The New York CityHousing Development Corp. is seeking more private activity bond volume cap from the state after allocating all of its remaining share for the year with the authorization of $142.9 million of bonds subject to the cap at its monthly board meeting yesterday.

The board also approved the sale of $200.9 million of bonds not subject to the cap, which includes bonds to be sold as part the agency's effort to exit the auction-rate market.

"There's no reason for us to believe that we're not going to get an additional allocation from the state, and the question is the scale and size of that allocation," said HDC president Marc Jahr.

The agency hopes to get about $300 million of additional volume cap from the Legislature, which Jahr says is about the level of additional cap it's received from Albany over each of the past three years. The additional cap would not be enough to cover the $700 million of projects in the HDC's pipeline.

The board approved the sale of $36.9 million of tax-exempt bonds on behalf of developer Kiumarz Geula to build a 227-unit low-income multi-family housing development in the Bronx. Bank of America NA is expected to provide a letter of credit for the development which will be known as Las Casas Development. Banc of America Securities LLC will underwrite the bonds which will be marketed as variable-rate demand bonds.

The project will also receive a $12.5 million loan from the HDC's corporate reserves and a $6.6 million loan from a fund to be created as part of legislation that modified a tax credit program known as 421-a. The 421-a fund will be administered by the HDC.

Hawkins Delafield & Wood LLP is bond counsel.

The agency plans to convert $125.7 million of auction-rate securities that financed four projects into variable-rate demand obligations. The ARS include Series 2006J-1, which financed $100 million of construction on behalf of Avalon Bay Communities Inc. for a mixed-income project in Morningside Heights in Manhattan and Series 2006J-2, which financed three low-income projects and was sold at a par of $25.7 million. JPMorgan will underwrite and remarket the bonds and provide a standby purchase agreement. Hawkins Delafield is bond counsel.

The largest approval was for eight series of bonds that include a mix of tax-exempt bonds and bonds exempt from state and local taxes and taxable bonds totaling $306.9 million. The bonds will be sold as both fixed- and variable-rate. The bonds will be used to finance the construction or rehabilitation of eight low-income housing developments in Manhattan and the Bronx, to finance five new developments in the Bronx, to refinance mortgage loans for the "Big Six Towers" development in Queens built under the state's Mitchell-Lama program and to refund or refinance $112.9 million of auction-rate securities. The corporation expects to directly place $100 million of the refinanced ARS with the Federal Home Loan Bank of New York.

The ARS conversions and refundings will leave the HDC with a single series of auction-rate securities. HDC has been working to find a way to convert these bonds without causing a reissuance which would affect tax credits associated with the project.

HDC general counsel Richard Froehlich declined to identify which bonds were still in auction-rate mode.

The HDC also announced that it plans to issue a request for proposals for underwriters to form a pool for future bond issues. The corporation last issued an RFP for underwriters in 2003 when it chose Goldman, Sachs & Co., Bear, Stearns & Co., Merrill Lynch and JPMorgan as senior managers. The RFP will likely be issued next month or in June.


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