Senate Bill S2865

                                 BILL NUMBER:  S2865A

 TITLE OF BILL :

An act to amend chapter 514 of the laws of 1983 amending the private
housing finance law and the real property tax law relating to the
powers of the New York city housing development corporation and the
New York state housing finance agency to finance certain multi-family
housing, and to amend chapter 396 of the laws of 1984 amending the
private housing finance law and the real property tax law relating to
the powers of the New York state housing finance agency to finance
certain multi-family housing, in relation to the effectiveness of such
chapters


 SUMMARY OF PROVISIONS :

This proposed legislation would extend the sunset provision of
subdivision 23-c of Section 654 of Article 12 of the Private Housing
Finance Law, which establishes the New York City Housing Development
Corporation ("HDC").  The sunset provision currently calls for
subdivision 23-c to expire on June 30, 2009. This bill would preserve
subdivision 23-c in full force and effect until June 30, 2011, thereby
allowing HDC to continue to issue notes and bonds for the financing of
housing developments.

              

 REASONS FOR SUPPORT :

Enactment of this proposed legislation would allow HDC to continue to
assist in the financing of newly constructed and rehabilitated low-
and moderate-income housing in the City of New York. The bill would
continue HDC's authorization to enter into direct loan agreements with
developers of low- and moderate-income housing, as well as joint
financing programs with recognized lending institutions. Pursuant to a
joint financing program, HDC lends funds obtained from the sale of its
securities, both tax-exempt and taxable, to financial institutions,
which in turn re-lend the proceeds to private developments for the
construction or rehabilitation of low- or moderate-income housing. In
cases of conduit lending, the responsibilities of underwriting and
servicing the loans are assumed by the lending institutions, which
also bear the risks of default under the mortgages. HDC does not rely
upon the credit (or tax levy) of either the City or the State of New
York to pay bondholders.

Since its creation in 1971, HDC has financed the construction or
preservation of more than 135,000 units of affordable housing in New
York City. More than 75,000 units have been financed since 1984
pursuant to subdivision 23-c of Section 654.  Overall, HDC's portfolio
includes a broad array of housing, from low-income tax credit
developments to mixed-income developments and aging developments
originally financed in conjunction with direct federal subsidies. The
vast majority of units financed by HDC are income restricted to be
affordable to families and individuals who earn from 40% to 130% of
the area median income.

Under Mayor Bloomberg's expanded "New Housing Marketplace" initiative,
HDC is responsible for creating or preserving 42,000 units of housing
during an eleven year period ending in June 2014. As of January 1,
2009, HDC has financed the construction or preservation of more than
40,000 apartments under the plan, and HDC expects to exceed its goal
in 2009. The housing units for the Mayor's plan are financed under
three main programs: (1) Low Income Affordable Marketplace Program
("LAMP") which combines tax-exempt bonds and 4% as-of-right low income
housing tax credits ("LIHTC") to produce housing affordable to people
earning less than 60% of area median income, (2) New Housing
Opportunity Program ("New HOP"), a taxable bond program used to
finance rental units affordable to middle-income New Yorkers, and (3)
Preservation, including its Mitchell-Lama restructuring program
(described below) as well as its program for preserving federally
assisted developments originally financed under Sections 8, 202 and
236 of the National Housing Act.

In June of 2004 Mayor Bloomberg announced a voluntary Mitchell Lama
restructuring program along with a rehabilitation loan program for all
Mitchell Lama projects with first or second mortgages that are held by
HDC or the City. The program provides for refinancing or restructuring
of the Mitchell Lama's existing mortgage in exchange for a commitment
to remaining the program for a minimum of an additional 15 years. The
response to this program has been significant. To date HDC has
restructured 38 projects with more than 18,250 units preserved. HDC is
still actively working with Mitchell Lamas in New York City and
expects to provide funds to preserve even more units over the next few
years.

Overall, in 2009, HDC expects to close on financing or refinancing
transactions for over 25 projects involving the construction or
preservation of approximately 5,000 units of housing.

Accordingly, the Mayor urges the earliest possible favorable
consideration of this proposal by the Legislature.