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Since 1980, the Town of Brookhaven Industrial Development Agency (IDA) has issued over $132 million in tax-exempt or taxable bonds on behalf of more than 50 companies to either locate or expand in the Town of Brookhaven. This assistance has been extended to companies both large and small, and has resulted in the direct creation of more than 4,500 jobs for Brookhaven residents.
In addition to the financial incentives, IDA is prepared to provide your company with information on potential sites, demographics and other community data with respect to Brookhaven. Of further benefit to you is the dedication of the IDA to guide an applicant through any process related to the development of your company's facility.
The IDA can also provide tax-exempt bonds to construct and equip not-for-profit facilities such as colleges, libraries and all state and federally operated medical resources.
"What about the advantages?" you ask...
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Tax Abatements - Qualified companies receive up to 100% real property tax abatements on improvements for job producing projects.
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Available Land - Competitive pricing on over 500 acres in prime locations are ready for industrial development in parcels from 2 to 100 acres.
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Expanding Labor Force - Since 1985, the Town of Brookhaven continues to exhibit one of the fastest population growth rates in the Northeast.
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Available Housing - Brookhaven's diversified and growing housing stock can meet the demands of the employees - from entry level - President.
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One-Stop development - The review of qualified projects can be expedited through the Town of Brookhaven Planning Department (link to planning) to reduce development costs.
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Central Long Island Location - Major industrial/commercial hubs and MacArthur Airport are within minutes; only 1 hour to Manhattan via LIRR/Ronkonkoma line.
INDUSTRIAL DEVELOPMENT AGENCY FINANCING
The Town of Brookhaven Industrial Development Agency is a corporate government agency and public benefit corporation of the State authorized to facilitate the acquisition, construction, reconstruction and equipping of manufacturing, warehousing, research, commercial, industrial, pollution control and recreation projects. It facilitates fund-raising to accomplish these purposes by issuing its negotiable, tax-exempt and taxable bonds and notes. The security of the Agency's bonds is an assignment of the Agency's rights under the lease or sale agreement with the company.
Neither the State, Suffolk County, nor the Town of Brookhaven is in any way liable. The bonds may also be secured by a mortgage and by additional guarantees, as negotiated by the company and bank or underwriter.
The Agency is comprised of concerned citizens consisting of businessmen and professionals who are appointed by the Town Board of the Town of Brookhaven. The members of the Agency, who serve without compensation, donate their time and efforts for the purpose of advancing job opportunities, health and the economic welfare of the residents of the Town of Brookhaven.
ADVANTAGES & BENEFITS OF IDA FUNDING
- The Company may receive 100% financing for the total project cost - including construction, equipment and planning costs and financial expenses.
- The Company pays a rate of interest generally lower than the rate on conventional financing.
- The Company may receive real estate Tax Abatement of Up to 100% on all new capital investment for Up to 10 Years
- The Company may save the sales tax on material and equipment purchased during the construction period from proceeds of the bond issue. This benefit may save a company Up to 5% of the total project cost. For accounting and federal income tax purposes, the Company is treated as the constructive owner of the project. Accordingly, it carries the project as an asset on its books and the total obligation under the lease or sale agreement as long term debt.
- The Company is entitled to the investment tax credit under Section 38 of the Internal Revenue Code, and is entitled to the depreciation allowance under Section 167 of the Code (Rev. Rul. 68-590).
- The Company may: (a) increase the size of borrowing to include an amount equal to the interest payable during the construction period, and (b) defer the first payment of principal during this period of time. As a result, the
Company need not divert cash flow from other sources to make payments on the debt until the construction has been completed.
- Tax exempt bonds are generally exempt from the registration requirements of the securities laws and State "blue sky" laws and are consequently considerably less complex and time consuming than the public or private placement of corporate bonds. Bonds subject to federal tax will also be exempt from registration under most circumstances if the bonds are sold
pursuant to the private placement exempt transaction rules.
- Cost applicable to an industrial development revenue bond issue include fee of bond counsel, Agency fee, fees to trustee or paying agent, other legal fees, and placement fees if outside bond placement is required. However, the fees and expenses incurred in connection with IDA financing, make questionable the feasibility of any project funding under $750,000.
The Agency will be happy to advise you on these issues and to answer any questions you may have.
THE IDA APPROVAL PROCESS
- The company becomes aware of industrial development financing as an alternative to conventional bank financing or public or private sale of bonds and applies to the Agency for assistance.
- If this application is approved by the Agency, it will adopt an "inducement resolution," resolving to issue the bonds on behalf of the company. Only after the passage of this Resolution should the company begin acquisition or construction of the project.
- The company is responsible for finding either an underwriter, a bank or group of banks willing to purchase the bonds of the Agency to be issued on behalf of the company. Banks buy the bonds as an investment, much as they would make a commercial loan, although they may later resell the bonds if the need arises.
- The underwriter or bank and the company negotiate the terms and conditions of the loan: its length, interest rate, whether the loan is prepayable and on what terms, the financial restrictions, if any, on the company, and the security.
- After the structure of the loan has been agreed upon, the terms and conditions are incorporated in financing documents. In most cases, the financing takes the form of a lease-purchase agreement. The Agency issues its bonds and uses the proceeds to acquire and construct the project.
- If the financing is a lease-purchase arrangement, the company must negotiate for payments to be made in lieu of property taxes for any existing facility. (Check with the Agency's Administrative Director for specific application of 100% Tax Abatement Incentive.) Upon completion of the project, it is leased or sold on an installment basis to the company for a term equal to the term of the Agency's bond issue, which generally ranges from 10 to 25 years. The company remains in possession of the project throughout the financing term. The annual payments of the company are set at an amount sufficient to pay the annual principal and interest on the Agency's bonds. The company usually makes interest payments on the bonds semi-annually and principal payments annually. The company also pays all the operations and maintenance expenses for the project, so the lease or sale agreement is a "net-net" transaction from the Agency's viewpoint.
THE IDA FEE SCHEDULE:
APPLICATION FEE (non-refundable):$750
ADMINISTRATIVE FEES
- TAX-EXEMPT BOND FINANCING on projects of up to $10,000,000. There will be an Administrative fee of 3/4 percent.
- TAXABLE FINANCING for a project will have an Administrative Fee at 3/4 percent on any amount up to $10,000,000 and an additional 1/8 percent on any amount in excess of $10,000,000.
- Minimum Administration Fee:$5,000
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