Extends provisions of law relating to the financing of certain multi-family housing

Reasons for support

Enactment of this proposal would allow HDC to continue to assist in the financing of newly constructed and rehabilitated low- and moderate-income housing in the City of New York. The bill would continue HDC's authorization to enter into direct loan agreements with developers of low- and moderate-income housing, as well as joint financing programs with recognized lending institutions. Pursuant to a joint financing program, HDC lends funds obtained from the sale of its securities, both tax-exempt and taxable, to financial institutions, which in turn re-lend the proceeds to private developments for the construction or rehabilitation of low- or moderate-income housing. In cases of conduit lending, the responsibilities of underwriting and servicing the loans are assumed by the lending institutions, which also bear the risks of default under the mortgages. HDC does not rely upon the credit (or tax levy) of either the City or the State of New York to pay bondholders.

Since its creation in 1971, HDC has financed the construction or preservation of more than 225,000 units of affordable housing in New York City. More than 165,000 units have been financed since 1984 pursuant to the passage of subdivision 23-c of Section 654. Overall, HDC's portfolio includes a broad array of housing -from low-income tax credit developments, to mixed-income developments and aging developments originally financed in conjunction with direct federal subsidies. The vast majority of units financed by HDC are income restricted to be affordable to families and individuals who earn from 40% to 130% of the area median income.

Under Mayor de Blasio's "Housing New York" initiative, HDC is working to finance a portion of the 200,000 units of affordable housing units to be created or preserved during a 10-year period ending in 2023. The housing units for the Mayor's plan are financed under three main programs: (1) Extremely Low and Low-income Affordability program ("ELLA") which combines tax-exempt bonds and 4% as-of-right low-income housing tax credits ("LIHTC") to produce housing affordable to people earning less than 60% of area median income, (2) Mixed-Middle Income

Program or "M2", a program used to finance rental units affordable to low- and middle-income New Yorkers, and (3) Preservation, including its Mitchell-Lama restructuring program (described below) as well as its program for preserving developments previously financed by either HDC or the City of New York as well as federally assisted developments originally financed under Sections 8, 202 and 236 of the National Housing Act.

Since 2004, HDC has provided a voluntary Mitchell Lama restructuring program and a rehabilitation loan program for all Mitchell Lama projects in New York City. To date HDC has restructured over 45 Mitchell Lama projects with approximately 32,000 units preserved and provided rehabilitation loans for several additional projects with 5,000 units. HDC is still actively working with Mitchell Lamas in New York City and expects to provide funds to preserve even more units over the next few years.

In 2015, HDC expects to close on financing/refinancing transactions for over 40 projects involving the construction or preservation of approximately 8,000 units of housing.

Accordingly, the Mayor urges the earliest possible favorable consideration of this proposal by the Legislature.