A School With a Complex

The New York City Education Construction Fund plans to competitively market $53 million of bonds tomorrow to finance construction of a public school at an apartment tower and retail complex. The deal will accept both taxable Build America Bond and tax-exempt bids. The bonds will have serial maturities out to 30 years.

“The [true interest costs] on the subsidized rate with the BABs will be compared to the TIC on the tax-exempts and we’ll take the lowest cost,” said New York City deputy budget director Alan Anders.

The planned project will be built on the former site of a public school at 250 East 57th Street in Midtown Manhattan and include an elementary school and a high school. Nixon Peabody LLP is bond counsel and A.C. Advisory Inc. is financial adviser on the deal.

The ECF will use lease payments and tax-equivalency payments from the developer for the non-school portion of the projects to pay debt service, but the bonds are secured by a lease between the city and ECF. If payment from the developer combined with any BAB subsidy payments are insufficient to pay debt service, the city is obligated to pay the difference. As an additional layer of security, the New York comptroller can intercept state school aid due to the city to pay debt service on the bonds.

Moody’s Investors Service rates the bonds A1 with a stable outlook.

Real estate developer World Wide Holdings Corp. plans to develop the residential tower and 78,000 square feet of retail space on the site.

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