, schools, arts and cultural organizations, expired and has not been renewed. Without this authority, IDA has been unable to assist companies with active IDA deals to refinance their bonds. In many cases the bonds carry variable rates which have become onerous in the current economic climate. Pending approval by the State Attorney General, today’s amendment gives CRC the authority to assist with refinancing and ease debt service requirements.
“This announcement is an example of how the Administration is working to help New York and its institutions navigate their way through the credit crisis,” said CRC Chairman, Seth Pinsky. “This action will bring needed relief to many organizations that provide vital services to thousands of New Yorkers. I want to thank our board members, especially the representatives from the Office of the Comptroller and the Bronx Borough President, for their hard work on and support of this action.”
The amendment will be effective through December 2009. IDA estimates that there are currently about fifty IDA transactions that could avail themselves of this financing tool.
“I applaud today’s unanimous decision by the Capital Resource Corporation to begin allowing non-profits to refinance existing projects,” said NYC Comptroller William C. Thompson, Jr. “This creative solution will help pave the way for many of the City’s finest institutions, such as schools, hospitals, and social service providers, to navigate frozen credit markets during these tough financial times. Refinancing options that can help raise capital or negotiate different interest rates on pre-existing projects will help non-profits move forward with important civic facility projects. I am proud to have played a role in developing this solution, and look forward to continuing this work with CRC. We must do as much as possible to help our City’s non-profits get out from under the crushing burden of the financial crisis.”
“The collapse of the auction rate bond market has caused a severe hardship on non-profits in the City that issue bonds through IDA,” said Bronx Borough President Adolfo Carrion, Jr. “I am extremely gratified and relieved that the CRC board could come up with a solution to this pressing problem.”
In January 2006, New York City Economic Development Corporation formed the CRC to make it easier for not-for-profits organizations to access tax-exempt financing. Available to companies of all sizes, its simplified structure makes it especially attractive to smaller companies where other programs such as those offered by IDA are not cost-effective. CRC and IDA are both administered by New York City Economic Development Corporation.