The New York City Housing Development Corp. yesterday approved selling $535 million of tax-exempt and taxable bonds to finance the acquisition and rehabilitation of public housing so that it becomes eligible for federal funding.

The bond deals will be rolled out over multiple years and will finance the New York City Housing Authority’s transfer of ownership of 21 public housing developments to two new nonprofit limited liability companies that it controls.

The purpose of the transfer is to qualify the housing for federal funding available under the American Recovery and Reinvestment Act of 2009 for public housing. ARRA allows for a one-time expansion of federally funded public housing.

The deal covers 20,139 units that were constructed and financed by the state and city between 1949 and 1978 and have been ineligible for federal operating assistance. The Housing Authority is currently operating with annual deficits of more than $80 million.

The transaction is expected to bring the authority $75 million to $100 million of federal support annually. The state Senate yesterday passed a bill allowing the transfer, following the Assembly’s passage of the same bill on Monday.

The rehabilitation work will include structural and facade improvements, the replacement of roofs and elevators, asbestos abatement, and heating upgrades.  The HDC expects to sell $150 million of bonds for the Housing Authority project this year, beginning next month.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.