Relates to increasing the amount of bond and note authorization totals that may be made by certain agencies

Section 2 of the bill increases the SONYMA taxable bonding authority by $200 million to a maximum aggregate of $1 billion and establishes new income limits applicable to mortgage loans purchased with the proceeds of taxable bonds for the neighborhood revitalization program (and successor programs).

Section 3 of the bill would make it effective immediately.

Prior legislative history

Chapter 85 of the Laws of 2015

Statement in support

1) HFA:

This bill would increase the maximum amount of new money bonds which HFA is authorized to issue. The Agency currently has a substantial pipeline of financing requests that will result in both the creation and preservation of affordable housing across New York State. The bill would increase HFA's authority to issue bonds by $2.5 billion for a maximum aggregate of $24.2 billion, which will enable the Agency to continue to meet the housing demands of New Yorkers, as well as help create jobs and provide economic stimulus.

In 2013, HFA, as part of Governor Cuomo's House New York initiative, acquired a portfolio of Mitchell Lama projects previously owned and managed by ESD. The goal of the acquisition was to grant - authority to the State's housing finance agency, HFA, to refinance, modernize and refurbish this portfolio of affordable housing properties to ensure their continued availability as affordable housing, and to better the lives of the New Yorkers residing in those properties.

Since the acquisition in July of 2013, HFA has refinanced, through the issuance of tax-exempt bonds, 17 of these properties and expects to complete the refinancing of the portfolio by 2018. These activities, plus the continued active involvement of HFA in the capital markets through the issuance of tax-exempt and taxable bonds to finance the production and rehabilitation of affordable housing under its Affordable Housing Revenue Bond Resolution and its 80/20 program, have resulted in increased use of its bonding authority. Since 2013, HFA has issued over $4.6BN of bonds. In 2015 alone, HFA expects to issue over $2.1BN of bonds.

2) SONYMA:

SONYMA is launching its new Neighborhood Revitalization Program to stimulate homeownership in areas hard hit by the foreclosure crisis. The program will offer competitive mortgages and other incentives to encourage homebuyers to move into and help stabilize these communities. To accommodate a broader group of eligible purchasers, SONYMA is offering this program to first time homebuyers as otherwise required in its other programs financed by tax-exempt bonds.

In addition to this new and targeted use of SONYMA's taxable bonding authority, SONYMA expects to continue to issue taxable bonds as it did in October 2015 to make up for the reduced availability of Federal Volume Cap for tax-exempt bonds in New York State. The combination of these two factors make it crucial that the current taxable limit of $800 million (of which SONYMA has used approximately $600 million) be increased.

The current legislation authorizing SONYMA to issue taxable bonds sets forth income limits with respect to the mortgage loans to be financed with proceeds thereof. One-third of the total principal amount of mortgages authorized to be so financed cannot not exceed one hundred twenty-five percent of the latest maximum income limits permitted under the Internal Revenue Code of 1986, as amended, for mortgagors financed by mortgage revenue bonds; one third cannot exceed one hundred thirty-five percent of such income limits; and the last third of such principal amount authorized to be so financed, cannot exceed one hundred fifty percent of such limits. These limitations have the unintended result of limiting the ability of SONYMA to use taxable bonds (not limited by the IRS limits on tax-exempt bonds) to assist moderate income New Yorkers that need programs such as the one described above. The proposed amendment would set one limit applicable to all mortgage loans financed with SONYMA taxable bonds: in connection with the new program (or successor programs) and leave the existing limits for any other taxable bond issue. The limit for the new program is set at one-hundred fifty percent of the latest maximum income limits permitted under the Internal Revenue Code of 1986, as amended.

Local impact

This bill would have no impact on local governments.

Fiscal implications

None.

Effective date

This bill would take effect immediately.