The Suffolk County Economic Development Corporation (EDC) is a local development corporation of the State of New York created in 2010, pursuant to NYS Not-For-Profit Corporation Law 1411. The primary purpose of the EDC is to promote economic development in Suffolk County by assisting not-for-profit corporations in their acquisition of capital projects.
The mission of the Suffolk County Economic Development Corporation is to promote the economic welfare, employment opportunities and quality of life of the residents of Suffolk County.
In order to promote economic development the EDC provides financial assistance through the issuance of tax-exempt or taxable bonds. The EDC provides this assistance for not-for-profits that either wish to locate or expand their operations in Suffolk County. Typical projects eligible for financing include the purchase and rehabilitation of existing buildings, the construction of new buildings, or the construction of additions to existing facilities. Equipment may also be financed through the EDC.
The key to completing an EDC tax-exempt bond issue is to have a financial institution purchase the bonds. The EDC does not have its own funds to loan; instead, it acts as a financial conduit by which the financial institution “makes the loan” to the applicant. Typically, a bank or an investment banking firm will purchase the tax-exempt bonds and, in effect, make the loan. This means that EDC approval of a project does not automatically result in funding being available. The financial institution reviews the project and makes the credit decision as to whether or not to purchase the bonds. In addition, the applicant and the financial institution negotiate the terms and conditions of the loan independently of the EDC.
There are four types of financial assistance available through the EDC:
1. Tax-Exempt Bonds: Not-for-profit facilities can be financed with tax-exempt bonds.
2. Taxable Bonds: Not-for-profit projects qualify for taxable bonds.
3. Tax-Exempt and Taxable Bonds: A combination of tax-exempt and taxable bonds can be issued for projects.
4. Refunding Bonds: Projects which were previously assisted with tax-exempt bonds are allowed to repay/refund the outstanding principal amount of the “old” bonds with new tax-exempt refunding bonds bearing a lower interest rate but only for the same term remaining on the original tax-exempt issue.
1. Tax-Exempt Bonds: The interest on a tax-exempt bond is wholly or partially exempt from federal, state and local income taxes, while the interest on a taxable bond is exempt from New York State personal income tax only.
2. Exemption from Mortgage Recording Tax: If a mortgage is used to finance the project it is exempt from mortgage recording tax.
EDC Application/Project Process
1. Initial inquiry – discuss project; eligibility; application process, etc.
2. Review draft application with applicant to insure it is complete.
3. Completed application submitted to EDC. Application distributed to EDC Bond Counsel, Agency Counsel, Board Members and Planning Department for environmental review and EDC staff for internal review and preparation of project abstract.
4. Presentation of application to the EDC Board for consideration. Board approves, tables or disapproves. An inducement resolution is issued for approved applications.
5. Public Hearing for all EDC projects as required by Federal and State law. Current law requires 14 day notice for Public Hearings. Note: In some cases it may be possible to schedule the Public Hearing prior to Inducement.
6. Processing of documentation begins; Inducement Agreement sent to applicant; Engagement letter from Bond Counsel; etc.
7. Applicant submits fully executed bank commitment letter to the EDC indicating that the required financing is in place.
8. Induced project is again presented to the EDC Board for the adoption of the Bond Resolution for bonds.
9. Applicable elected representative approves the project, i.e. that all requirements of environmental review, public hearing, etc. have been compiled with. This approval is required under TEFRA 1982 for tax-exempt bonds.
10. After all approvals and the documents are finalized, a closing is scheduled and the bonds are issued. In most cases the bond funds are held by the financial institution or a trustee and the EDC applicant requisitions the funds to complete its project.