Assembly Bill A8786

                                BILL NUMBER:A8786

TITLE  OF  BILL:    An  act to amend the private housing finance law, in
relation to the powers of the New York state housing finance  agency  to
finance certain multi-family housing projects

Purpose  Or  General  Idea Of Bill:   This bill would grant the New York
State Housing Finance Agency (HFA) authority to issue unrated bonds  for
private placement to finance affordable housing programs.

Summary  Of  Specific Provisions:  Section 1 of the bill amends Subdivi-
sion 29-a of Section 44 of the Private Housing Finance Law to grant  HFA
additional  authority to issue bonds for private placement to an accred-
ited investor as defined by section 051 (a) (1), (2), (3) or (7) of part
230 of title 17 of  the  Code  of  Federal  Regulations  that  have  not
received  an investment grade rating from a recognized rating agency, as
well as extend their authority until June 16, 2011.  Obligations  issued
in  this fashion shall not exceed $10 million per project, and shall not
annually exceed ten percent of total bonds issued by HFA in the previous
year. HFA shall include any private placement bonds issued in its annual
report pursuant to Section 2600 of the Public Authorities Law,

Section 2 of the bill provides for an immediate effective date.

Effects Of Present Law Which This Bill Would Alter:   Currently,  SONYMA
must  receive  a rating for any bonds they issue and loans financed with
              

such obligations must be fully secured as to principal and interest.

Justification:  Private placement of bonds to finance affordable housing
is a proven method of financing for certain local  banks  in  New  York.
However,  HFA  does  not  currently  have  statutory  authority to issue
unrated bonds for private placement beyond HFA financing  of  Article  2
Mitchell-Lama projects.

Loans  financed  with  proceeds  of unrated HFA bonds issued for private
placement offer gains in efficiencies  to  HFA  borrowers.  Without  the
involvement  of  rating agencies, outside underwriters, credit enhancers
and their respective legal counsels, private placement transactions  can
be  completed  at  a  substantially  lower  cost  to the borrower. These
savings are particularly important to smaller 100% affordable  projects,
for  which  the cost of issuance of a public offering are often prohibi-
tive. HFA would set limitations on the end users  of  bonds  issued  for
private placement and would only place bonds with an accredited investor
as such term is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation
D,  as  adopted  by the United States Securities and Exchange Commission
under the United States Securities Act of 1933.

Prior Legislative History:  This is new legislation.

Fiscal Implications For State And Local Governments:  None to the State

Effective Date:  This bill takes effect immediately.