Solutions

What is Neighborhood Improvement Zone (NIZ)?

Created by a state law in 2011, the Neighborhood Improvement Zone (NIZ) is a special taxing district that encourages development and revitalization in Allentown. The NIZ consists of approximately 128 acres in center city Allentown and along the western side of the Lehigh River.

Under the law, certain state and local tax revenues generated by new and existing businesses within the NIZ can be used to pay debt on bonds and loans that are issued for qualifying capital improvements in the zone. Those improvements include the public-private arena complex at Seventh and Hamilton streets as well as other private commercial, retail, residential, hospitality, conference and exhibition projects of approved applicants.

The NIZ is overseen and managed by the Allentown Neighborhood Improvement Zone Development Authority (ANIZDA).

How does this benefit an organization’s construction project?

As certain state and local tax revenues generated by new businesses within the NIZ can be used to pay debt on loans for these capital construction projects. In addition, the NIZ Tax Revenues generated by new tenants that will occupy these buildings will help offset their base rent, which will entice new businesses to move into Allentown. This will bring new jobs and have a positive community impact in Allentown.

How will Edge Business Solutions Business Solutions help your organization?
Edge Business Solutions has developed an expertise in the NIZ and can provide the following services:

• Prepare the NIZ Application to be reviewed and approved by ANIZDA. This includes the financial models.
• Prepare the financial models and construction loan package to be financed by a conventional bank.
• Manage the NIZ Compliance with the contractors based on the taxes generated from construction.

What is a Business Valuation?

A business valuation is a general process of determining the economic value of a whole business or company unit. Some of the purposes of valuing a business include but are not limited to Mergers and Acquisitions; Sales and Divestitures; Buy/Sell Agreements; Shareholder Transactions; Estate Planning and Taxation; Gift Taxes; Solvency Opinions; Insolvency Opinions; Banks – Loan Applications; Marital Dissolution..

Why engage Edge Business Solutions?

Celene B. Hadeed, President of Edge Business Solutions and Martin C. Levin, Managing Director of RLB Accountants have forged an allicance to combine their expertise to provide services to clients in the area of Business Valuations.  Both Celene and Marty are Members of the National Association of Certified Valuators and Analysts; the only business valuation credential accredited by the National Commission for Certifying Agencies ® (NCCA®).    Celene’s qualifications include an MBA and CVA certification. Marty’s qualifications include a CPA, MBA and CVA certification. Our depth of experience in operations, taxes, finance, accounting and project management complement each other in performing business valuations.

How will Edge Business Solutions help your organization with business valuations?

In order to perform a business valuation, the valuation expert must have an understanding of the organization and also the purpose of the valuation.  With our expertise in operations, taxes, accounting and finance, we will perform a thorough analysis of your company’s current financials, while gaining an understanding the company’s management, capital structure and its potential future earnings.  Based on the information gathered, we will make a determination on the best method to value your organization and provide you with our professional opinion of value.

What is the City Revitalization and Improvement Zone (CRIZ)?

The City Revitalization and Improvement Zone (CRIZ) Program was created by Act 52 of 2013. The Pennsylvania Department of Revenue (Revenue Department), the Pennsylvania Department of Community and Economic Development (DCED) and the Governor’s Office of Budget are tasked with administration of the CRIZ Program. These guidelines provide information for municipalities looking to apply to the CRIZ Program.

A CRIZ is an area of up to 130 acres, comprised of parcels designated by a contracting authority, which will provide economic development and job creation within a political subdivision. State and local taxes collected within the CRIZ will be used to repay debt service to stimulate economic development projects within the CRIZ.

The CRIZ Program also permits one pilot zone to be designated. A pilot zone is an area of not more than 130 acres designated by a contracting authority within a township or borough with a population of at least 7,000 based on the most recent federal decennial census. Program guidelines apply to both zones.
The focus of the program is to provide opportunity to spur new growth, helping to revive downtowns and create jobs for the residents in the regions. Vacant, desolate, underutilized or abandoned space will be developed, thereby creating jobs, increasing personal incomes, growing state and local tax revenues, reviving local economies and improving the lives of city residents and visitors.

How is the funding used?

Funds may only be used for the following:

• Payment of debt service on bonds issued for the construction, including related infrastructure and site preparation, reconstruction or renovation of a facility in the zone.
• Construction, including related infrastructure and site preparation, reconstruction or renovation of all or a part of a facility.
• Replenishment of amounts in debt service reserve funds established to pay debt service on bonds.
• Employment of an independent auditing firm to perform required duties on behalf of the contracting authority.
• Improvement or development of all or part of a zone.
• Improvement projects including fixtures and equipment for a facility owned by a public authority.

How is it funded?

Bonds will be issued by the contracting authority. Various State and Local Tax Revenues created in the zone will be then used to pay off the bonds.

How will Edge Business Solutions Business Solutions help your organization?

Edge Business Solutions has developed an expertise in the CRIZ and can provide the following services:

• Prepare the CRIZ Application to be reviewed and approved by the appropriate authority. This includes the financial models.
• Prepare the financial models and construction loan package to be financed by a conventional bank.
• Manage the NIZ Compliance with the contractors based on the taxes generated from construction.

What is New Markets Tax Credits?

The New Markets Tax Credit (NMTC) Program permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities (CDEs). Substantially all of the qualified equity investment must in turn be used by the CDE to provide investments in low-income communities. The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year credit allowance period. In each of the first three years, the investor receives a credit equal to five percent of the total amount paid for the stock or capital interest at the time of purchase. For the final four years, the value of the credit is six percent annually. Investors may not redeem their investments in CDEs prior to the conclusion of the seven-year period.

How does this benefit an organization’s construction project?

The investment that a taxpayer makes in the project can be used for an organization’s construction project. This typically becomes an equity investment in the project after the seven-year compliance period.

How will Edge Business Solutions Business Solutions help your organization receive equity in your capital project?

Edge Business Solutions will work with your organization to receive an investment from these taxpayers through the NMTC program as part of your construction financing for a project. Edge Business Solutions will become part of your internal project team to develop the following:

• Project Cash Flow Model
• Project Information Document
• Business Plan
• Zero Based Budget
• Revenue and Expense Reconciliation
• Source NMTC Allocation
• Assist in the structuring of the NMTC transaction
• Assist in the closing of the NMTC transaction
• Preparation and support throughout the Conventional Bank Financing process (Bridge Loans, Long Term Debt, etc.)
• State funding programs (ex: Redevelopment Assistance Capital Program – RACP)
• State Tax Credits (ex: Neighborhood Partnership Program – NPP)
• Project Tracking
• Draw requests for NMTCs
• Compliance Reporting

What is the Redevelopment Assistance Capital Program (RACP)?

The Redevelopment Assistance Capital Program (RACP) is a Commonwealth grant program administered by the Office of the Budget for the acquisition and construction of regional economic, cultural, civic, recreational, and historical improvement projects. RACP projects are authorized in the Redevelopment Assistance section of a Capital Budget Itemization Act, have a regional or multi-jurisdictional impact, and generate substantial increases or maintain current levels of employment, tax revenues, or other measures of economic activity. RACP projects are state-funded projects that cannot obtain primary funding under other state programs.

How will Edge Business Solutions Business Solutions assist you with the RACP program?

Edge Business Solutions understands that redevelopment within the State of Pennsylvania is very important for both the government and for organizations. Edge Business Solutions will work with your organization to apply for RACP, and become the liaison between the State, local municipality and State appointed consultants throughout the process.

Additionally, Edge Business Solutions will work with your organization to compile the Special Conditions required, and also apply for reimbursement from the State of Pennsylvania throughout your construction project while ensuring that all reporting requirements are met.

What is a commercial loan?

A commercial loan is a debt-based funding arrangement between a business and a financial institution such as a bank, typically used to fund major capital expenditures and/or cover operational costs that the company may otherwise be unable to afford, as opposed to a loan made to an individual.

How will Edge Business Solutions be able to help you with this process?

Edge Business Solutions will work with your organization to develop all the necessary materials needed by a financial institution for a commercial Loan, including real estate transactions.  This includes:

• Analysis and write-up of the request, project and organization
• Credit analysis of financials
• Projections
• Identification of risks and mitigates
• Business Plan (if necessary)

Additionally, Edge Business Solution will support your organization throughout the process.

Our objective is to ensure that your organization is very well-prepared as you approach and interact with these financial institutions.  If these banks see that your organization has spent the time preparing ahead of time and answered questions before they were asked, it will reflect confidence in the management of your organization.

What is Contractor Controlled Insurance Program (CCIP) / Owner Controlled Insurance Program (OCIP)?

An Owner Controlled Insurance Program (OCIP) or Contractor Controlled Insurance Program (CCIP) is an insurance policy held by a property owner or construction manager during the construction or renovation of a property, which is typically designed to cover virtually all liability and loss arising from the construction project (subject to the usual exclusions).  The policy package usually contains Commercial General Liability Policy, Workers Compensation policy with employer’s liability.  It is also known as a “Wrap-Up” in the industry.

The traditional method for insuring construction consists of each general contractor and sub-contractor obtaining their own insurance policies from any provider of their choosing.  In turn, they would build their policy premiums into their cost structure, which in turn became part of their bids.

In OCIP and CCIP, all construction, materials, hazard, workers’ compensation, terrorist, and other building-related insurance is purchased by the property owner or construction manager as part of a single policy from a single insurer.  Thus, property owners and construction managers benefit from OCIP in that all insurance costs are collected into one transparent policy premium rather than spread across the bids of dozens of contractors and subcontractors, and they have direct control over administrative costs by dealing with a single broker and insurer.

How will Edge Business Solutions Business Solutions help your organization with OCIP and CCIP?

• Works with insurance company and property owner / construction manager to determine deductions from subcontractors to help determine insurance requirements.
• Provides overall internal administration of the program:
  • Subcontract status follow up which determines timing of sub’s enrollment into the program.
  • Subcontractor enrollment in the program.
    • Sends necessary enrollment documents to subcontractors and subs of subcontractors.
    • Once received back from sub, reviews documentation and determines additional requirements needed.
  • If subcontractor is not eligible for the OCIP or CCIP, ensures that indemnification and subcontractor’s insurance requirements met the necessary requirements for the construction project.
  • Obtain additional insurance requirements from all subs that are not covered under the wrap up.  Ex: Professional Liability and Off Site Coverage.
  • For subs of subcontractors, suppliers, and vendors that are not part of wrap up – ensures that the appropriate documentation (indemnification and insurance requirements) to manage risk of accessing site was in place.
  • Maintains a fully detailed tracking report related to communication with all related parties related to the CCIP.
• Works as the primary contact and intermediary between the subcontractors, sub of subcontractors, insurance company / broker and property owner or construction manager to resolve issues related to enrollment, ineligibility, risk, claims and accessing the site.
• Maintains an Access to Site document that allows Site Team to see which subcontractors can access the site.
• Implements a Claim Process with Site Team, Insurance Company and Subcontractors.
• Manages the CCIP reconciliation from original estimates deductions to actual enrollment deductions to determine any offsets.
• Tracks Monthly Payroll Reports that will be used for wrap up audit.
• Prepares internally written processes and procedures for the following:
  • Claims
  • Safety Process
  • Enrollment
• Provide weekly status updates of the wrap up to the property owner / construction manager.
• At end of program, will provide necessary services needed to ensure a proper audit is completed for the wrap up with the subcontractors.

Edge Business Solutions will work with your organization to provide project management services that focuses in financial management.  Our focus is to work with your organization as they implement financial software systems ensuring that the processes within the organization provide solid financial information for key stakeholders.

We will assist you with the following:

• Assessment of needs.
• Strategic planning.
• Review of your current business practices.
• Re-Engineering of those practices to generate operational efficiencies.
• Specifications related to the software needed.
• Selection of the software.
• Project Management and Implementation of the software.
• Benchmarking the business practices.

Edge Business Solutions diligently worked to gain an understanding of what was required of different entities in order to apply for the PPP Loan through various financial organizations.  It successfully submitted 21 applications with over 650 jobs to financial organizations, of all which were approved.

The most critical factor for an organization is going to be the forgiveness component.  Edge Business Solutions will work with your organization on calculating the forgiveness portion based on the guidelines provided by the Small Business Administration.