The New York City Capital Resource Corp. on Tuesday gave final approval to $28 million of recovery zone facility bonds to finance a cement facility on Staten Island.

Staten Island Terminal LLC plans to use the CRC bond proceeds to help finance the construction of an 18,000-square-foot distribution center that will include a pier for ships unloading cement.

Once finished, the facility would be capable of handling 800,000 tons of ready-mix cement to be used in the metropolitan area.

The bonds will be marketed as 16-year variable-rate demand bonds supported by a direct-pay letter of credit from Citibank NA. Roosevelt & Cross Inc. will underwrite the deal and Gonzalez Saggio & Harlan LLP is bond counsel.

Recovery zone facility bonds, a private-activity bond program created under the American Recovery and Reinvestment Act of 2009, expires at the end of this year. New York City received a $120 million allocation of RZFBs but to date has only completed one transaction.

In June, Roosevelt & Cross privately placed $20 million of the bonds on behalf of Albee Retail Development LLC. The bonds were priced at par with a 32-year maturity and a 7.5% coupon.

CRC  staff has cited a difficult financing environment as the reason for delaying some of its deals. Though there has been discussion in Congress about extending the RZFB program, CRC chairman Seth Pinsky said they weren’t counting on it.

“Until they’re extended we’re working under the assumption they expire at the end of the year and our goal remains to use all these benefits that were provided by the federal government,” he said.

The Internal Revenue Service last year allocated $15 billion of RZFBs to states, territories and municipalities, but few of the bonds have been issued.

Last year issuers sold $56.3 million of RZFBs in 10 deals, according to Thomson Reuters. The pace has picked up in 2010 with 31 deals totaling $486.5 million completed.

Also Tuesday, the New York City Industrial Development Agency, an issuer affiliated with CRC, approved the substitution of letters of credit from Allied Irish Banks plc on several VRDB issues after a downgrade and financial deterioration of the bank caused interest rate spikes. Columbia Grammar and Preparatory School saw weekly rates on its bonds jump from 0.75% in the first week of May to 3.5% by the end of that month.

The borrowers approved to subsitute their Irish Bank LOCs include: Spence-Chapin, Services to Families and Children, the Hewitt School, Birch Wathen Lenox School, Alan Stevenson School , Columbia Grammar, Federation of Protestant Welfare Agencies and New York Law School.

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