What are New York Liberty Bonds?
New York Liberty Bonds are tax-exempt private activity bonds, a form of debt financing available for a capital project. These bonds are sold to investors, who provide the capital for the project. The bonds are not obligations of the State or City, but are instead obligations of the entities established by the State or City to issue the bonds, secured by pledged project revenues, typically with no recourse to the issuer. Interest on the bonds is exempt from federal, State, and City income tax, and these savings are passed on to the borrower in the form of a lower interest rate. The interest rate available to a borrower under the New York Liberty Bond Program will depend on the individual project's credit worthiness and financing structure, as well as general market conditions.
Take advantage of the opportunity to rebuild and revitalize New York City.
$8 billion in low-cost, tax-exempt bond financing is now available for the construction and renovation of commercial and residential facilities. Major commercial and residential development projects for Lower Manhattan will be given first priority.
On behalf of New York State and New York City, Governor George E. Pataki and Mayor Michael R. Bloomberg are pleased to introduce the New York Liberty Bond Program. This is a cooperative program of the New York Liberty Development Corporation, the New York City Industrial Development Agency (IDA), the New York State Housing Finance Agency (HFA), and the New York City Housing Development Corporation (HDC), which will offer tax-exempt financing for the construction and renovation of commercial and residential properties.
A new category of low-cost, tax-exempt private activity bonds, called New York Liberty Bonds, is an integral part of the federal assistance made available to New York to support the Lower Manhattan rebuilding effort. Up to $8 billion of these bonds may be issued for housing, office, utility, and retail development, primarily in the Liberty Zone (the area of Manhattan south of Canal Street, East Broadway and Grand Street). The Governor and the Mayor will each allocate $4 billion of this amount. Up to $800 million of the $8 billion total may be issued for retail development, up to $1.6 billion for residential rental projects in the Liberty Zone, and up to $2 billion for commercial projects in New York City but outside the Liberty Zone.
Application Process and Project Selection
In allocating New York Liberty Bonds, the State and the City are seeking projects that will contribute significantly to the City's revitalization and long-term economic health. To be considered for financing, projects must be consistent with one or more of the program principles and satisfy the program eligibility criteria listed below. The decision to provide bond financing for any project is discretionary.
To fulfill the vision of Lower Manhattan as a 24/7, mixed-use, diversified community and support the City's broader revitalization, the program seeks to:
Repair and replace damaged and destroyed commercial space and improve lower quality commercial space
Create additional multifamily residential rental and complementary retail development in Lower Manhattan
Provide modern office space for displaced and decentralizing businesses and facilitate new investment in central business districts throughout the City
Attract new residents and employers to New York City
Encourage environmentally responsible design and construction.
Eligibility Criteria for Commercial Projects
New commercial construction projects located within the Liberty Zone creating at least 20,000 square feet of contiguous space; if located outside the Liberty Zone, creating at least 100,000 square feet of contiguous space
Commercial renovation projects located in the Liberty Zone consisting of at least 50,000 square feet of contiguous space; if located outside the Liberty Zone, consisting of at least 100,000 square feet of contiguous space
Commercial renovation projects located in the Liberty Zone involving expenditures for base building improvements of not less than $50 per square foot; if located outside the Liberty Zone, involving base building expenditures of not less than $100 per square foot.
Eligibility Criteria for Residential Projects
Multifamily residential rental projects located in the Liberty Zone
Projects may consist of new construction, conversion of a commercial facility to residential use, or substantial renovation of an existing residential facility
Rehabilitation expenditures of at least 50% of the amount of New York Liberty Bonds utilized for acquisition
Both HDC and HFA are requiring an additional public benefit as part of the Liberty Bond Program: HDC will impose additional fees to be used to preserve and create affordable housing throughout the City, while HFA will require that at least 5 percent of the units be affordable to moderate income families
New York State and New York City are collaborating to implement this unified bond financing program. The New York Liberty Development Corporation, a local development corporation formed at the direction of the Empire State Development Corporation, and the New York City Industrial Development Agency will issue bonds for commercial and utility projects. The State's issuer for residential facilities will be the New York State Housing Finance Agency; the City's residential issuer will be the New York City Housing Development Corporation.
The State and the City, in consultation with the bond issuers and the Lower Manhattan Development Corporation, jointly formulated the program's goals and project approval criteria, and will jointly administer the program. Once selected, projects must be approved by the board of either the State or the City bond issuer, and receive a formal designation from either the Governor or the Mayor. Applicants may begin the process by contacting one of the bond issuers.