financing and incentives ray witzleben, esdc
TRANSCRIPT
Financing and IncentivesRay Witzleben, ESDC
11/1/2016
Niagara Falls Developers ForumRay WitzlebenEmpire State Development
New York State Economic Development Programs
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Economic development branch of New York State Government
Uses loans, grants, tax credits and other forms of financial assistance to enhance private business investment and growth
Spurs job creation and supports prosperous communities across New York State
Coordinate Regional Economic Development Council
Empire State Development (ESD)
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ESD works with individual companies to:
Identify creative solutionsGenerate enhanced growth opportunitiesAssist in the achievement of short‐ andlong‐term goals
ESD helps entrepreneurs and businesses:
Start a company or establish a presence in New YorkExpand or upgrade existing operations in New YorkRetain or enlarge their workforceCompete more effectively and profitably
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10 Regional Councils across the state establish regional strategies for job creation & business growth
Identify projects & priorities for investment
The councils serve in an advisorycapacity to State Government
Regional Economic Development Councils
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WNYREDC: Growing our Strategic IndustriesThree Primary Themes:
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Excelsior Tax Credits
Fully refundable tax creditsto firms making a substantial commitment to growth –either by creating/retaining jobs or through investing significant capital in a NYS facility.
The tax credit is treated as an overpayment of tax to be credited or refunded if the tax credit is greater than the tax payment due.Non‐profits not eligible
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Excelsior Tax Credits
Jobs Program Tax Credit: per new job created in NYS calculated at 6.85% of gross wages paid
Investment Tax Credit: Valued at 2% of qualified investments
Research and Development Tax Credit: 50% of the Federal R&D credit (up to 3% of R&D expenditures)
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Excelsior Tax CreditsStrategic industries:Scientific R&DManufacturingSoftware DevelopmentAgricultureBack office operationsDistribution centerFinancial services back office operations
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Linked Deposit ProgramSubsidized interest rate loans to small businesses in New York State
Assists existing New York State small businesses obtain reduced‐rate financing for investments in projects that improve theirperformance, competitiveness, market access and productdevelopment.Enables businesses to obtain “linked loans” from commercialbanks, savings banks, saving and loan associations, farm creditinstitutions or the New York Business Development Corporation ata reduced interest rate.Compensates lenders with a deposit of state funds atcomparably reduced rates.
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Linked Deposit ProgramSubsidized interest rate loans to small businesses in New York State
2% interest rate reduction for:Manufacturers with 500 or fewer full‐time employees in New York StateService firms with 100 or fewer full‐time employees in New York State that are independently owned and
operated and not dominant in their field
3% interest rate reduction for:Agricultural businesses with 500 or fewer full‐time employees in NYS that need financing to expand or improve agricultural operationsQualifying technology and innovation businesses with 100 or fewer full‐time employees in New York StateEmpire Zone certified business with 100 or fewer full‐time employees in New York StateBusinesses in highly distressed census tracts with 100 or fewer full‐time employeesCertified Minority‐ or Women‐Owned Business Enterprises (MWBEs) that need financing to fulfill a New York State or federal procurement contractDefense industry manufacturers with at least 25 percent of gross revenue derived from defense contracts or subcontracts, investing to reduce dependence on the defense industry by diversifying production to non‐military markets
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Economic Development FundFinancial assistance for projects that promote the economic health of NYS by facilitating thecreation and/or retention of jobs or the increase of business activity in the State.
Program HighlightsEDF is a flexible program, providing a range of assistance to businesses, municipalities, IDAs and other economic development organizations to ensure that the diversity of business needs are being met by the State.
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Economic Development FundFinancial assistance for projects that promote the economic health of NYS by facilitating thecreation and/or retention of jobs or the increase of business activity in the State.
Funds can be used for:Real Estate and Land AcquisitionDemolitionConstruction and RenovationsSite and InfrastructureMachinery and EquipmentInventoryConstruction Related Planning and DesignTrainingSoft CostsFeasibility Planning Studies
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Consolidated Funding Application (CFA)Single application for multiple sources of state funding
Part of Governor Cuomo’s transformative plan to improve the state’s economic development model.Modern and easy‐to‐use online application to access economic development resources currently available from multiple New York State agencies and authorities, including:
o Empire State Developmento NYS Canal Corporationo NYS Energy Research and Development Authorityo New York Power Authorityo Environmental Facilities Corporationo Homes and Community Renewalo Department of Laboro Parkso Department of Stateo Department of Environmental Conservationo Office of Storm Recoveryo Council on the Arts
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Consolidated Funding Application (CFA)Single application for multiple sources of state funding
Funding is available for the following projects: Affordable HousingCommunity and Waterfront RevitalizationDirect Assistance to BusinessesEnergy and Environmental ImprovementsLow‐Cost FinancingMunicipal/Public InfrastructureParks, Historic Preservation and Heritage AreasSustainability Planning AssistanceTransportation InfrastructureWorkforce Development
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Consolidated Funding Application (CFA)Single application for multiple sources of state funding
Letters of InterestIn advance of submitting an official CFA, the WNYREDC is accepting “Letters of Interest” (LOI). You are encouraged to complete this optional, pre‐application form that will help you engage with the WNYREDC members and partners.
For more information on the CFA and submitting a Letter of Interest, visit http://regionalcouncils.ny.gov/content/western‐new‐york
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Financing and IncentivesSusan Langdon, NCIDA
City of Niagara Falls Developer’s ForumNiagara County Incentives
Niagara County Industrial Development Agency (NCIDA)Tax IncentivesLoan FundsMarketing and AttractionPass-through for State and Federal GrantsAdminister FTZ #34
Niagara County Department of Economic Development (NCDED)Planning ServicesBrownfields Assessment and Cleanup ProgramsBusiness Retention ProgramEmpower NiagaraU.S. Census Bureau Affiliate Data Center
Niagara County Center for Economic Development
Partial Real Property Tax Abatement (PILOT)Assures financial stability during early stagesImproves cash flowEncourages Investment and job growth
Sales Tax AbatementFurniture, fixtures & equipmentConstruction materialsEquipment installation costs
Mortgage Recording Tax AbatementNew York State Fee
Niagara County Tax Incentives
Retail exceptions: Tourist destination, Goods/services not otherwise
Types of Projects – PILOT Schedules
Year Brownfield Industrial Commercial RetailSenior Housing /
Health Care
1 15% 20% 20% 15% 20%
2 15% 20% 25% 30% 25%
3 25% 30% 30% 45% 30%
4 25% 30% 35% 60% 35%
5 25% 40% 40% 75% 40%
6 35% 40% 45% 100% 45%
7 35% 40% 50% 50%
8 35% 40% 55% 55%
9 35% 40% 60% 60%
10 35% 50% 65% 65%
11 45% 50% 70%
12 45% 50% 75%
13 45% 50% 80%
14 45% 50% 85%
15 45% 50% 90%
City of Niagara Falls Projects – 2011 - 2016
Hampton Inn - $6.2 millionWyndham by Wingate Hotel - $9.6 millionHamister Hotel - $35.7 millionMicrotel - $2.9 millionLaQuinta - $4.5 million
Covanta Niagara - $30.1 millionFrank’s Vacuum - $2.3 millionOlin Corporation - $20 millionGreenpac Mill – $407 million
Niagara County Development Corporation (NCDC)Capitalized by U.S. Economic Development AdministrationMachinery and equipmentMaximum $200,000 or 1/3 of total project cost
Niagara County Economic Development Fund (NEDF)Capitalized by New York Power AuthorityMachinery and equipment, working capital Maximum $250,000 or 1/3 of total project cost
Niagara County Microenterprise Assistance Program$25,000 maximum loanBusiness with 5 employees or lessTargets low/moderate income individuals
Loan Funds
Niagara County Assessment ProgramFunding to conduct Phase I and II Environmental Site AssessmentsSites can be privately or publicly ownedSites must meet EPA’s eligibility requirements and property owner cannot be responsible for site contaminationAssessments are completed using grant funds with no charge
Niagara County Brownfields Cleanup Revolving Loan FundLoans are available to any eligible entity with no minimum or maximum at 0.5% interest and flexible termsSubgrants available to eligible nonprofits and municipalities that own the brownfield site Can only be used for cleanup costs at hazardous waste sitesRemediation must be conducted under NYS oversight
Niagara County Brownfield Programs
New York Power Authority – EP / RPMinimum new electrical demand requirement of 100kWMust be located within 30-mile radius of Niagara Power ProjectProject cannot have been started Prior to applicationMust create new jobs (minimum 20 jobs per Megawatt)ReCharge NY – mix of NYPA & market rate power focusing on job creation or retention for large and small businesses and Not-For Profits
Empower NiagaraReduce power costs through allocation of low cost powerMust be located in Niagara CountyMinimum new electrical demand of at least 75kWMust create and/or retain jobs
Low Cost Power
Foreign Trade Zone #34
FTZ #34 consists of 183 acres adjacent to the NFIA (including Wheatfield Business Park) and the 158 acre Vantage International Point Industrial ParkAn FTZ is an area within the U.S. where foreign and domestic merchandise is considered outside of U.S. Customs TerritoryCertain types of merchandise can be imported in to a zone without going through formal Customs entry procedures or paying dutiesCustoms duties are due only at time of transfer from FTZ for U.S. consumptionIf merchandise never enters U.S. commerce, no duties are paid on those items2016 reactivation of FTZ #34 and contract with Borderworx Logistics to be FTZ operator
Susan C. Langdon, Director of Projects and FinanceNiagara County Industrial Development Agency6311 Inducon Corporate DriveSanborn, NY [email protected]
Michael A. Casale, Deputy CommissionerNiagara County Department of Economic Development6311 Inducon Corporate DriveSanborn, NY [email protected]
Amy E. Fisk. Brownfields CoordinatorNiagara County Department of Economic Development6311 Inducon Corporate DriveSanborn, NY [email protected]
Contact Information – niagaracountybusiness.com
Financing and IncentivesAnthony Vilardo, City of Niagara Falls
N.F.C. DEVELOPMENT CORP.Niagara Opportunity AreaDevelopers Forum November 3, 2016
N.F.C. FUNDING YEAR-BY-YEAR
$- $2,000,000.00 $4,000,000.00 $6,000,000.00 $8,000,000.00
$10,000,000.00 $12,000,000.00 $14,000,000.00 $16,000,000.00
2010 2011 2012 2013 2014 2015
TPC $NFC $
• $1,897,625 NFC Investment• $30,927,056 Private Sector Investment• $32,844,681 Total Project Costs
POTENTIAL FUNDING OPPORTUNITIESDirect Loan Program
Micro-Enterprise Assistance Program
Downtown Tourism Assistance Program
Industrial Growth Program
Commercial Grant Assistance Program
Green Initiative
Special Assistance
Façade, Market Rate Apartment Programs
ELIGIBLE USES OF FUNDSN.F.C. Funds may be used for the following and will be outlined in signed agreement:
Acquisition of real property
Renovation or leasehold improvements
The purchase of machinery, equipment, furniture, fixtures and
equipment and inventory used in the conduct of the business
DIRECT LOAN PROGAM
Up to $250,000
Cover no more than 40% of total project cost
Prime Rate
1 job / $50,000
MICRO-ENTERPRISE ASSISTANCE
Up to $10,000
Matching Grant
Create 1 job, retain for 3 years
DOWNTOWN TOURISM ASSISTANCEThe City recognizes the vast potential for growth in the tourism industry
On a case-by-case basis, NFC may entertain providing a loan
and/or grant for projects that the Empire State Development
Corporation U.S.A. Niagara Development Corporation (USAN) is
considering funding.
INDUSTRIAL GROWTH PROGRAM
Up to $200,000
Matching Grant of a 4:1 ratio
1 job / $10,000
COMMERCIAL GRANT ASSISTANCE
Up to $100,000
Matching Grant
Minimum Six Employees
1 job / $25,000
GREEN INITIATIVE
Low interest loan
Maximum of $25,000
Grant in the form of twenty percent (20%) reduction in the loan
amount available upon demonstrated evidence of energy savings
of 10% or greater based on past history.
SPECIAL ASSISTANCE PROGRAM
On a case-by-case basis, NFC may provide a loan and/or grant for
projects that the Empire State Development Corporation is
considering funding and as may be referred by ESDC to NFC for
participation. The creditworthiness of the project shall have been
reviewed by ESDC and ESDC must also provide a loan or grant for
the project. The NFC Board of Directors shall approve the terms of
any NFC loan or NFC grant.
POTENTIAL FUNDING OPPORTUNITIES
Up to $250,000
Cover no more than 40% of total project cost
Prime Rate
1 job/$50,000
FACADE & APARTMENT REHAB
Federal Facade Program
$10,000 matching grant
Apartments must be in a mixed use building
$10,000 matching grant, up to 4 units
FINANCINGBILL GRESSER, EB-5 NYS
City of Niagara Falls - Opportunity AreaDeveloper’s ForumNovember 3, 2016
Investing in Job Creation
Page 2, November 3, 2016
EB-5 Program Overview
• US Government Program Begun in 1990’s• Objective:
• Create New US Jobs Through Investment• Strong US Government Support
• $15+ Billion Raised to Date, Creating 181,000+ Jobs• All at No Cost to the US or State Governments
Page 3, November 3, 2016
EB-5 New York State - Experience
Regional Center – Buffalo NY basedStarted 2007; US Approved 2009National Leader: Top 1% in the US
100% of Projects Approved by the US Gov’t100% of Funds Raised for Projects
Track Record of Success
Page 4, November 3, 2016
Experience of the 800+ Regional Centers
864 + Regional CentersNote: % are our Estimates
Approved I-526 & I-829 Petitions (< 3%)
Funded Projects (< 20%)
Done Nothing (75%)
Approved I-526 & I-829 Petitions, Unconditional Green Cards &
Return Investment (<1%)
Page 5, November 3, 2016
Kaleida HealthGates Vascular Institute
EB-5 capital used as equipment secured line-of-credit to support the Gates Vascular Institute, Buffalo, New York.
Multi-Collateral Debt Facility
Participants:
Page 6, November 3, 2016
EB-5 capital participation in tax-exempt municipals for a new transportation structure on the Buffalo Niagara Medical Campus in Buffalo, New York.
Buffalo Niagara Medical Campus Transportation Structure
Tax-Exempt Municipal Bonds
Lead Bank:
Participants:
Page 7, November 3, 2016
Ellicott DevelopmentHealth Sciences Charter School
EB-5 capital for the purchase and renovation of the Charter School’s new School building in Buffalo, New York.
First Mortgage
Lead Lender:
Page 8, November 3, 2016
Iskalo DevelopmentHyatt Place Hotel, Hospitality Campus
EB-5 capital as a 1st mortgage for the construction of a new Hyatt Place Hotel and the renovation of an adjacent hotel and restaurant in Amherst, New York.
First/Second Mortgage
Lead Lender:
Participants:
Page 9, November 3, 2016
Buckingham PropertiesThe Tower at Midtown
EB-5 capital as a 1st mortgage for the renovation of a 17-story mixed-use building in downtown Rochester, New York.
First Mortgage
Lead Lender:
Participants:
Page 10, November 3, 2016
Uniland DevelopmentDelaware North Companies, Headquarters
EB-5 capital as a 1st mortgage for the construction of a new headquarters building for Delaware North Companies and an adjacent hotel in Buffalo, New York.
First Mortgage
Lead Lender:
Participants:
Page 11, November 3, 2016
Kaleida HealthJohn R. Oishei Children’s Hospital
EB-5 capital used as equipment secured line-of-credit to support the John R. Oishei Children’s Hospital in Buffalo, New York.
Multi-Collateral Debt Facility
Participants:
Page 12, November 3, 2016
EB-5 Regional Center Roles & Benefits
What do we do?1. Identify & Structure Job-creating Projects2. Raise & Lend Investors’ Funds3. Manage US Gov’t Review / Processes4. Represent Investors’ Interests5. Collect and Return Investor Principal
Page 13, November 3, 2016
Ideal EB-5 Investment Project
• Substantial Job Creation• Financing in Place & Construction Started
• High Unemployment or Rural Area• Significant Gov’t Support / Investment• EB-5 $ Investment
• Over $10 million ($20-$50 million ideal)• Less than 50% of the Capital Stack• Low Principal Repayment Risk• Lead-time to EB-5 $ or Bridge Financing
Page 14, November 3, 2016
NOT Ideal EB-5 Investment Project
• High risk of jobs not being created• Venture Capital Investment (Start up high tech)• Incomplete Capital Stack
• High risk of capital being repaid• Longer term financing (over 7 years)
Page 15, November 3, 2016
Example EB-5 Project
Capital Stack: $100M Project• $20M Developer Equity• $10M Gov’t Grant/Loan• $70M 1st Mortgage
• $48M Bank Loan• $22M EB-5 Loan
Why Use EB-51.Interest Only2.Free Rate Lock3.Low Fixed Rate4.Fits into Stack5.Structure
(Participant? Take out?)
Page 16, November 3, 2016
Synergy with Other Capital Sources
• Flexibly Fits into Capital Stack• No Concentration Issues• Other Capital Can Lead from Minority Position• Provides Options for More Complex
Structuring• Lower Cost of Capital for Borrower and/or
Bank
For more information, please contact:
Investing in Job Creation
Bill Gresser 480-206-5723 [email protected]