A debt program called BuildNYC that was unveiled by the city late last year and allows non-profit and educational organizations to borrow at below-market rates to fund real estate related development and construction projects, has sourced another $26 million of deals.
The New York Economic Development Corporation cleared two financings at a board meeting yesterday, a $21 million bond offering for the Marymount School of New York, a Pre-K through 12th grade Catholic school on the Upper East Side, and $5 million in financing for The Center for Family Support, a social services provider.
Marymount is using $13 million to refinance existing debt and the remaining $8 million to help it acquire nearby properties in order to expand.
The Center for Family Support will also refinance debt with its loan and pay for the acquisition of a property in Richmond Hill, Queens.
BuildNYC has become a popular pathway for non-profits to access lower cost loans. Four years ago, state legislation that allowed regional industrial development agencies to run a similar program expired after its renewal stalled in the Legislature, where talk to restart it has languished ever since.
The BuildNYC program was meant to cater to the demand created by the expiration of that state-authorized program and allow borrowers who, because of their social, educational or philanthropic mission, are particularly sensitive to the cost of capital, access to loans again.
The city does not lend out the capital in the program itself nor guarantee its repayment. Rather, BuildNYC allows bondholders, including financial institutions and individuals, to forgo having to pay city, state, or federal taxes on the proceeds of the debt, meaning they are willing to accept a lower rater of return, creating the discounted cost to the debt for the borrower.