New York City’s economic development bond issuers hope to get additional bond allocations under the recovery zone facility bond program, issuer staff said yesterday.
The boards of the New York City Capital Resource Corp. and the New York City Industrial Development Agency yesterday approved the expansion of areas designated as eligible under the federal program. New York State is considering the reallocation of unused bond cap.
“Because there may now be additional allocation available at the state level, maximizing the eligible areas for our purposes is prudent,” said IDA executive director Maureen Babis. The expansion adds areas designated last year by the state as eligible for a historic tax-credit program.
The city should advocate to “make sure the cap is used by city projects,” Babis said. “While the state has not yet announced plans on the distribution of this recycled cap, it is likely there will be tens of millions if not hundreds of millions available for projects after this recycling.”
Treasury last year allocated $15 billion of RZFBs — a kind of private -activity bond created under the American Recovery and Reinvestment Act to help finance projects in economically distressed areas — to municipalities nationwide to be issued by Jan. 1 2011. To date only 10 deals totaling $56.3 million have been sold and none of those were in New York, according to Thomson Reuters.
One reason that so few issues have been done is that the program was so new last year and Internal Revenue Service guidance wasn’t immediate, said Council of Development Finance Agencies manager of education and policy Brian Anderson.
“It takes some time for counsel and issuers to look at what it all means and then set up your allocation process and then you have to wait for private companies,” Anderson said. “You will see an exponential increase [in issuance] this year.”
“The other thing that’s going on is the fact that we’re in a recession and there aren’t a lot of investments being made now,” said Brian McMahon, executive director of the New York State Economic Development Council.
New York municipalities received allocations of $555.1 million, including $121.7 million for New York City, which plans to issue bonds though the CRC. The agency has given preliminary or final approval to projects using all but $19.7 million of its allocation.
In December, the Empire State Development Corp. asked issuers to declare their intent to use their allocation by Jan. 29 and suggested they waive unused cap back to the state by March 1.
“Many municipalities have indicated that they will use all of their allocation,” ESDC spokeswoman Elizabeth Mitchell said in an e-mail. The agency has not said whether it will reallocate waived cap to local issuers or issue RZFBs itself.
New York City Comptroller John Liu, an ex-officio board member of the IDA and CRC, cast “no” votes on subsidies and incentives for projects brought before the board yesterday, including $20 million of RZFBs for a Brooklyn project called Albee Square. Liu called for the establishment of a “standardized system of review to create a more transparent and accountable process.”
“My vote today is not a judgment on these projects, but rather reflects the need to examine how scarce public resources are used to advance our city’s economic development,” Liu said in a press release.