New York City Housing Development Corp., which expects to play a significant role in Mayor Bill de Blasio's affordable housing plan, approved $372.6 million in bonds and $88.7 million in subsidies to fund 2,226 related units in 16 developments in Manhattan, the Bronx and Brooklyn.
The agency's board of directors approved the funds at its June 10 board meeting, at which it signed off on $607 million in bonds overall.
That total amount includes board authorization for up to $150 million in Series 2014D multi-family housing revenue bonds to securitize and releverage assets; $40 million in Series E refunding; and $60 million in Series F multi-family housing revenue bonds to recycle volume cap.
In addition, the board authorized up to $50 million in Series 2014A multi-family housing pass-through revenue bonds to securitize and releverage assets.
The board also approved $40 million in corporate reserves to renovate and preserve as affordable two developments under the Mitchell-Lama preservation program with 569 units in Brooklyn.
Retail pricing for the $372.5 million will be Monday with the institutional sale Tuesday. JPMorgan and RBC Capital Markets are co-senior managing underwriters, according to the preliminary official statement. The six series feature fixed, variable, index floating and term rates.
"We employ different funding mechanisms to make it all happen," HDC President Gary Rodney said in an interview. "We like to be flexible and creative."
Pricing for the pass-through structure may extend into Wednesday, though officials will decide early in the week. Pass-through is a form of mortgage-backed security created by pooling mortgage loans.
Moody's Investors Service and Standard & Poor's rate the agency Aa2 and AA, respectively.
Hawkins, Delafield & Wood LLP is the corporation's bond counsel.
S&P said before the agency's May 1 sale of multi-family revenue bonds that its rating reflects "very strong" credit quality of the mortgage loan portfolio and coverage of credit shortfalls through excess assets within parity resolution. That sale generated about $160 million for affordable housing objectives.
The authorized bonds combine tax-exempt and recycled bonds that will be used to finance affordable developments under de Blasio's plan to create or preserve 200,000 affordable homes over the next decade. The mayor announced the initiative last month.
Moody's called de Blasio's initiative credit neutral for the city.
"I favor these mixed-income deals as an agency and I favor them personally, and HDC is expected to play a big part," said Rodney. "They bring tremendous benefits to the neighborhoods."
HDC also participated in the affordable housing plan under de Blasio's predecessor, Michael Bloomberg. According to Moody's, bonds and loans outstanding spiked substantially under that program while the credit quality of HDC and their bond programs remained strong.
After his election in November, de Blasio appointed Rodney as HDC president. Rodney, who was HDC's vice president from 2001 to 2006, had been executive vice president for development at Omni New York LLC, where he financed community based affordable housing projects that rehabilitated distressed buildings across the five boroughs.
De Blasio's initiative calls for a $1 billion investment from the city's five public employee pension funds and the use of tax-exempt 501(c)(3) governmental purpose bonds to finance middle-income housing, with affordability for that bracket to begin at 80% of area median income, or AMI.
The plan calls for HDC to issue roughly $11 billion in bonds over 10 years, Ellen Duffy, the agency's senior vice president for debt issuance and finance, said Tuesday at a Standard & Poor's affordable housing conference in midtown Manhattan. Since 2011, HDC has issued an average of $1.2 billion of bonds per year.
Under the plan, HDC will contribute $1.14 billion in subsidy loans and securitization proceeds.
According to HDC, the 501(c)(3) bonds will probably be structured as standalones and would require additional subsidy. The structure would depend upon available liquidity and credit enhancement from different sources, such as the New York City Employee Retirement System.
On March 11, HDC refunded $78.7 million of West 26th Street Development multi-family mortgage revenue bonds.
HDC also expects a new securitization with the city in 2017 to generate roughly $125 million to fund affordable housing.
Since 2000, HDC has issued about 10% of all of the multi-family housing revenue bonds in the United States. In 2013, it was the third-largest affordable housing lender in the U.S. after Citi and Wells Fargo.
