Establishes the empire revolving bridge loan fund within the urban development corporation act

Section 1 declares the legislative intent of the bill.

Section 2 creates the fund within the custody of UDC/ESDC to be known as the Empire Revolving Bridge Loan Fund.

Section 3 describes the sources of funds for the bill, including the net proceeds of bonds and notes issued under Section 5-C of the State Finance Law, and any payments of principal on loans made from the fund.

Section 4 authorizes UDC/ESDC to make loans from the bond proceeds and defines certain terms for the purposes of the bill, including "eligible project" and "eligible purposes".

"Eligible project" is defined to include any new equipment, improvement or structure, including new construction, alteration or improvement to existing structures, (1) which is projected to cost a minimum of $20 million, (2) create in one or more phases, at least 300 FTE jobs at the project site, and (3) meet one or more of the following criteria: (a) constructed to achieve "gold" or higher LEED certification under the Green Building Rating System developed by the United States Green Building Council, or (b) constructed to achieve "3 Globes" or higher certification under the Green Globes Rating System developed by the Green Building Initiative; or (c) will utilize technology enabled design, construction and operation including, but not limited to, universal design principles. Jobs created in a phase in progress at the time of the application shall count towards the total job creation number. UDC/ESDC is to give preference to those eligible projects which are located (1) in an economically distressed region or municipality or (2) in whole or in part on a brownfield site as defined in the Environmental Conservation Law.

"Eligible purposes" includes all costs paid or incurred in connection with the design and construction of an eligible project.

Section 5 authorizes UDC/ESDC to create an application form, to charge an application fee of $1000, and to approve the application within 30 days of receipt. This section discusses the factors to be considered by the corporation in determining the creditworthiness of a project, including the structure and timing of any permanent financing.

Section 6 authorizes loans, for a term of 3 years, with the borrower eligible for 3 one-year extensions if they are in compliance with the loan's terms, at the all-in true interest cost to UDC/ESDC on the bonds issued to seed the fund. This section also creates special revolving accounts for individual borrowers who shall receive funding for ten years from the date of commencement of the initial loan.

Section 7 requires the sponsor of an eligible project to pay a closing fee equal to allocable share of the costs of issuance of the project, capped at 1% of the loan amount. The allocable share is equal to the ratio of the loan amount to the net bond proceeds which will seed the Fund.

Section 8 requires an annual report by UDC/ESDC to the legislative finance chairs and the Governor on the fund's progress towards meeting its goals.

Section 9 authorizes UDC to issue personal income tax (PIT) backed bonds in one or more series, at any time and from time to time, the net proceeds of which, in an amount of up to $500 million, will seed the fund.

Section 2 of the bill extends the sunset date of the loan powers of UDC to July 1, 2010.

Justification

The State of New York is in the midst of deep economic difficulties. Major projects entailing significant capital investment and job creation are needed to provide the necessary stimulus that will lead to short-term economic recovery and long-term prosperity.

The Empire Revolving Bridge Loan Fund will use PIT-backed UDC/ESDC credit in the bond markets to provide large-scale development projects with critical short-term conduit financing backed by bonds or bond anticipation notes. No general fund revenue will be used. Provision of loans from the fund may be coordinated with the ESDC Self-Sufficiency Program or any other long-term financing structure. Through the Self-Sufficiency Program, the borrower can use payments-in-lieu-of-taxes (PILOTS) to support a long-term financing structure and repay the revolving loan. The fund will serve to minimize the reliance of large-scale economic development projects on direct grants or loans. Moreover, conventional lending covenants will mitigate any risk to UDC/ESDC for failed projects. Projects assisted through this revolving loan fund will ultimately provide the State with significant economic development, job creation, and tax revenue.

Legislative history

Similar to A11780 of 2007-2008.

Fiscal implications

To be determined.

Effective date

Immediately.