Since becoming president of the New York City Housing Development Corp.last month, Marc Jahr's main focus hasn't been on developing new programs, but simply getting enough borrowing capacity under the private-activity bond volume cap to keep up with demand.
The HDC has about $1.6 billion of housing developments in the pipeline, of which $950 million are seeking tax-exempt financing.
This "is a very sound agency, with a very strong set of programs, and a very large pipeline," Jahr said. "We're not going to ignore opportunities that are going to arise in the future and we're prepared to develop new initiatives, [but] right now the first goal is to try to secure the cap necessary to do a billion pipeline in 2008."
In past years, the HDC benefited from a large supply of unused private-activity bonding capacity allocated to it by the state to finance the construction and renovation of affordable housing and play a key role in implementing Mayor Michael Bloomberg's plan to create or preserve 165,000 units of housing. But these days capacity under the private activity volume cap has become a scarce resource.
The HDC has sold $7.58 billion of bonds in the past ten years, according to Thomson Financial data. Slightly more than half of that was sold from 2004 to 2006. As volume cap ran out, new money bond issuance dropped from $1.41 billion in 2006 to $622.7 million last year. The corporation expects to get its initial cap allocation by the end of the month.
A provision in Congress' economic stimulus package that would have raised volume cap for housing nationally failed to pass the Senate last week, but separate legislation is still possible.
Rising construction costs and changes in the tax credit market have contributed to the volume cap problem.
In the last four years, total development costs for low and middle income projects financed by the HDC have increased 45%, he said. Compounding the problem are increasing yields and falling prices on tax credits sold by developers to raise equity for projects.
"It's a pity to have good affordable housing projects in a city that desperately needs affordable housing for virtually all income levels, to have them sitting at the starting line with their engines idling. That would be truly unfortunate, so we need more cap," Jahr said.
Jahr replaced Emily Youssouf, who left in October to form an affordable housing unit at JPMorgan. He has spent 26 years in affordable housing and community development on both the for profit and nonprofit sides.
Prior to coming to the HDC, Jahr oversaw community development real estate lending in the greater New York area at Citi where his group, among other things, provided letters of credit and underwriting for some HDC deals. From 1990 to 2002 he worked at the national nonprofit Local Initiatives Support Corporation, a nonprofit organization that helps local development organizations to improve distressed communities.
New York State Housing Finance Agency president Priscilla Almodovar praised Jahr's experience.
"Though in office only a short time, Marc has already brought the type of commitment and collaboration needed to marshal limited resources like volume cap," she said in a statement.
The one new initiative Jahr is talking about involves apartments for college students and faculty.
"Both the College of Staten Island and Queens College are very anxious to do that form of housing because if they're going to compete for both students and faculty, they need to provide people with housing opportunities in the city that otherwise might not exist or are too expensive," he said.
The HDC is engaged in talks with both colleges, Jahr said. q