New York Codes, Rules and Regulations
Title 21 - Miscellaneous
Chapter L - New York State Urban Development Corporation
Part 4211 - Regional Economic Development Partnership Program
Section 4211.3 - Business development projects

Current through Register Vol. 44, No. 38, September 21, 2022

(a) Assistance available. The corporation may make loans and grants, as set forth below and within available appropriations, for business development projects. Business development projects are projects that involve an industrial, manufacturing, commercial, research and development, high technology, tourism, agricultural or service company (an eligible company) and meet the other requirements of this section.

(1) Loans.
(i) Business development project loans shall not exceed one-third of the total project cost or $500,000, whichever is less and may be used for:
(a) working capital;

(b) the purchase or leasing of machinery and equipment;

(c) land acquisition;

(d) acquisition, renovation or construction of facilities; and

(e) related ancillary costs including, without limitation, legal expenses, appraisal costs, brokerage commissions, interest costs, survey expenses, architectural and engineering fees and site preparation and relocation expenses.

(ii) Business development project loans shall not be used for:
(a) expenses incurred before the initiation of the REDPP application process; or

(b) tax or employee benefit arrearages.

(2) Grants.
(i) Business development project grants may be used for:
(a) interest subsidies, to reduce the cost of financing projects that meet the requirements for and would qualify as business development projects and that demonstrate an inability to occur without subsidy; provided, however, that no such grant shall exceed one third of total project cost or $400,000; and

(b) studies of the feasibility of the transfer of ownership of a company to local interests; provided, however, that no such grant shall exceed $40,000.

(ii) Business development project grants may not be used for:
(a) expenses incurred before the initiation of the REDPP application process; or

(b) tax or employee benefit arrearages.

(b) Eligibility.

To be eligible for business development project assistance, the project must:

(1) be consistent with the regional strategic plan, as evidenced by the certification of the regional council or the corporation, as the case may be, in accordance with section 4211.11(b) of this Part;

(2) create or retain substantial permanent private sector jobs, taking into consideration the following factors:
(i) the nature of the industry of the applicant;

(ii) the total number of jobs available, and the level of unemployment in the area in which the proposed project is located;

(iii) the overall level of business activity in such area; and

(iv) such other aspects of the local economy as the corporation deems appropriate;

(3) be reasonably likely to be completed within the time and cost estimates presented in the proposal;

(4) be unable to obtain sufficient funding on reasonable terms from other public or private sources to permit the project to proceed without the requested assistance; and

(5) satisfy one of the following:
(i) the project is located in an economic development zone, has firm commitments from all other financing sources for the total project cost and an eligible company has expressed an interest in the project; or

(ii) the project is located in a distressed area and has firm commitments from an eligible company to occupy or otherwise participate in the project and from all other financing sources for the total project cost; or

(iii) the project is located in a non-distressed area, has firm commitments from an eligible company to occupy or otherwise participate in the project and from all other financing sources for the total project cost and furthers one of the following economic development objectives:
(a) business development by women, minority group members or unemployed persons;

(b) modernization and productivity improvements by an eligible company;

(c) diversification of the economic base of a community;

(d) creation of substantial, permanent private-sector jobs, including jobs for dislocated workers, public assistance recipients, disadvantaged youth, or long-term unemployed persons;

(e) retention of jobs involving companies at imminent risk of reducing employment;

(f) prevention of the loss of a primary employer which will have a major adverse impact on the economic condition of the community; or

(g) furthers the development of a location or facility which is likely to attract a significant number of visitors from outside the region.

(c) Ineligible projects.

Business development assistance may not be provided to projects that involve any of the following:

(1) retail businesses;

(2) overnight lodging facilities;

(3) businesses providing legal, medical or nursing services;

(4) newspaper, broadcasting or other news media company;

(5) debt refinancing;

(6) the relocation of a business from one municipality to another municipality unless all municipalities from which the business will be relocated are notified in writing of the corporation's approval of funding for the project and the chief executive officers of the municipalities do not object in writing to the corporation within 20 days of receipt of such notification, or unless they waive in writing their right to such notification; and

(7) the provision of financial assistance, directly or indirectly, by the corporation to:
(i) the State, or any agency, department, authority, public benefit corporation or political subdivision of the State; or

(ii) a full-time employee of the State or of any State agency, department, authority, public benefit corporation, or political subdivision (a State employee); or

(iii) any entity that is controlled or a majority of which is owned by a State employee.

(d) Business terms for loans.

(1) Within the limitations established hereunder, terms and security arrangements will be flexible, depending on the type of loan and the particular characteristics of the business development project under consideration. Business development project loans that provide permanent financing and are secured by fixed assets will be preferred.

(2) No business development loan shall be disbursed without firm commitments from all other funding sources. Construction loans approved by the corporation hereunder will not be funded before secure commitments for permanent financing have been obtained.

(3) Interest rates on business development project loans will be set at the time the directors approve an application. Rates and terms will be fixed based upon what is necessary to make the project feasible, and will reflect market conditions, the applicant's ability to repay and project requirements. Generally, a 10 percent equity contribution to the project on the part of the project applicant and a personal guaranty of a principal of the project applicant will be required. Interest rates may be increased during the term of the business development loan if the recipient fails to create and/or retain specified employment levels approved by the corporation.

(4) For certain business development project loans, an additional return to the corporation may be required, based on the recipient's projected performance.

(5) Business development project loans will be made for the following terms:
(i) loans made for the purpose of financing the acquisition of real property or the acquisition, renovation or construction of facilities generally may be made for a term not to exceed 20 years. In a co-equal and coordinate mortgage situation, a mortgage granted to the corporation will match the term of the other mortgagee;

(ii) loans made for the purpose of financing the acquisition of machinery and equipment generally may be made for a term of from three to seven years;

(iii) working capital loans generally will be made for a term of from one to four years; and

(iv) construction loans generally will not exceed 24 months.

(6) Standard repayment terms generally will include level debt service payments over the term of the business development project loan. In certain circumstances, deferred or graduated payments may be permitted, provided that the business development project loan is fully amortized over the remainder of the loan term.

(7) Eligible companies receiving business development project loan assistance must agree first to consider, for any jobs created as a result of the business development project financed, persons eligible to participate in Federal Job Training Partnership Act (JTPA) programs, who shall be referred to the eligible company by administrative entities of service delivery areas created pursuant to the JTPA by the job service division of the State Department of Labor.

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