New York City Bond Collateral Assistance Fund HELPING MWBEs GET TO THE NEXT LEVEL!
New York City Bond Collateral Assistance Fund -Presenter Liz Duncan-Gilmour Senior Vice President & General Counsel The Cayemitte Group 2
The Cayemitte Group & Our Role NYC Bond Fund Role - Program Manager & Fund Administrator TCG core focus: serving small, MWBE and SDVOB businesses Insurance & Bonding - clients include start-ups to NY/NJ Port Authority and NJ Transit Current Capacity Building Education Programs- DASNY, City of Newark, NJ EDA, NYS DOT and the World Bank Capital Management – facilitates access to capital and incentivizes bond underwriters and lenders be cause it mitigates their risk • ` 3
The NYC Bond Surety Fund Partners Surety (Bonding) Representatives: ▪ Boston Indemnity Group (HIIG Surety) - Drew Jennings, Regional Director ▪ Service Insurance - James Burger, President ▪ International Fidelity - Scott Zmigrodski, Assistant Underwriting Manager ▪ Evergreen National Indemnity Company - Kevin McCabe, President ICU ▪ Travelers - Ralph Pulver, Regional Underwriting Officer 4 • `
New York City Bond Collateral Assistance Fund David Cayemitte, President The Cayemitte Group Insurance Bonding Fund Management Capital Management Back Office Services 5
The NYC Bond Collateral Assistance Fund Purpose of the Fund ➢ Support MWBE firms doing business with NYC agencies ➢ Provide incentives to Surety partners by offsetting risk ➢ Assist MWBE firms to qualify for larger contracts/projects ➢ Develop MWBE firms to qualify as primes for NYC projects ➢ Assist various NYC agencies with meeting MWBE goals 6
$10,000,000 Bond Fund NYC Bond Collateral Assistance Fund When will you need support ? If Bidding or contracting directly with one of the 39 city agencies and a Bid or Payment & Performance Bond is required If Bidding or contracting with a Prime contractor who is working with one of the 39 city agencies and the Prime requires a surety bond And You require support to “qualify” for bonding (Payment & Performance Bond) 7
$10,000,000 Bond Fund Fund will provide up to $500,000 support per project TCG and surety partners will underwrite each opportunity with the aim of providing support If supported, TCG will issue an Irrevocable Letter of Credit (ILOC) on behalf of the contractor to help them to qualify for the bond TCG will provide technical assistance where necessary for the project TCG will coordinate and manage the issuance of the ILOC and the bond and manage closeout. 8
The NYC Bond Collateral Assistance Fund Apply one of Web-Based secure Portal - nycbondfund.bondingportal.com OR Through your agent or broker who will contact our surety partners, who will then contact TCG • You MUST complete the on-line application • The underwriters may ask for additional information such as: • • Financial Statements Accounts Rec and Accounts Pay aging schedules • • WIP Schedule Job Cost Estimate or Bid Submission • • Personal Financial Statement Scope of work • • Tax Returns Proof of cash or working capital 9
The NYC Bond Collateral Assistance Fund If you are approved for collateral assistance: • TCG will coordinate the issuance of the ILOC and the Bond • The ILOC will be issued on behalf of your firm via Signature Bank • The contractor will be responsible for all ILOC fees assessed by Signature Bank 10
New York City Bond Collateral Assistance Fund HELPING MWBEs GET TO THE NEXT LEVEL!
Case Study: Stacie Alexiou, CEM CEO, Managing Director at WATT + FLUX an LED inspire Company WBE NYS NYC PANYNJ MTA American Entrepreneur Award 2016 Board of Directors Women Builders Council State University of New York Maritime College Greater New York City Area 12
Opportunity with the DOT DOT contracted The Prime The Prime had to meet MWBE goals The Prime subcontracted with WBE LED Inspire Contract Amount $2,103,624 The Prime required a bond for the contract 13
The Opportunity – DOT and Client/Prime Contract Scope of Services: Upgrade of All Lighting to LED at the Whitehall Ferry Terminal 14
Agency – DOT – The Client/Prime The Team is Experienced and Ready to Deliver 15
To Proceed - LED Inspire required a Bond In The Amount of $2,103,624
LED Inspire Did Not Qualify for A $2,103,624 Bond Why : ▪ LED’s largest completed contract was roughly $385,000 ▪ The contract size was much larger than the company’s largest completed contract (the company was qualified for a $650k to $700k bond) ▪ The company’s financials did not support a $2mil+ contract 17
The NYC Bond Fund helped LED to Qualify Underwriting and Approval Process: • TCG Worked with prime to break the $2.1mil contract into two smaller contracts: $1,048,781 & $1,054,843 • TCG worked with the surety underwriter and applied various risk mitigation tools to minimize surety exposure including collateral access from the fund and capital management. 18
LED Inspire Bond Qualification - Whitehall 8/2017 to 11/2017 $1,200,000 $1.08mil ▪ Use of Collateral (NYC Bond Fund) was the critical piece to getting the bond approved $900,000 Bond exposure reduced to $708,000 ▪ LED qualified for a $700k to an amount the company SURETY contract, not $1mil contract qualified for $600,000 ▪ Underwriting partner willing to provide terms to facilitate bond approval $300,000 $300,000 collateral offsets NYC Bond ▪ TCG used risk mitigation tools Fund 30% of the bond risk to offset the bond risk $300,000 $0 Initial Contract 19
LED Inspire Bond Qualification $1,200,000 $1.05mil $900,000 Phase 2 Capital Management Capital Management Bonded with $500,000 Collateral Support from the $705,000 ?? Support Support Fund $600,000 BIG SURETY and Capital Management $300,000 NYC Bond Surety exposure Fund $300,000? ILOC $0 Phase 2 Phase 2 ILOC Support Estimated Bond Exposure 20
Helping MWBEs Get To The Next Level ▪ The Fund assisted LED to obtain and complete a $1.0mil bonded contract ▪ The Fund then assisted LED for the second $1.0mil bond ▪ The firm has recognized a 400% growth in project size capacity ▪ LED can now potentially qualify for a $3.6mil project 21
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