NEW YORK STATE AMENDED ACTION PLAN Empire State Development in Cooperation with New York City Economic Development Corporation Amended Action Plan for New York Business Recovery and Economic Revitalization June 7, 2002 Action Plan History Congress appropriated an initial $700 million to New York State for economic recovery and revitalization efforts. These funds are managed by Empire State Development (“ESD”). ESD, in cooperation with the New York City Economic Development Corporation (“EDC”) published a draft Action Plan for the $700 million on December 26, 2001, for public comment. The Action Plan was modified to reflect comment and published in final version on January 30, with response to comment attached. The Final Action Plan was accepted and approved by the federal Department of Housing and Urban Development (“HUD”), which administers the federal disaster recovery funds appropriated by Congress through the Community Development Block Grant (“CDBG”) program. Congress subsequently appropriated $2.0 billion for economic recovery and revitalization and awarded the funds to the Lower Manhattan Development Corporation (“LMDC”). While the $2.0 billion is allocated under a separate spending plan--not described here--a portion of those funds will be allocated to the programs outlined in the Final Action Plan and this Amended Action Plan as referred to below. Need for Modification ESD, in partnership with EDC, has implemented the business recovery and economic revitalization programs outlined in the Final Action Plan and continues to disburse funds according to established guidelines. ESD and EDC have monitored program use over the past months and recognize the need to modify three program activities. Such modification requires a formal amendment to the Final Action Plan, with opportunity for public comment. This Amended Action Plan describes the proposed modifications to three program activities from the Final Action Plan of January 30th. All other programs from the Final Action Plan continue to be implemented as previously described in the Final Action Plan without any change, and are not discussed here. The Amended Action Plan modifies: World Trade Center Disaster • • • Small Firm Attraction & Retention Grant Program WTC Business Recovery Loan Fund Infrastructure Rebuilding Allocation of Funding Categories The Amended Action Plan reallocates funding between two categories. The $25 million initially allocated to Infrastructure Rebuilding will be reallocated in the Amended Plan to the Small Firm Attraction and Retention Grants Program. Amended Action Plan Spending Commitments Spending Categories Small Business Assistance • Bridge Loan Program • WTC Business Recovery Loan Fund • WTC Business Recovery Grant Program Compensation for Economic Losses • Small Firm Attraction and Retention Grants • Grants to Technical Assistance Service Providers for Lower Manhattan Total: Small Business Assistance Assistance to Larger Firms • Job Creation and Retention Program • Compensation for Economic Losses to Other Businesses Total: Larger Firm Assistance Business Information • Business Information Infrastructure Rebuilding • Initial Planning and Design Administration TOTAL • • Subtotal: Economic Loss Compensation Subtotal: Attraction & Retention Assistance Action Plan 1/30/02 $15,000,000 50,000,000 *331,000,000 **80,000,000 5,000,000 481,000,000 **170,000,000 *5,000,000 175,000,000 5,000,000 Amended Plan 5/10/02 $15,000,000 50,000,000 *331,000,000 **105,000,000 5,000,000 506,000,000 **170,000,000 *5,000,000 175,000,000 5,000,000 25,000,000 14,000,000 $700,000,000 *336,000,000 **250,000,000 0 14,000,000 $700,000,000 *336,000,000 **275,000,000 ESD reserves the right to reallocate funds among and within the above categories as needed to respond most effectively to the goals of economic revitalization, job retention and creation in New York City. Additional funding from the $2 billion Federal allocation will be required to meet program objectives described in the Final Action Plan and below. ESD and EDC anticipate receiving the additional funds needed to fulfill program obligations from the $2.0 billion CDBG award managed by LMDC. Small Firm Attraction & Retention Grant (SFARG) Program -- Amended Plan $105,000,000 ESD and EDC propose the following modifications to the SFARG program. The effect of the modifications is to expand eligibility to include firms employing fewer than ten people rather than a minimum of ten employees as previously required, and to ease lease commitment requirements for those firms located in the area designated as the October 23 Zone. Firms that were eligible for SFARG under the terms published in the Final Action Plan remain eligible without any reduction in previously described benefits. The program modifications respond to community requests for greater assistance to small businesses. 1. Attraction and retention of small business establishments is an important, but difficult to achieve, objective of any successful recovery plan. Because there are thousands of small establishments operated by small and large businesses in the lower Manhattan area that will make decisions about whether to remain in the area, it is administratively impractical to provide assistance on a discretionary basis. Thus, ESD and EDC will offer grants to businesses on the following general conditions: a) For companies operating in the eligible area (see #4 below), the current lease must expire on or prior to December 31, 2004, and the company must sign a new lease, or renew an existing lease for a minimum of five years beyond the current commitment. b) For companies newly locating within the eligible area, the company must sign a new lease for a minimum of five years. c) If the company is located within a section of the Restricted Zone referred to as the October 23rd Zone (the area bounded by the centerlines of Chambers Street, Greenwich Street, Park Place, Broadway, Rector Street, West Street, Albany Street, South End Avenue World Financial Center Esplanade, Murray Street and North End Avenue), the company must sign a new lease, or renew an existing or reaffirm an existing lease. In each case, the new, renewed or reaffirmed lease must expire on or after September 11, 2006 for premises within the October 23rd Zone. 2. The new lease must be signed not earlier than September 11th, 2001 and not later than December 31, 2004. ESD and EDC may extend availability of assistance if funding remains at the end of the period. 3. Upon application, the company must employ not more than 200 employees in an establishment in the eligible area. 4. The new lease or lease amendment is for space located in the area on the south side of the line beginning at the intersection of the Hudson River with the Holland Tunnel, and running thence east to Canal Street, then running along the centerline of Canal Street, to the intersection with Rutgers Street, and thence running along the Centerline of Rutgers Street to the East River. 5. Except as provided in paragraph #6, ESD/EDC will make two payments of $1,750 per employee to assisted companies • The first payment will be made upon approval of the application for assistance. • The second payment will be made 18 months later based on the company’s employment at that time, up to a maximum of 250 employees. However, Companies with 3 or less employees will be eligible to receive one payment of $3,500 per employee upon approval of application, in lieu of the two payments indicated above. 6. Businesses in the Restricted Zone: Businesses operating in the Restricted Zone (the area bounded by the area south of the centerline of Chambers Street from the Hudson River to Broadway, then the area west of the centerline of Broadway running south to Rector Street and the area north of the centerline on Rector Street running west to the Hudson River) on September 11th, 2001 that sign, renew or reffirm a lease for space in New York City within the area defined in Paragraph 5, will be eligible for assistance in the same manner as firms described in that paragraph, except that ESD/EDC will make two payments of $2,500 per employee (or one payment of $5,000 if three or less employees). In the event that firms located prior to September 11th in the Zone described in this paragraph relocate outside the area defined in Paragraph #4 but within New York City, on or prior to December 31, 2002, ESD/EDC will provide two payments of $1,750 per employee (or one payment of $3,500) in the same manner as described above. 7. The Amended Action Plan allocates $105 million for Small Firm Attraction and Retention Grants. The increase of $25 million over the original allocation of $80 million, recognizes the additional cost of expanding eligibility criteria to include firms with fewer than ten employees. 8. Total program cost is now estimated at $291 million. We anticipate accessing funds above the $105 million allocated here, from the $2.0 billion Federal appropriation. 9. Impact objective: help retain and create 65,000 jobs through the program at assisted businesses. Assisted firms will have an indirect impact upon businesses employing an additional 30,000. (Note – businesses assisted by this program will also be eligible for assistance from other programs in this Plan. Consequently, job impacts described are not additive). Business Recovery Loan Program – Amended Plan $50,000,000 The objective of making low-cost financing available to small businesses and not-for-profit organizations, as stated in the Final Action Plan, remains unchanged. The Final Action Plan estimated the likely cost of total loan programs at $150 million and allocated $50 million toward this from the $700 million appropriation. The Final Action Plan limited use of the $50 million to loans that would provide working capital to small businesses. The Final Action Plan anticipated that an additional $100 million would be sought for this program, and that a portion of those funds would be extended to loans for larger businesses. ESD and EDC program experience to date indicates that the demand for loans will not likely exceed the $50 million presently allocated. The Amended Action Plan no longer seeks $100 million to extend the WTC Business Recovery Loan Fund beyond the initial commitments made to small businesses from the $50 million allocation. The initial use of funds under the Business Recovery Loan Program will be to provide community based development organizations, not-for-profit community organizations and other lenders with capital to make low-cost working capital loans to small businesses and not-for-profit organizations in the four targeted business groups, as those groups are described in the Final Action Plan. The Business Recovery Loan Program may subsequently also provide funds to create loan loss reserves and to reduce financing costs. 1. Applicants for this program will be encouraged to first apply for assistance through available SBA lending programs, if they are eligible. 2. The increased availability of loans will assist in meeting the credit needs of firms that currently lack access to suitable credit, particularly those that do not meet SBA credit criteria for disaster loans, thereby increasing their viability. 3. Repaid loans will remain in the community, available for ongoing loan programs to sustain small business recovery. 4. Objective: to help meet the working capital needs of affected small firms, thereby contributing to the retention of 10,000 jobs at assisted businesses. If indirect employment related to the business activity of assisted firms were included, a total of 17,000 jobs would be affected. Infrastructure Rebuilding – Amended Plan $0 The Final Action Plan allocated $25 million for initial planning and design efforts toward the work of rebuilding lost infrastructure. This allocation was made in conjunction with the formation of LMDC, and was intended to fund their initial planning and administrative costs. Congress subsequently appropriated $2.0 billion and named LMDC as the direct recipient of the funds. Infrastructure rebuilding, planning and design costs are covered by the $2.0 billion fund, and LMDC no longer needs to draw planning funds from the $700 million appropriation covered by the Final Action Plan and this Amended Action Plan. Since LMDC no longer needs the $25 million allocation, the Amended Action Plan proposes to reallocate this fund to the expanded SFARG program, which has increased costs because of the Amended Plan proposal to extend program eligibility to include business and not-for-profit organizations employing fewer than ten people. This will be of immediate benefit to small business and not-for-profit organizations. Invitation for Public Comment to the Amended Action Plan As discussed above, this Amended Action Plan reflects modifications only to the Final Action Plan of January 30, 2002. That plan was approved by the Department of Housing and Urban Development (HUD) and is available on the Empire State Development web site at www.empire.state.ny.us. The proposed changes to the Final Action Plan, as described in this Amended Action Plan, are open to public comment. As required by HUD, the public comment period extends for fifteen calendar days from the date of publication. Comment must be made in writing, and may be delivered to Empire State Development either by posted mail, or by electronic mail, addressed as follows: By post to: Amended Action Plan Empire State Development PO Box 4438 Grand Central Station New York, NY 10017 firstname.lastname@example.org By email to: The deadline for receipt of comment is June 24, 2002. Comments to the Amended Action Plan delivered by fax or telephone cannot be considered.