The New York City Industrial Development Agency yesterday approved the selection of four firms to do bond counsel work and adopted new policies and a fee schedule affecting borrowers.
The IDA kept its three existing bond counsel firms, Hawkins Delafield & Wood LLP, Nixon Peabody LLP and Winston & Strawn LLP, and added Hiscock & Barclay LLP. The firms were chosen from among 18 that responded to a request for proposals issued in November 2007. The firms will serve as bond and tax counsel on IDA transactions, project counsel for industrial incentive program and straight lease transactions, and provide ancillary legal services to the IDA.
Hawkins was chosen to create template documents for bond transactions and straight lease transactions that the agency said will make their execution more efficient.
The IDA approved a schedule of fixed compensation for bond counsel services to be paid by borrowers on transactions of less than $40 million. Bond counsel will charge $65,000 for transactions of less than $5 million, $75,000 for transactions between $5 million and $10 million and charge $125,000 for transactions between $10 million and $40 million. On deals greater than $40 million, bond counsel can charge hourly billing rates and disbursements, which was the past policy on all transactions. On deals that fail to close, counsel can charge $300 per hour.
Most of the IDAs deals since 1999 - 149 of them totaling $1.7 billion - have been for less than $40 million, while 46 deals totaling $7.17 billion have been for more than $40 million, according to Thomson Reuters data.
The IDA also adopted a policy requiring that borrowers put $15,000 into escrow for legal fees at the onset of transactions. If the deal fails to close, the law firm can draw down from the escrow account.
"Historically, bond and project counsel have lost fees and time spent when agency transactions have failed to close at no fault of their own," an IDA staff member said in a presentation.
Discussions over the proposed modification of issuance rules for the Capital Resources Corp., which like the IDA operates under the umbrella of the New York City Economic Development Corp., have not yielded any results.
Last month the CRC board voted against changes to its certificate of incorporation that would have allowed it to issue bonds for projects that the IDA currently can't because of the expiration of the law allowing industrial development agencies to sell bonds for civic facilities on behalf of nonprofits.
The city comptroller's office objected to provisions that would have made the change to the CRC permanent and exempt it from potential new rules governing IDAs.