Advantages & Benefits

The use of the Industrial Development Agency for qualifying projects can offer applicants several advantages:

• The ability to borrow at significantly lower interest rate. if the project is eligible for tax-exempt financing. the reductions in debt service resulting from the lower tax-exempt rates is significant. if the project is not eligible for tax-exempt financing, a taxable bond may be issued which, if sold in public market, may result in lower debt service.
• Borrowing money through the issuance of tax-exempt bonds enables the Borrower to access the public market.usually a letter of credit is required for the sale to public markets. The public markets, unlike most conventional sources of financing, offer long-term fixed rates.
• Exemption from Mortgage Recording and Deed Transfer Taxes. The Mortgage securing the bonds is granted by the Agency. and therefore. is not subject to Mortgage Recording Taxes.
• Real Property Tax abatement Under state law, property owned by the Agency is exempt from Real Estate Property Tax.
• Exemption from Sales tax. Material purchased by or in the name of the Agency and incorporated into the real property owned by the Agency are not subject to New York State Local Sales and Use Tax
• The possibility of utilizing the Agency to coordinate the State Environmental Quality Review Act (SEQR) process.

The Agency can provide various benefits to applicants who qualify for IDA assistance.

Federal and State Tax Exemption on Certain Debt

When the Agency issues debt in the form of bonds or notes, interest on that debt is exempt from personal income taxes imposed by the State of New York and all political subdivisions thereof. In certain circumstances, interest on debt of the Agency may also be exempt from gross income for federal income tax purposes if the particular Applicant Project meets the requirements of the Internal Revenue Code. These exemptions of interest from certain income taxation allows the Agency to borrow at lower interest rates than a private entity can borrow at, thus lowering the cost of borrowing for a project.

State Tax Abatement Benefits

Qualifying Agency Projects may also be exempt from New York State Mortgage Recording Tax, the New York State Deed Transfer Tax, and State Sales Tax on purchases of equipment, building supplies and other personal property. These exemptions from state and local taxes enable the Agency to lower the cost of undertaking and financing a project.

Real Property Tax Exemption

In addition, real property owned by the Agency is exempt from certain real property taxes. This exemption from real property taxes allows the Agency to lower the operation costs of a project.

Additional Powers

In addition, the Agency possesses other powers that can facilitate projects. For example, the Agency can condemn property for a project.