With two weeks left to use its remaining $90.2 million allocation of recovery zone facility bonds, New York City is projecting that $18.7 million of unused capacity will be left to help finance World Trade Center development.
Four other projects, which are expected to claim $71.5 million of RZFBs, already have received final approval and are eligible for issuance by the end of the year, according to New York City Capital Resource Corp. spokeswoman Julie Wood. If all four projects close as planned, they would leave $18.7 million from the city's original $121.7 million allocation.
Demand for RZFBs by borrowers in New York City has exceeded capacity, but some approved deals dropped out.
"We're working hard to try to get as many of them issued as we can," CRC chairman Seth Pinsky said following its final board meeting of the year Tuesday. "It's a tough environment."
On Monday, the New York Liberty Development Corp. designated the World Trade Center site as a recovery zone for purposes of issuing up to $200 million of RZFBs on behalf of Silverstein Properties Inc. to help finance development of 4 World Trade Center, a 63-story office tower.
"If we can use them on other projects, we will use them on other projects," Pinsky said. "If we can't, then I think it's better for everyone that they get used on a project of national importance."
No other projects were approved at the meeting.
Arthur Management Corp., a subsidiary of St. Barnabas Community Enterprises Inc., plans to use $19.8 million of RZFBs to help finance a parking garage in the Bronx. According to the Municipal Securities Rulemaking Board's EMMA site, that deal is expected to close Dec. 21 with a single 15-year maturity priced to yield 7% at par.
WytheHotel LLC, a company controlled by Two Trees Management Co., plans to use $15 million of RZFBs to build a hotel in Brooklyn. According to EMMA, the bonds will be issued as variable rate debt, close on Thursday and have a single 40-year maturity.
ESmith Legacy Harlem LLC, an affiliate of ESmith Legacy Inc. plans to use $19.7 million of RZFBs to build a $74.6 million hotel and retail development on 125th Street in Manhattan in a private placement.
Fleet Financial Group Inc., a real estate firm, plans to use $17 million of RZFBs to pay part of the costs to build and equip North Queens Medical Center.
The CRC gave extensions to the medical center and the parking garage to go to market because they were unable to meet the corporation's 150-day deadline for issuing the bonds.
The $15 billion private-activity bond RZFB program Congress created in the American Recovery and Reinvestment Act has been slow to catch on. To date, $2.17 billion of RZFBs have been issued nationwide, according to Thomson Reuters.
New York City aggressively promoted the program, inviting any eligible developer with a stalled project to apply, and suggesting the bonds could be used for construction of office buildings, large industrial facilities, or retail complexes. To date, CRC has issued $31.5 million of RZFBs for two deals.
"You'd be hard pressed to find any locality or state or city that has done a much better job than New York City," Pinsky said. "The whole purpose for these bonds was to induce projects that were marginal. So, by definition, they're tough projects to get closed."
New York municipalities received RZFB allocations totaling $555.1 million. Aside from the CRC, only Erie County has closed an RZFB deal in the state. That was an $8 million issue. California has been the leader of RZFBs, issuing nine deals totaling $378.6 million, according to Thomson Reuters. Among the 28 states in which RZFBs have been issued, New York ranks 21st. It has asked counties and municipalities to voluntarily waive unused allocations but as of August had only received $2.3 million. A spokeswoman for the Empire State Development Corp. said a more recent tally of waived allocations was not available.
