A new local development corporation for New York City nonprofits has closed its first four tax-exempt bond financings, totaling $93.4 million.
Build NYC Resource Corp. last week closed $49.9 million for the YMCA of Greater New York, $24.7 million for Royal Charter Properties Inc., $15.2 million for New York Foundling Charitable Corp. and $3.6 million for Yeshiva Har Torah.
Build NYC, which is administered by the New York City Economic Development Corp., launched in December, ending a four-year absence of a city-based tax-exempt bond issuer for nonprofits.
A portion of New York State law allowing industrial development agencies to financially assist nonprofits had expired in early 2008.
"We're very excited about the program and the reaction we've gotten from the investor community," said Shin Mitsugi, an EDC vice president.
"This reflects the diversity of nonprofit activity in New York City," Mitsugi noted.
According to the EDC, about 470,000 people work at more than 42,000 health, human services and cultural nonprofits in the city.
Both Mitsugi and EDC senior vice president Jonathan Gouveia said the new organization has spent the past few months getting its name out.
During the four-year gap, meanwhile, EDC officials continued to collect data about nonprofit needs.
"There's a lot of demand out there," Gouveia said.
The funding will benefit both new capital projects and bond refundings. Lowering interest rates through refunding, officials said, will free up cash flow for capital projects.
"Market conditions are favorable nowadays," Mitsugi said.
The YMCA, for instance, plans to use the new money to refund outstanding bonds and pay for a new family aquatic center at its Prospect Park branch in Brooklyn.
Royal Charter Properties, which develops and manages real estate properties for such organizations as the New York-Presbyterian Hospital, will use its allocation to refund tax-exempt bonds issued in 2001.
New York Foundling provides housing and other service facilities to affiliated child-welfare agencies.
It will refinance a loan used to construct a 56,000-square-foot building in the Mott Haven section of the Bronx.
Yeshiva Har Torah, a co-educational school with students from nursery through eighth grade, will refund bonds issued by the New York City Industrial Development Agency in 2006.
Since launching, Build NYC's 15-member board of directors have approved 11 projects for funding, four of which closed last week.
The New York Foundling and Yeshiva Har Torah transactions featured direct placements through TD Bank, while YMCA and Royal Charter were sold in the public markets.
The inability of city government to assist nonprofits looking to sell tax-exempt bonds has sometimes effectively raised borrowing costs, according to Mitsugi and Gouveia.
A 12-person strategic investment group has worked with internal and external bond counsel.
The outside firms included Hawkins Delafield & Wood LLP, Winston & Strawn LLP and Nixon Peabody LLP — all with considerable New York City exposure — as well as Gonzalez Saggio & Harlan LLP, a minority-owned firm looking to expand its presence in the Northeast region.
"We're really pleased with our success to date," Gouveia said.
"The four closings represent an important milestone."