Fund includes $10m of capital committed by NYCEDC for pre-development and land acquisition loans
Fund provides low-interest loans to NYC-based real estate projects including mixed-income and mixed-use residential, industrial and commercial projects with development costs under $30M
The New York City Economic Development Corporation (NYCEDC), in partnership with Basis Management Group, LLC, today announced the launch of the Emerging Developer Loan Fund (EDLF), which includes $10 million of capital committed by NYCEDC.
Many emerging developers, particularly minority and women-owned firms, often face major hurdles in accessing affordable financing as banks will generally only finance 60 to 70% of the total project. Even if the developers bring in their own equity of 10 to 20%, they fall short in fully financing their projects by 10 to 30%. Larger developers tend to have access to alternative financing either through private equity, high-net-worth individuals or federal programs like EB-5 but small/emerging developers may have to turn to more costly sources like mezzanine financing or rely on their network of friends and families.
Additionally, banks/lenders may not provide financing for pre-development as it is considered to be high-risk. Most large developers finance those costs on their own while small/emerging developers may not have the capacity to do so. Commercial and industrial developments are also judged to be more high-risk than residential developments, so lending for non-housing/non-affordable housing is more costly and more difficult for small/emerging developers to secure.
The fund will provide affordable pre-development and land acquisition low-interest loans ranging from $100,000 to $2.5 million to developers taking on mixed-income and mixed-use residential, industrial and commercial projects under $30 million. The fund specifically seeks to facilitate the acquisition process and increase opportunities for emerging developers, which includes many minority and women-owned firms, with annual revenues of less than $10 million.
Interested emerging developers can find more information and apply through the fund’s website at http://nycedc.com/EDLF.
In addition to underwriting loans for the Emerging Developer Loan Fund, Basis Management Group will also provide technical assistance to help emerging developers craft loan packages to facilitate interest from senior lenders as well as mentorship to help the developers manage their projects in a timely and successful manner.
Basis Management Group, a privately-held, minority and women-owned commercial real estate finance firm, is the official lending partner and manager for the fund. As evidence of its commitment to the emerging developer program, Basis Management Group has made commercial real estate loans to minority and women-owned firms in excess of $370 million in the last 3 years.
“The Emerging Developer Loan Fund will help level the playing field for New York City’s burgeoning development firms by addressing what has historically been a real barrier to entry for these types of firms – affordable financing,” said NYCEDC President Maria Torres-Springer. “Through City-led initiatives like these, particularly those that support minority and women-owned businesses, we are making sure that every City dollar spent is an investment in opportunity. NYCEDC is proud to work with Basis Management Group to provide critical financial support to budding developers.”
“To play the game, you need a stake — the financial resources to transform a dream into a brick-and-mortar reality,” said Brooklyn Borough President Eric L. Adams. “Unfortunately, enterprises owned by minorities and women have often been prevented from accessing the lines of credit and other financing required to become a property developer, depriving communities in need of affordable housing and jobs. The Emerging Developer Loan Fund has the potential to dramatically expand opportunities and create a new generation of entrepreneurs who want to build in our neighborhoods, as well as to support my efforts to advance local companies that are investing in Brooklyn’s future.”
“Basis is extremely excited with the launch of the Emerging Developer Loan Fund,” said Tammy K. Jones, President of Basis. “As a company that has benefitted from similar initiatives, we know first-hand the difference this program can make for emerging developers seeking access to capital and look forward to working with our partners at New York Economic Development Corporation in addressing this critical need.”
“For far too long, our city’s M/W/DBEs have been absent from a thriving and financially powerful New York City economy. Only a handful of select and seasoned M/W/DBEs have prospered. Our city is at a crossroads; and I applaud the New York City Economic Development Corporation, in partnership with Basis Investment Group, for the creation of the Emerging Developer Loan Fund. There are so many women and minority developers that show promise and have visions for important projects, yet cannot carry them out due to lack of funds. As Chair of the Women’s Issues Committee, I am pleased that partnerships such as this will empower new M/W/DBEs to pull down on vital capital, so they may continue to excel, and change the business landscape in the City of New York,” said Council Member Laurie Cumbo.
“Investing and working with minority or women-owned businesses is one of the most important goals we have as a city today,” said Council Member Donovan Richards, chair of the Subcommittee on Zoning and Franchises. “By providing low-interest loans for affordable pre-development and land acquisition to M/W/DBE firms, EDC is showing that they are committed to closing the vast gap that has persisted for far too long in New York City. With the Mayor’s necessary push for more affordable housing and economic diversity, the Emerging Developer Loan Fund will allow M/W/DBEs to capitalize on these opportunities to develop mixed-income and mixed use industrial and commercial projects. I’d like to thank Mayor de Blasio and EDC President and CEO Maria Torres-Springer for providing another program that adds to their continued dedication to investing in minority and women-owned businesses.”
“The goal of the initiative will help level the playing field and give MWBE’s the opportunity to be part of the acquisition process. It is my desire that my constituent and MWBE companies throughout the 5 Borough take advantage of the opportunity. I also would like to thank NYCEDC for this game-changing initiative,” said Council Member Inez Dickens.
“Public-private partnerships, such as the Emerging Developer Loan Fund, meets a critical need in growing MWBE businesses by providing access to capital especially at crucial points in the development process,” saidAssemblymember Rodneyse Bichotte, Chair of the Subcommittee on the Oversight of M/WBE’s. “Having Basis Management Group, an MWBE, as a partner is important and underscores Mayor de Blasio’s and the Economic Development Corporation’s commitment to support qualified MWBEs, wherever possible. The additional layers of technical assistance and mentoring are also important in developing sustainable businesses over time. These synergies are a step in the right direction towards economic inclusion.”
“NYCEDC’s new initiative demonstrates its solid commitment to increase minority participation in New York City commerce,” said Dawanna Williams, Founder, Managing Principal, Dabar Development Partners and Founding Member & Chair of The New York Real Estate Chamber. “The New York Real Estate Chamber continues to acknowledge the invaluable efforts of New York City in providing unprecedented opportunities for MWBEs.”
“EDLF provides pre-development capital for soft costs like legal and professional studies and construction financing necessary to emerging developers that allows them to be viable in NYC’s highly competitive real estate development market,” said Brenda Walker, Managing Partner of 522 Capital. “This new NYCEDC initiative fills a gap that enhances an emerging developer’s ability to participate in development opportunities throughout the five boroughs.”
“The Emerging Developer Loan Fund addresses one of the most significant barriers to entry for smaller, community based MWBE firms – access to capital,” said Elizabeth Velez, President of Velez Organization. “The importance of MWBE developers is that they provide the greatest impact on empowering all neighborhoods throughout NYC.”
In addition to other services, the Emerging Developer Loan Fund will also provide technical assistance that will help borrowers better administer their financing. Eligible applicants must be able to demonstrate prior experience completing projects in the City or similar urban areas, and have been in operation for at least 3 years and/or are the lead or co-developer with site control on either an acquisition or ground lease project in New York City.
NYCEDC has a range of programs to that aim to boost opportunities for M/W/DBE firms, such as:
◾ConstructNYC – Connects small-to-mid-sized minority, women and veteran-owned as well as disadvantaged business enterprises with exclusive opportunities to work on NYCEDC Projects through contracts up to $1 million.
◾Next Level Bronx – Provides customized training for small business owners to create successful, growth-oriented business strategies.
◾Manage Forward – Gives small business owners the tools, training, and networks to turn growth plans into action.
◾Kick-Start Loan Program – NYCEDC helps M/W/DBEs that work as either Prime or Subcontractors on our projects to obtain loan capital that can strengthen their financial position, enabling them to cover upfront project costs or enhance cash flow streams during the life of the project.
The Emerging Developer Loan Fund will help close the inequality gap and help further Mayor Blasio’s goal to support diverse communities and boost local economic growth by awarding $16 billion in contracts to M/W/DBE’s over the next ten years.
Compliments of NYCEDC