Business owners can’t always rely on the private market to fully fund their ventures. Under the leadership of Mayor Thomas M. Menino, the Boston Redevelopment Authority’s (BRA) financial services department has provided city businesses with close to $500 million in bond and loan assistance. To do this the BRA relies heavily on boards made up of industry experts to assess loan and bond applications and move Boston businesses forward.
In the last 15 years, the Boston Local Development Corporation (BLDC) has authorized $13 million in loans, which has helped to create and retain more than 2,500 Boston jobs. The BLDC is a nonprofit, overseen by an independent board of trustees made up of representatives of Boston’s banking institutions, small businesses, law firms and development outfits. The program is administered by BRA staff and provides loans of up to $250,000 to businesses in or relocating to Boston, ranging from gyms to mom-and-pop shops.
Labs, Coffee Shops
Gingko BioWorks, a startup bio-tech company, received funds from the BLDC that allowed it to relocate and retrofit space in Boston’s newest life sciences cluster, the Innovation District. The company has added 14 employees since 2008 and is breaking new frontiers in the creation of microorganisms. Gingko BioWorks has received more than $7 million in federal grants and will be expanding into a larger facility this year.
Boston Common Coffee was unable to secure bank financing during the recent credit crunch. After vetting the business, the BLDC approved a loan that allowed the company to open a new location, the third in Boston, on Washington Street in Downtown Crossing. The bustling coffee shop has created 20 new jobs and activated the streetscape.
Other BLDC loan success stories include: Seafood Specialties, a seafood processor with a new LEED-certified Innovation District facility; South Boston wholesaler Imported Foods; Blue Nile Restaurant in Jamaica Plain; and Reebok CrossFit in the Back Bay to help you work off all that good food.
Tax-Exempt Bonds
The Boston Industrial Development Financing Authority (BIDFA) has assisted in the issuance of nearly $500 million in bonds, and has helped to create more than 19,000 jobs since 1972. BIDFA serves as a conduit for the issuance of tax-exempt and taxable private activity bonds for manufacturing and institutional projects. It is guided by an appointed five-member volunteer board made up of Boston residents with professional backgrounds in real estate law and finance.
Tax-exempt bonds are attractive to both borrowers and lenders. In return for tax-free earnings, lenders are able to charge below taxable market interest rates on their bonds, allowing borrowers capital access on a tax-exempt basis. The borrower’s credit, not the city’s, is pledged to repay these bonds.
Tax-exempt bonds are available to nonprofit organizations, such as medical facilities, academic institutions, and museums. Also available are Industrial Development Bonds (IDBs) for manufacturers, some small power facilities and solid waste recovery facilities. Taxable bonds can be issued to industrial, commercial and institutional projects; however, the earnings on these bonds are not exempt from federal taxes.
The Boston Renaissance Charter School was issued a $16.6-million. tax-exempt bond through BIDFA, allowing for the construction of a new campus in Hyde Park suited to the school’s specific educational needs. The 107,000-square-foot, state-of-the-art facility provides an exceptional learning environment for more than 800 Boston children, and employs approximately 176 teachers and administrative staff.
The city of Boston is available to assist businesses financially in all stages of growth. We partner with numerous resources and are available to connect businesses of all sizes with a wealth of resources.
William Nickerson is senior finance manager of the Boston Redevelopment Authority. For more information, visit businesshub.boston.gov.
