N.Y.C. Housing Agency Approves $155M Bond Package

The New York City Housing Development Corp. approved up to $155 million of taxable and tax-exempt bonds to finance 13 projects at its monthly board meeting yesterday. The bonds will be sold as pooled financings in three series in the corporation’s open resolution. The HDC uses its open resolution to offer mortgages to developers to finance a portion of the costs of construction or renovation. The HDC did not announce a date for pricing. Most of the bonds— $125 million — will be tax-exempt and sold as series 2007E-1 and 2007E-2 to finance the construction or preservation at nine developments under HDC’s Low-Income Affordable Marketplace Program, which designates all units for low-income tenants. Most of the units, 499, will be in the Bronx, while 368 will be in Brooklyn and 98 in Manhattan. The largest of these projects is the 145-unit Sach Family Portfolio in the Morris Heights section of the Bronx that is being developed by the Fordham Bedford Housing Corp. This project will get $13.2 million of HDC financing. The project to get the largest portion of financing from these bonds is the 144-unit Crown Heights Senior Center being developed by SKAMarin and the Crown Heights Local Development Corp. The Crown Heights project will use $22.3 million of HDC financing. The E-1 bonds will be sold as fixed-rate with a par of $58 million and will mature in 2045, while the E-2 bonds will be sold as variable-rate demand obligations at a par of $67 million, maturing in 2017. The series F bonds will be $30 million of taxable debt to finance new construction at four developments in the Bronx under the corporation’s New Housing Opportunities Program. The bonds will be sold as VRDOs and mature in 2040. All of the housing will be reserved for middle or low-income tenants. The largest development will be the 122-unit Decatur Terrace developed by Jackson Development Co. in the Williamsbridge section of the Bronx, which will use $9.6 million of HDC financing. Bear, Stearns & Co. will underwrite all three series bonds, and Hawkins Delafield & Wood LLP is bond counsel. Dexia Credit Local will provide a letter of credit for series E-2 and F for a six-year period. Those bonds will pay interest monthly and reset weekly. All the bonds will be sold as term bonds and will be callable at anytime. Standard & Poor’s assigns its AA rating to HDC’s open resolution bonds. “It’s a strong credit because they have sufficient over collateralizing in the indenture to coverany potential losses,” Standard & Poor’s analyst Valerie White said. “They also have excellent management and very aggressive and successful asset management policies. Their loans are very strong. They don’t have any loan losses under the resolution and haven’t had any for close to 30 years.” The nationwide housing slump isn’t having an impact on the credit since the affordable housing market in New York City is underserved, she said. “The current housing market conditions generally do not affect what’s going on with their resolution because there are so many more people in need of affordable housing than there is available supply, and that helps keep the indenture strong,” she said. Moody’s Investors Services assigns its Aa2 rating to HDC’s open resolution. Fitch Ratings does not rate the credit.