The Suffolk Legislature voted to create an agency that will be empowered to issue tax-free bonds to nonprofit groups to help spur the economy with $70 million in projects, now stalled by the lack of low-cost financing.
The measure, approved Tuesday, will authorize starting a local development corporation to issue tax exempt bonds for nonprofit projects like schools and hospitals.
"I think everyone is on board, "I don't see a problem," said presiding officer William Lindsay (D-Holbrook).
The action is needed because the state legislature in 2008 let lapse local industrial development agencies' power to issue such bonds for nonprofit groups. The nonprofit provision was a collateral casualty of a larger fight in Albany to make IDA's financing of private business more accountable, but overhaul plans have stalled.
Legis. Wayne Horsley (D-Babylon), chairman of the economic development committee which unanimously approved the measure last week, said, "The state has failed miserably here and we need this arrow in our quiver because we need all the economic development we can get."
Legis. Thomas Cilmi (R-Bay Shore) said, "It's a good way for these organizations to get low-cost funding to do their job in tough times."
Bruce Fergueson, executive director of the Suffolk Industrial Agency, said eight nonprofit groups, including the Parrish Art Museum in Southampton, the Commack Ambulance Corps, the Children's Museum of the East End and Huntington Hospital, have expressed interest in doing projects that would total $50 million to $70 million.
Under the measure, the corporation, whose board members would be the same as that of the county IDA, would act as a conduit, issuing tax-exempt bonds, which a bank or another institution would buy. The county does not guarantee the bonds, but they carry a lower interest rate because buyers do not have to pay income tax on the interest. Fergueson estimated rates on tax-free bonds would be about 3.25 percent, about half that of conventional financing.
Hempstead Town has already reactivated a dormant local development corporation and last year approved financing for projects for Molloy College and Adelphi University totaling nearly $90 million, said Fred Parola, chairman of both the town IDA and local development corporation. He said the agency is also processing am application for Kulanu Torah School in the Five Towns for $6 million. Parola said Nassau and Oyster Bay are also looking at creating similar agencies.