More than $2.5 billion worth of projects to build schools, hospitals and other non-profit buildings has been stalled for more than two years while a union battle for prevailing wages holds up reauthorization legislation needed to help finance those projects.
The legislation focuses on tax-exempt bond financing, which allows non-profits to borrow money at lower interest rates.
“There are hospitals, universities and schools with stalled financing that are stuck in a pipeline that is not authorized yet,” said David Lebenstein, a broker with Cassidy Turley who represents such tenants. “The IDA [Industrial Development Authority] can’t issue any bonds.”
The legislation was first authorized in 1986 and has been renewed 15 times since then. But the law expired in January 2008 as unions exerted their influence over legislators.
Bills sponsored by Gov. Paterson and Assemblyman Sam Hoyt and state Sen. Antoine Thompson, both Democrats from Buffalo, limit the use of the bonds to just continuing care and recreational facilities and require construction projects to both be unionized and pay prevailing wages.
Mayor Bloomberg, business officials and non-profits are bristling at what they say would be overly costly requirements.
“Unfortunately, the unions want to leverage the non-profit community to achieve their legislative agenda to ensure a prevailing and living wage requirement for all IDA projects,” said Brian McMahon, executive director of the New York State Economic Development Council. “We think it’s counterproductive.”
Both the NYSEDC and Bloomberg support a measure proposed by Assemblyman Joseph Morelle of Rochester and state Sen. Bill Stachowski of Buffalo that would extend the tax-exempt bond financing plan for one year, remove a $20 million cap, restore “civic facility authority” and contain no wage mandates.
“The now-expired civic facility authority enabled the city to help non-profit organizations throughout the five boroughs thrive and expand, and we strongly support its extension,” said City Hall spokesman Andrew Brent. “But we oppose IDA reform bills that contain wage mandates because the costs of the mandates exceed the benefits the IDA can provide, eliminating the ability to reduce costs for organizations and provide any assistance.”
The state legislation is also needed so the city’s Economic Development Corp. — which oversees the city’s IDA — can reauthorize the exemption for the Association Center at Larry Silverstein‘s 120 Wall St., where non-profit tenants are at the end of their 15-year leases.
Broker Suzanne Sunshine said that without the IDA her tenants are facing rents in the low $30s per square foot rather than in the high $20s. They are weighing the costs of moving to similarly priced downtown properties vs. remaining in place, Sunshine said.
“Obviously, the tax situation is a critical issue,” said Lebenstein of Cassidy Turley. “It’s a factor but not the only factor. It’s definitely put a crimp on deals.”
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The Abraham Joshua Heschel School is among those non-profits that could use some IDA financing.
The school now wants to sell its Upper West Side elementary and middle school buildings but stay in them until its new school at 20 West End Ave. is ready.
Jon Epstein, Charles Kingsley and Yoav Oelsner of Grubb & Ellis are marketing the 54,788 square foot building at 270 W. 89th St. and the 23,530 square foot building at 314 W. 91st St. with no formal asking prices.
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In last week’s column, Susan Penzner Real Estate should have been named as the sole broker representing both the owner, Calliope Associates, and The Rug Company in the latter’s relocation to a temporary store at 134 Spring St. and expansion of its original space at 84 Wooster St.
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The World Health Organization has signed a 10-year lease for 6,150 square feet of space at One Dag Hammarskjold Plaza.
The building at 885 Second Ave. between East 47th and E. 48th streets has asking rents from the high $40s to the low $50s.
The WHO plans to relocate this month from its current and smaller location at Two United Nations Plaza into the One Dag space on the 26th floor.
Nicky Heryet of Cassidy Turley, who represented the specialized United Nations agency, said, “While there are many buildings in the area that cater to UN ten ants, this space has great views and the owner is doing all the work for the WHO.”
Heryet, along with colleague Stephen Bellwood, represented the WHO, while the building was represented in-house by Jonathon Yormak of the Ruben Cos.
