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Upper Manhattan Empowerment Zone Facilities Bond Program and Section 179 Deduction Benefit

 
- General Information
- Links
- Prerequisites
- Fees, Tax Rates, and Payment Information
- Additional Notes
- Disclaimer
General information [back to top]  
Agency:
Housing and Urban Development, Department of (FEDERAL)
Description:
Companies that are planning major capital investments within the designated area of Upper Manhattan EZ may be able to finance these projects with triple tax-exempt bonds issued by New York City Industrial Development Authority (NYCIDA). Triple tax-exempt bonds allow borrowers to receive exemptions from Federal, State and City income taxes on interest payments.

Bond proceeds can be used to finance acquisition, construction, renovation and equipping of facilities.

Eligible businesses include developers of commercial, industrial and retail facilities. Additional eligibility requirements are as follows:
• Project must be located within the geographic boundaries of the EZ.
• At least 50 percent of the gross business income is derived from activity within the EZ.
• At least 35 percent of the facility’s employees are EZ residents.
• Less than 5% of the tax basis of the assets of the borrower consists of securities or similar instruments (other than reasonable amounts of working capital held as cash or cash equivalents).

See Additional Notes, below, for more information.

II. Section 179 Deduction
Certain EZ businesses can elect to deduct an additional $35,000 over the standard IRS Section 179 deduction on the cost of qualifying property in the year it is placed in service, instead of recovering that cost through depreciation over time. Complete instructions and the application form for filing for increased Section 179 deduction are included under Links to Application Materials below.
Links [back to top]  
Prerequisites [back to top]  
1.  The project must meet all enterprise zone business eligibility criteria as described above.
 
Fees, Tax Rates, and Payment Information [back to top]  
Fees:
  • Applicable financing fees are payable to the NYCIDA. There is a UMEZ financing fee of 0.5% of the face value of the bond amount up to $5 million and 0.35% of the bond amount above $5 million. The fees do not include the bond issuance fees payable to the State of New York or fees payable by Applicant to the other parties to the transaction and their counsel, including, but not limited to, reasonable and customary fees and disbursements for the services of UMEZ counsel, Bond Counsel, the Bond Trustee and the Bond Trustee’s counsel.
    		•
    Payment Types Accepted:
  • Not Applicable
    • Additional notes [back to top]  
    Financing a project with triple tax-exempt bonds enables borrowers to initiate needed capital improvements at the lowest available cost and to better manage the timing of their capital investments. Compared with conventional loans, advantages of triple tax-exempt bonds can include reduced interest rates, longer financing terms, lower equity contributions, and, depending on the project, the ability to obtain construction and permanent financing in a single loan.

    Due to transaction costs associated with bond issuances, NYCIDA assists borrowers in assessing the cost-effectiveness of financing their proposed projects with NYCIDA bonds prior to accepting applications. The cost of the project and the organization's debt repayment capacity dictate the amount borrowed.

    Additional questions can be directed to the NYCIDA at (212) 312-3600 or via email to nycidabonds@nycedc.com.
     
    Disclaimer [back to top]  
    This page provides general information only. The information does not address all relevant regulatory requirements of City, State or Federal Agencies, nor does it address requirements with which the business must comply on an ongoing basis. It is the business owner's responsibility to meet all City, State and Federal requirements. Failure to comply with all applicable laws and regulations may result in fines or in the suspension and/or revocation of licenses or permits, or other penalties as allowed by law.

    Please note that this information is not legal advice; you can only obtain legal advice from a lawyer. For more information or assistance, please contact the issuing Agency, using the contact information above, or call 311 (or 212-NEW-YORK if outside of New York City).
     


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