BACKGROUND:
In 2015 the New York State Economic Development Council (“NYSEDC”) and the office of the State Comptroller agreed on proposed changes to the New York State Industrial Development Agency Act, and a bill to accomplish these changes was passed by the Assembly and State Senate. It was executed in December 2015 by Governor Andrew Cuomo and is fully effective June 15, 2016.
MAIN EFFECTS:
For certain industrial development agencies (“IDAs”) operating under Article 18-A of the General Municipal Law of the State of New York, as amended, the changes transform what has already been done as “best practices” into requirements. For other IDAs, changes to applications for financial assistance (to seek more information concerning firms and projects), to the cost-benefit analysis process (whether by IDA board, IDA staff and/or outside consultants) and to Project Agreements (especially in areas of covenants and potential cancellation/recapture of financial assistance).
Full implementation of the changes will cause applicants to make certain representations and warranties under penalty of perjury and require far more information concerning costs of Projects at time of application. At multiple NYSEDC meetings, three Cuddy & Feder attorneys, Joseph P. Carlucci, Randall A. Huffman and Robert C. Schneider, have seen widespread agreement among many involved people that applications will only be possible at a later point in the Project development cycle than had been the case under prior law, which had been in effect since 1969.
“IN PROCESS” PROJECTS:
In the case of some “in process” projects, the firm can close its IDA Bond issue and/or IDA Straight-Lease Transaction prior to June 15, 2016 and thus not be subject to the new provisions.
For many “in process” projects, unlikely or impossible to close prior to June 15, 2016, the firm pursuing financial assistance for its IDA Project will need to go through additional and/or modified steps in order to fully comply with the new statute, including the changes.