Build NYC Program Clears $90 Million Financing
Daniel Geiger April 10, 2012, 1:44 p.m.
The YMCA received approval from the city this morning to borrow $50 million of funds through a new debt facility being administered by the Economic Development Corporation.
Called Build NYC, the funding window allows non-profit groups to issue bonds to finance real estate development and other construction projects. The vehicle is not paid for by the city but private buyers of the bonds such as banks or other investors and offers below-market interest rates for the borrower because the proceeds on the debt are triple tax exempt.
The YMCA will be using the money to refinance outstanding debt and also raise about $5 million to finish a stalled pool and aquatic center the organization is building next door to its branch in Park Slope, Brooklyn as well as pay for other capital projects.
“With today’s approval of this important tax-exempt financing, the YMCA will be able to reduce costs while increasing the number of critically important services they provide to communities across the city,” Seth Pinsky, the president of the EDC and chairman of Build NYC, said in a statement.
During this morning’s meeting, held at EDC’s headquarters in Lower Manhattan, preliminary approval was also granted for another large financing; a roughly $40 million debt offering that Montefiore Medical Center wants to issue through Build NYC in order to help pay for interior work on a 280,000-square-foot ambulatory care center it is planning to build at the Hutchinson Metro Center in the Bronx.
“This project is of great importance to Montefiore, to the community and to the city, and Build NYC’s participation is a significant factor in enabling us to proceed with the project,” Ed Pflegin, vice president of facilities and real estate at Montefiore, said in a statement. “This project will enable Montefiore to continue and expand its mission of healing in the Bronx.”
Although interest rates are currently at near-historic lows, the Build NYC program allows non-profit groups, which typically have tighter budgetary restraints than their for-profit counterparts, to reduce their cost of capital even a step further. A Build NYC spokesman last month told The Commercial Observer that the facility currently offers interest rates as low as 2.5 percent, though that figure is subject to market fluctuations.
The facility began operation last month, providing $26 million to Manhattan College to allow it to refinance existing debt it incurred in the early 2000s developing facilities on its Bronx campus.
Last November, when Build NYC was first rolled out, Jonathan Gouveia, a senior vice president at the EDC and an official who has been involved in the creation of the new vehicle, predicted the facility could help unclog $700 million of not-for-profit developments projects that stalled during the downturn.
“We have kept a tally here at the EDC of projects that were in search of these kinds of funds and it amounts to $700 million,” Mr. Gouveia said at the time. “And because this is only available now, we haven’t even been actively marketing it until recently. I have met with a number of institutions and banks and not-for-profit groups and many of them laugh at the $700 million. They say that’s the tip of the iceberg.”