Two nonprofit health center projects in Westchester County could be delayed this year if state legislators do not renew a bond program for civic facilities administered by industrial development agencies.
The state program, which authorizes industrial development agencies to issue tax-exempt bonds to nonprofit groups for civic buildings and continuing-care retirement communities, is set to expire Jan. 31. Periodically renewed since it was first enacted in 1986, the IDA bond program was given a seven-month extension by legislators last July after lapsing for a few weeks.
Economic development officials here and in Albany are waiting to see whether legislators will again extend the program on a short-term basis or whether, as rumored, Gov. Eliot Spitzer will use the expiration to transfer the bonding authority from local IDAs to the Dormitory Authority of the State of New York.
An estimated $36 million to $40 million in financing through the Westchester County Industrial Development Agency for two nonprofit projects could be held up by the political maneuvers in Albany.
In Mount Kisco, Northern Westchester Hospital plans to spend an estimated $16 million to $20 million for a new 30,000-square-foot emergency department. In the town of Greenburgh, Mount Vernon Health Center Inc. plans to spend an estimated $20 million for a 38,000-square-foot community health center serving underinsured residents and the working poor of the town and surrounding communities.
County IDA officials hope to close on financing for the projects before the Jan. 31 deadline, said Westchester County IDA Director Theresa Waivada. If not, “We are going to have to wait for that authorization from the state Legislature,” she said.
“It is a tight deadline,” said John Partenza, chief financial officer at Northern Westchester Hospital, where construction of the emergency department building is due to start in January or February. Regarding the bonding expiration, “We”™re very nervous about that both in the short term and the long term,” he said.
If the bond program expires before the closing, “It will probably delay the project. The delay will have a cost associated with it,” Partenza said. Project costs will rise more if the hospital is forced to seek taxable financing, he said.
“It”™s a major issue,” Partenza said. He questioned why the state would impose the Jan. 31 deadline on projects already approved that have not yet closed on the tax-exempt financing.
Partenza said this would be the third IDA bond issue for hospital projects in his 27 years there. “We feel the IDA is very easy to work with, accessible, flexible and inexpensive,” he said. If the bond program is shifted to the state Dormitory Authority, “I sense it would be a very long process” to secure the financing needed to start the project.
At the New York State Economic Development Council, a 900-member lobbying and educational group for economic development agencies and professionals in Albany, Executive Director Brian T. McMahon said nonprofit entities in the state have been “held hostage on this issue” by some lawmakers who are “trying to leverage the sunset” of the bond program to enact reforms of industrial development agency operations.
Those reforms are packaged in an Assembly bill that requires payment of prevailing wages for all IDA-backed construction projects. That would add 15 percent to 30 percent to project costs, McMahon said. “We”™re already a high-cost-project state. Any other added costs would make New York that much more uncompetitive.” He said that and other provisions of the bill, which has not been adopted by the state Senate, “would be very damaging to IDAs and their ability to attract employers and jobs.”
“It”™s our understanding that the governor is developing his own IDA reform proposal,” McMahon said. Those reforms could include transferring the civic facility bond program to the Dormitory Authority (DASNY), he said.
At the economic development council, “We think that would be a mistake.” If DASNY finances the lowest-rated bond projects, “It would increase DASNY”™s exposure and the state”™s exposure,” he said. “By increasing DASNY”™s risk and exposure, we obviously would be increasing taxpayers”™ risk and taxpayers”™ exposure.”
In White Plains, Susan Tolchin, chief adviser to Westchester County Executive Andrew M. Spano, said he urges the state Legislature to renew the IDA bonding authority quickly before it lapses. “It is affecting two very worthy community projects in the pipeline,” Tolchin said.
