Changes the composition and membership requirements of the agency's board of directors and expands the agency's reporting and publication requirements

Summary of provisions

Amends subdivision 1 of section 43 of the Private Housing Finance Law to change the composition of the HFA board of directors to include three members appointed by the Goyemor, four members appointed by the Legisla- ture (1 member to be appointed by each conference). The Comptroller, Commissioner of the Division of Housing and Community Renewal, the Commissioner of Taxation and Finance, and the Director of the Budget will each have one appointment. The Board will have a total of eleven members.

Amends subdivision 3 of section 43 of the Private Housing Finance Law to prohibit any individual who is a registered lobbyist or has a financial interest in a for-profit housing. development or housing finance corpo- ration from serving as a board member of the HFA.

Amends subdivision 1 of section 56 of the Private Housing Finance Law to require the HFA to provide each member of the Legislature with a report within 90 days of the end of each fiscal year. The report shall include the total number of affordable units financed by the agency, the hard and soft costs per square foot for each unit financed, a list of names of the development companies receiving financing from the agency, and the total amount of financing per company.

A new section 56-b is added to the Private Housing Finance Law. Subdi- vision 1 requires the HFA to publicize in statewide and local newspapers and on its website notices of funding availability whenever financing is available, or 3 times a year, whichever is greater. Subdivision 2 obli- gates the HFA to publish the date, time, location, and draft agenda of its public meetings on its website a minimum of 14 calendar days before each meeting. Following each meeting minutes must be posted an the agen- cy website within 10 days. Subdivision 3 requires the HFA to make all of its pending project documents available on its website a minimum of 14 calendar days before any vote on a project.

Subdivision 4 requires the HFA to post its project selection criteria on its website, to hold bidders conferences around the state, to make public announcements of its awards on its website, and to provide an

opportunity for unsuccessful bidders to learn why their bids were rejected.

Subdivision 5 obliges the HFA to develop and implement a request for proposal process for its allocation of nine percent low-income housing tax credits within 30 days.

Justification

At a time when localities across New York are in desperate need of affordable housing, and the state's debt burden has become one of the highest in the nation, it is vitally important that the state use its tax-exempt bonding authority wisely. It is essential for the Legislature to have the information and power necessary to ensure that all of the state's housing financing programs maximize the number of quality affordable homes produced while simultaneously minimizing the additional debt burden placed upon taxpayers.

Unfortunately, much of the state's current affordable housing finance structure prevents this crucial oversight from taking place. Nearly $1 billion in yearly tax-exempt bonding authority is controlled by the HFA which is an off-budget authority over which the Legislature has virtual- ly no oversight. The HFA is governed by a seven member board of direc- tors who are appointed by, and solely accountable to, the Governor. The HFA posts only minimal information on its website, issues an annual report with limited data, and rarely, if ever, appears before the Legis- lature. Although the HFA is required to provide more data on its accom- plishments to the Governor, the chairman of the Assembly Ways and Means committee, the chairman of the Senate Finance committee, and the Comp- troller, these reports do not include sufficient financial details and are frequently not shared with all members of the Legislature. Public hearing notices, board meeting times, agendas, and minutes, as well as proposed project documents are unavailable from the authority's website and are often difficult for interested members of the public to obtain. Furthermore, unlike the state's Division of Housing and Community Renewal, which posts its formal funding selection criteria on its website, holds bidders' conferences around the state, makes public announcements of its awards, and provides application assistance to affordable housing developers, the HFA fails to even refer to its tax credit application guidelines on its website or to announce funding awards and availability. As a result of the HFA's lack of transparency, it is all but impossible for legislators and the public to scrutinize its effectiveness.

The state of New York created the HFA in 1960 to issue tax-exempt bonds to help finance homeownership opportunities and rental housing afforda- ble to low and middle-income households. The HFA also allocates a portion of the state's limited supply of 9% low-income housing tax cred- its. In its early years the HFA fulfilled its mission quite successful- ly, creating more than 100,000 units of middle-income housing in 269 developments across the state through the Mitchell-Lama program between 1960 and the mid-1970s.

Regrettably, the HFA has been dramatically less successful in recent years. More than half of the HFA's bond resources during the last five years have gone to finance luxury housing, rather than much-needed affordable housing around the state. Only 5,959 out of 12,715 total units created between 2000 and 2005 were affordable. For projects proposed in New York City, HFA's record is even worse: in 2005 just 28% of new units were affordable. While the use of taxpayer money to subsi- dize luxury development is always questionable, it is particularly egre- gious at a time when the affordable housing needs of New York's families and communities have reached crisis proportions.

Equally troubling, it appears that the HFA has developed a pattern of favoritism in its awarding of financing and developers' fees that unfairly benefits politically-connected developers. Close to 50% of all the multi-family building projects in New York City approved by the HFA to receive taxexempt financing between January 2004 and 2006 from the HFA were developed by a single entity. The fact that one developer has received a disproportionate share of the HFA's tax-exempt bonding capac- ity, in and of itself, would not be alarming if that developer produced high quality affordable units at a reasonable cost. However, the average costs of these projects are particularly high, in one case reaching $950,864 per "affordable" apartment. The developer fees approved for these projects were more than 300% higher than the average for other developers receiving tax-exempt financing during the same time period. These deals are clearly an inefficient use of state bonds. In fact, other affordable housing developers have indicated that using the financing from the same amount of taxfree state bonds they could build more than five times the number of affordable units.

As a rule, government subsidies should only be provided to private developments if a project is unquestionably in the public interest and could not occur without the subsidy. The construction of desperately needed housing affordable to low and middle-income people is clearly in the public interest. However, tax-exempt bonds and low income tax cred- its are a valuable and fixed resource that must be used as efficiently as possible. In order to both maximize the construction of affordable housing, protect taxpayers, and ensure that developments are not over- subsidized, legislators and the public must have the information neces- sary to scrutinize the HFA's actions.

This legislation would provide legislators and the Comptroller with the data and authority to ensure the HFA is fulfilling its mission and is accountable to the public. Additionally, this bill would significantly reduce the potential for board members' conflicts-of-interest and favo- ritism to play a role in the HFA decision making processes.

Legislative history

2008: A8269 (Kavanagh) - Housing 2007: A8269 (Kavanagh) - Housing

Fiscal impact on the state

None to the state. Minimal cost to the HFA.

Effective date

This act shall take effect immediately, provided that the amendments to section 56 of the private housing finance law made by section two of this act shall be subject to the expiration and reversion of such section pursuant to section 7 of chapter 396 of the laws of 1984, as amended, when upon such date the provisions of section three of this act shall take effect.