ATLANTA - No moss is growing on the newly-formed Florida Housing Finance Corp., which is coming off a successful legislative session and preparing one of its largest bond offerings in recent years.
FHFC was formerly the state housing agency. But it was recast in 1997 as an independent public corporation so officials would face fewer restrictions and could operate with a more entrepreneurial spirit.
Now that the transition is almost done, the corporation is eying an ambitious plan, recently approved by legislators, that would allow it to sell bonds for infrastructure in rural areas.
During the 1998 legislative session, lawmakers gave the corporation authority to finance infrastructure needs, because they said utilities should be improved in rural areas. Better utilities would attract developers and pave the way for more affordable housing, they reasoned.
It is still unclear whether the corporation will sell bonds or provide grants to pay for infrastructure, FHFC executive director Susan Leigh said. "We need more time to explore the opportunities ... but it is good to have the authority moving ahead."
While state funding for the program was dropped from the final bill, the corporation is confident that it will eventually receive funds because of strong backing from legislators, she said.
As the bill (HB 3287) was first drafted, it was initially a "glitch" measure aimed at ironing out wrinkles prompted by the transition, Leigh said. But she said that lawmakers, in particular state Rep. Greg Gay (R- Cape Coral), wanted to designate a conduit to sell bonds or provide cash for rural municipalities, so they amended the bill. The bill has not been signed by Gov. Lawton Chiles yet, but he is not expected to oppose it.
Gay said yesterday that the FHFC is the "obvious nexus" for such financing needs, because it has greater flexibility to generate capital than a state agency and works closely with local communities. He said the program could help rural communities "buy down" the high cost of replacing sewer systems.
Leigh said adding the infrastructure bonding capacity is part of FHFC's long-range plan, which involves funding projects such as water treatment plants and sewer lines in rural communities that would in turn prompt development of affordable housing.
For instance, some rural municipalities still rely on outdated septic systems that could be replaced in conjunction with an affordable housing project, she said.
While plans for the program are still in their infancy, Leigh envisions an infrastructure fund that functions like the Florida Affordable Housing Guarantee Fund, which is administered by the corporation and provides mortgage insurance on low-cost housing loans.
For example, FHFC could receive a dedicated appropriation from the Legislature to create the fund that would stand behind infrastructure bonds. Or, the corporation could act as a conduit for rural municipalities, and provide some form of credit enhancement.
Coincidentally, Standard & Poor's Monday rated the guarantee fund a single-A credit, citing strong cash reserves, solid management, and growing demand for single and multifamily housing in Florida.
A single-A rating is expected to attract more lenders to FHFC's affordable housing projects and lead to better interest rates on its debt. The rating will also prompt a more liquid secondary market for housing bonds, officials said.
Meanwhile, investors interested in buying some FHFC bonds will not have long to wait, as the corporation intends to roll out one of its largest issues in years during the next two weeks.
On Monday, it plans to competitively bid up to $75 million of single- family mortgage revenue bonds as part of a multi-piece issue that will also contain as much as $85 million of negotiated debt.
For the negotiated piece, the corporation has picked Salomon Smith Barney Inc. to run the books on the upcoming issue. The syndicate also includes William R. Hough & Co. as a co-senior manager, Lehman Brothers, and Prager, McCarthy & Sealy.
