The New York State Housing Finance Agency is trying to get 17 deals, totaling $150 million, to the market by the end of the year, but the credit crunch is making the task harder than usual.
"We are doing everything we can to save any of the deals that are in our pipeline and are in line to close by the end of the year," HFA president and chief financial officer Priscilla Almodovar said at the agency's monthly board meeting yesterday.
The agency uses bond proceeds to provide mortgages to developers or property owners for new multifamily housing or preservation of housing.
HFA plans to sell fixed-rate bonds to finance the projects, which are 100% affordable housing, new construction, or preservation deals throughout the state, but high interest rates and market turmoil have added a layer of difficulty.
"It's hard to underwrite because we don't know what mortgage rate to ultimately use," Almodovar said.
The market for federal low-income housing tax credits has suffered too. Low-income housing projects that use tax-exempt bonds receive federal 4% low-income housing tax credits automatically. Developers typically sell the credits to increase equity in the development, which reduces the amount of bonds needed. This in turn reduces debt service costs, which helps the projects to be feasible with lower rents.
"Many of the financial institutions that traditionally purchased tax credits don't have profits any more so a tax credit isn't very useful," said HFA spokesman Philip Lentz. "The world of tax credit investors is smaller, and so the demand is less and that means developers are getting less."
To make up for the shortfall HFA is talking to the state Department of Housing and Community Renewal to try to get more subsidies for projects, using some of its trust fund as a subsidy, and talking directly to tax-credit investors.
HFA did approve $6.4 million of financing for the Gananda Senior Apartments, a 62-unit senior apartment complex to be built in Wayne County in upstate New York near Rochester. HFA plans to sell $4.8 million of bonds as part of a pooled bond deal to finance the mortgage and provide a $1.62 million second mortgage using some of $54 million of funds approved by the state for affordable housing funds.
The project will receive an annual allocation of $270,805 of low-income housing tax credits. The principals of Home Leasing LLC, which controls the development company, Gananda Senior Associates LLC, are buying the tax credits rather than trying to sell them. The project will also receive $2 million of grants from state agencies and a payment in lieu of taxes agreement from the town of Walworth, where it is located.