BILL NUMBER:  S7679

 TITLE OF BILL :
An act to amend the public authorities law, in relation to exempting
the New York city housing development corporation from the state bond
issuance charge


 SUMMARY OF PROVISIONS :
This proposed legislation would amend Subdivision 1 of section 2976 of
the public authorities law, as amended by section 1 of part C of
chapter 19 of the laws of 2010 to exempt the New York City Housing
Development Corporation from the state bond issuance charge.

 JUSTIFICATION :
The imposition of the Bond Issuance Charge (the "BIC") on bonds issued
by the New York City Housing Development Corporation ("HDC" or the
"Corporation") will result in an additional cost of approximately
$10-15 million per year incurred by the Corporation and its affordable
housing projects. For instance, if the existing BIC (which ranges from
.17% to .84% for each bond issuance) had been in place over the course
of 2009, HDC would have been subject to a State imposed issuance
charge of $14.4 million.

To date, over 90% of the units HDC has financed under the Mayor's
housing plan target low and moderate income residents. Given the
              

nature of HDC's projects-the high cost it takes to build in New York
City and the relatively low rents tenants can afford to pay--these
transactions require HDC to draw upon our corporate reserves to
subsidize the projects and make them affordable to low and moderate
income tenants. In many instances, the New York City Department of
Housing Preservation and Development must also provide subsidies for
the developments.

The BIC will have the effect of increasing project costs, thereby
creating financing gaps which will be incumbent upon HDC to fill.
These are costs that can be passed through to projects only if
additional subsidy is incorporated into the projects' financing. In
some instances, where HDC issues bonds in order to raise money for
subsidies or to securitize assets of New York City, there is no
borrower to pay such charge so the costs can't be passed on, and will
simply have to be paid "out of pocket" by HDC.

In short, an average annual State issuance charge of approximately
$10-$15 million per year will correlate directly with $10-$15 million
less being available in HDC project subsidy for low and moderate
income developments.

Not only will the State imposed issuance charge diminish the volume of
HDC's prospective financings, it will also threaten the feasibility of
existing, multi-year transactions which HDC has already committed to,
but for which additional bonds must still be issued. For example, HDC
has committed to issue the bonds for NYCHA's historic, mixed-finance
"Federalization" transaction, which will result in the upgrading of
approximately 20,000 units of public housing, as well as the ability
of NYCHA to transfer responsibility for the operating and capital
budgets of over 14,000 units to the Federal government.

While HDC has issued the initial series of bonds required to finance
the transaction, over the course of the next two years, the project
will require HDC to issue an additional $230 million in bonds. The
imposition of a State issuance charge will imperil this transaction by
leading to unanticipated fees of up to $2 million, for which no
budgeted sources exist.


This legislation will enable HDC to maintain its resources so that it
can continue to run programs that develop and maintain affordable
housing in New York City.

 LEGISLATIVE HISTORY :
New bill.

 FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
This act shall take effect immediately.