senate Bill S4032

Signed By Governor
2011-2012 Legislative Session

Extends various chapters relating to the powers of the New York state housing finance agency and the New York state mortgage agency

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Archive: Last Bill Status - Signed by Governor


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jun 28, 2011 signed chap.100
delivered to governor
Jun 16, 2011 returned to senate
passed assembly
ordered to third reading rules cal.319
substituted for a8249
May 02, 2011 referred to housing
delivered to assembly
passed senate
Apr 12, 2011 advanced to third reading
Apr 11, 2011 2nd report cal.
Apr 06, 2011 1st report cal.323
Mar 15, 2011 referred to housing, construction and community development

Votes

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Apr 6, 2011 - Housing, Construction and Community Development committee Vote

S4032
8
0
committee
8
Aye
0
Nay
0
Aye with Reservations
0
Absent
0
Excused
0
Abstained
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Housing, Construction and Community Development Committee Vote: Apr 6, 2011

S4032 - Bill Details

See Assembly Version of this Bill:
A8249
Law Section:
Private Housing Finance Law
Laws Affected:
Amd §47, Priv Hous Fin L; amd §6, Chap 514 of 1983; amd §7, Chap 396 of 1984; amd §16, Chap 915 of 1982; amd §2407, Pub Auth L; amd §19, Chap 555 of 1989; amd §2, Chap 172 of 2002

S4032 - Bill Texts

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Extends various chapters relating to the powers of the New York state housing finance agency and the New York state mortgage agency.

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BILL NUMBER:S4032 REVISED 05/02/11

TITLE OF BILL:

An act to amend the private housing finance law, in relation to an
increase in bond and note authorization of the New York state housing
finance agency; 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 state housing finance agency to finance
certain multi-family housing; 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; to amend chapter 915 of the laws of
1982 amending the public authorities law relating to the powers of the
state of New York mortgage agency, in relation to the effective date
thereof; to amend the public authorities law, in relation to the
powers of the state of New York mortgage agency; to amend chapter 555
of the laws of 1989 amending the public authorities law and other laws
relating to establishing a New York state infrastructure trust fund,
in relation to the effective date thereof; and to amend chapter 172 of
the laws of 2002 amending the public authorities law relating to the
powers of the state of New York mortgage agency, in relation to
extending the provisions thereof

PURPOSE OF BILL:

This bill would extend certain statutory authorizations of the New
York State Housing Finance Agency ("HFA"), State of New York Mortgage
Agency ("SONYMA") and SONYMA Mortgage Insurance Fund ("MIF"), and
increase the bonding authority of SONYMA and HFA.

SUMMARY OF PROVISIONS:

Section 1 of the bill would increase HFA's bonding authority by $1
billion to a maximum aggregate of $16.28 billion.

Sections 2 and 3 of the bill would extend HFA's authority to finance
certain multifamily housing projects until July 23, 2013.

Section 4 of the bill would extend SONYMA's authority to purchase
forward commitment mortgages until July 23, 2013.

Section 5 of the bill would extend SONYMA's authority to issue new
money taxable and tax-exempt bonds until July 23, 2013, and increases
SONYMA's tax-exempt bonding authority by $1 billion to a maximum of
$10.22 billion.

Section 6 of the bill would extend until July 23, 2013, the sunset
date of (i) sections six and nine through seventeen of Chapter 555 of
the Laws of 1989 that broadened the scope of MIF to provide primary
mortgage insurance on a statewide basis to individual homeowners and
to provide pool insurance to all of SONYMA's loans, and (ii) section
13 of Chapter 3 of the laws of 2004 concerning development corporation
credit support relating to the Jacob Javits Convention Center.


Section 7 would extend until July 23, 2013, the sunset date of the
requirement that at least 20% of a rehabilitation loan given by SONYMA
be used for rehabilitation or construction of improvements.

Section 8 of the bill would provide for an immediate effective date.

EXISTING LAW:

HFA

Current law authorizes HFA to issue bonds and notes for its housing
programs for any of its corporate purposes in an aggregate principal
amount not to exceed $15.28 billion. HFA's authority to finance
certain multi-family housing projects is scheduled to sunset on June
30, 2011.

SONYMA

Under existing law, SONYMA's authority to purchase forward commitment
mortgages and to issue new money taxable bonds are scheduled to sunset
on July 16, 2011. SONYMA is currently authorized to issue up to $9.22
billion of new money tax-exempt bonds and up to $800 million of new
money taxable bonds by July 16, 2011.

MIF

Chapter 555 of the Laws of 1989, as amended, authorizes MIF to provide
primary mortgage insurance on a statewide basis to individual
homeowners and to provide pool insurance to all of SONYMA's loans and
is scheduled to sunset on July 16, 2011. Chapter 3 of the Laws of
2004, as amended, enabling SONYMA to provide credit support for the
Jacob Javits Convention Center, is scheduled to sunset on July 16,
2011.

SONYMA is currently authorized through July 23, 2012 to insure
rehabilitation loans, which are defined in Public Authorities Law
§2426 (12) as loans wherein at least 20% of the mortgage loan amount
is attributable to the cost of rehabilitation or construction of
improvements.

LEGISLATIVE HISTORY:

Numerous similar extensions and increases in HFA and SONYMA bonding
authority have been made. The HFA provisions were extended in Chapter
407 of the Laws of 2010; Chapter 176 of the Laws of 2009; Chapter 151
of the laws of 2008; Chapter 85 of the Laws of 2007; Chapter 398 of
the Laws of 2006; Chapter 124 of the Laws of 2005; Chapter 204 of the
Laws of 2004; Chapter 99 of the Laws of 2003; Chapter 48 of the Laws
of 2002; Chapter 363 of the Laws of 2001; and Chapter 131 of the Laws
of 2000.

The SONYMA provisions were extended in Chapter 218 of the Laws of
2010; Chapter 177 of the Laws of 2009; Chapter 148 of the Laws of
2008; Chapter 227 of the Laws of 2007; Chapter 138 of the Laws of
2006; Chapter 121 of the Laws of 2005; Chapter 147 of the Laws of
2004; Chapter 141 of the Laws of 2003; Chapter 103 of the Laws of


2002; Chapter 111 of the Laws of 2001; and Chapter 132 of the Laws of
2000.

The MIF provisions contained in section 6 of this bill were extended
in Chapter 192 of the Laws of 2009; Chapter 230 of the Laws of 2007;
Chapter 125 of the Laws of 2005; Chapter 145 of the Laws of 2003; and
Chapter 110 of the Laws of 2001. The MIF provisions contained in
section 7 of this bill were extended in Chapter 162 of the Laws of
2010; Chapter 150 of the Laws of 2008; Chapter 137 of the Laws of
2006; Chapter 309 of the Laws of 2005; and Chapter 172 of the Laws of
2002.

STATEMENT IN SUPPORT:

HFA

This bill would increase the maximum amount of new money bonds which
HFA is authorized to issue, and would extend HFA's authority to
finance certain multifamily housing projects until July 23, 2013. The
Agency currently has a substantial pipeline of financing requests that
will result in both the creation and preservation of affordable
housing across New York State. The bill would increase HFA's authority
to issue bonds up to $1 billion for a maximum aggregate of $16.28
billion, which will enable the Agency to continue to meet the housing
demands of New Yorkers, as well as create jobs and provide economic
stimulus.

SONYMA

SONYMA's statutory authorizations to issue new money tax-exempt bonds
and to purchase forward commitment mortgages are scheduled to sunset
on July 16, 2011. SONYMA's statutory authorization to issue new money
taxable bonds is also scheduled to sunset on July 16, 2011. This bill
would extend the sunset dates for the issuance of new money tax-exempt
bonds and new money taxable bonds, and for the purchase of forward
commitment mortgages, until July 23, 2013.

This bill would also increase the maximum amount of new money
tax-exempt bonds which SONYMA is authorized to issue. The increase
being requested is intended to address the borrowing needs of the
Agency in 2011, 2012 and the first half of 2013, which borrowing needs
also include issuing bonds for student loan purposes.

The Agency, like most state housing finance agencies throughout the
country, has been adversely impacted in its ability to continue to
offer low interest rate fixed rate mortgage financing to eligible
first-time homebuyers, due to the dramatic events in the financial
markets during late 2008, the impact of which is still being felt in
the capital markets. In order to ameliorate this situation, the US
Department of Treasury announced in 2009 a program that will permit
state housing agencies such as SONYMA to sell tax-exempt bonds to
Fannie Mae and Freddie Mac (the "GSEs"). The GSEs securitize the bonds
and simultaneously sell the securities to the Department of Treasury.
The program has enabled the Agency to lower its borrowing costs and as
a result, the Agency has once again been able to offer its mortgages
at attractive interest rates. The program runs through the end of
2011, by which time the capital markets should have fully recovered.


In early 2009, the Agency's statute was amended to modernize the
Agency's authority to issue bonds to finance student loans. The Agency
completed its first bond sale in December 2009. Demand for the program
has been slow to develop, but the Agency will need to use bonding
authority to issue bonds in the future.

Given the Treasury Department program and the implementation of the
student loan program, the Agency expects a continuing demand for its
products. SONYMA's current authorities to issue new money tax-exempt
bonds and taxable bonds are insufficient to cover the current expected
demand for mortgages and student loans in the next few years. The bill
would increase SONYMA's authority to issue additional tax-exempt bonds
and notes up to a total maximum amount of $10.22 billion which will
enable SONYMA to satisfy its expected mortgage and student loan
demand.

MIF

Enactment of Chapter 575 of the Laws of 1989 and of Chapter 3 of the
Laws of 2004 enabled SONYMA to provide primary mortgage insurance on a
statewide basis, provide pool insurance for mortgages on one-to-four
family homes and on multi-family projects where the loans are made by
lenders who meet certain criteria and provide credit support to the
Jacob Javits Convention Center. However, these provisions will sunset
on July 16, 2011. The bill would extend these sunset provisions until
July 23, 2013.

Without an extension, the MIF will only be able to insure mortgages
for projects located in "blighted" neighborhoods and provide per
project mortgage insurance in amounts not exceeding $5 million or $10
million depending upon project type. In addition, the MIF will be
unable to provide primary mortgage insurance, pool insurance and
credit support.

SONYMA's primary tool for promoting new construction and
rehabilitation of affordable housing is its authority to insure
Rehabilitation Loans. The statutory authority that reduced the
percentage of a rehabilitation loan that must be attributable by
SONYMA to the cost of rehabilitation or new improvements from 25% to
20% of the mortgage loan is set to expire on July 23, 2012.

The 25% requirement is inconsistent with the provisions of the
Internal Revenue Code ("Code") concerning the issuance of tax-exempt
bonds for multifamily housing. Under the Code a minimum of 15% of such
bonds must fund construction or rehabilitation costs. Several of the
most important users of SONYMA's mortgage insurance are public benefit
corporations, such as the New York State Housing Finance Agency, that
issue tax-exempt bonds subject to the standards set by the Code.

The 25% requirement also encourages lenders and borrowers to pad
prospective loans with additional improvement not otherwise necessary
for the project so that they are eligible under the current definition
of Rehabilitation Loan.

The reduction of the percentage requirement from 25% to 20% has
resulted in SONYMA's insurance product matching more closely the needs
of some of its primary users without in any way negatively affecting


the programmatic or financial integrity of the Mortgage Insurance
Fund.

BUDGET IMPLICATIONS:

This bill does not affect the state budget.

EFFECTIVE DATE:

This bill would become effective immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4032

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             March 15, 2011
                               ___________

Introduced  by  Sen.  YOUNG  -- (at request of the Division of Housing &
  Community Renewal) -- read twice and ordered printed, and when printed
  to be committed to the Committee on Housing, Construction and Communi-
  ty Development

AN ACT to amend the private housing  finance  law,  in  relation  to  an
  increase  in bond and note authorization of the New York state housing
  finance agency; 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 state housing finance agency to finance
  certain multi-family housing; 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; to amend chapter 915 of  the  laws  of
  1982 amending the public authorities law relating to the powers of the
  state  of  New York mortgage agency, in relation to the effective date
  thereof; to amend the public  authorities  law,  in  relation  to  the
  powers  of the state of New York mortgage agency; to amend chapter 555
  of the laws of 1989 amending the public authorities law and other laws
  relating to establishing a New York state infrastructure  trust  fund,
  in relation to the effective date thereof; and to amend chapter 172 of
  the  laws  of 2002 amending the public authorities law relating to the
  powers of the state of  New  York  mortgage  agency,  in  relation  to
  extending the provisions thereof

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph (c) of subdivision 1 of section 47 of the private
housing finance law, as amended by chapter 407 of the laws of  2010,  is
amended to read as follows:
  (c)  The  agency  shall  not  issue  bonds  and notes other than state
university construction bonds and state university  construction  notes,

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09662-02-1

S. 4032                             2

hospital  and  nursing  home project bonds and hospital and nursing home
project notes, health facilities  bonds  and  health  facilities  notes,
youth  facilities  project  bonds  and  youth  facilities project notes,
community mental health services and mental retardation services project
bonds  and  community  mental  health  services  and  mental retardation
services project notes, community senior citizens services project notes
or community senior citizens services project bonds and  mental  hygiene
improvement  bonds  and  mental  hygiene improvement notes and bonds and
notes for the housing program for any of its corporate  purposes  in  an
aggregate  principal  amount  exceeding  [fifteen]  SIXTEEN  billion two
hundred eighty million dollars, excluding  bonds  and  notes  issued  to
refund outstanding bonds and notes.
  S  2.  Section  6  of  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  state housing finance agency to finance
certain multi-family housing, as separately amended by chapters  76  and
176 of the laws of 2009, is amended to read as follows:
  S  6.  This act shall take effect immediately and shall remain in full
force and effect until [June 30, 2011] JULY 23, 2013 at  which  time  it
shall be repealed.
  S  3.  Section  7  of  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, as amended by chapter 176 of the  laws  of
2009, is amended to read as follows:
  S 7. This act shall take effect immediately, except that sections one,
three,  four,  five  and  six of this act shall remain in full force and
effect until [June 30, 2011] JULY 23, 2013 at which time  such  sections
shall be repealed.
  S 4. Section 16 of chapter 915 of the laws of 1982 amending the public
authorities law relating to the powers of the state of New York mortgage
agency,  as  amended  by  chapter 218 of the laws of 2010, is amended to
read as follows:
  S 16. This act shall take effect immediately except  that  the  amend-
ments  to  law  effected  by  sections  one  through ten of this act, as
amended, shall cease to be of force and effect on and  after  July  [16]
23,  [2011] 2013, on which date the provisions of the public authorities
law amended by such sections shall be as they were in force  and  effect
immediately prior to this act taking effect.
  S 5. Section 2407 of the public authorities law, as amended by chapter
218 of the laws of 2010, is amended to read as follows:
  S  2407.  Bond limits. (1) Except for notes issued in nineteen hundred
seventy and nineteen hundred seventy-one, the  agency  shall  not  issue
bonds  and  notes,  the  interest  on which is not included in the gross
income of the holders of the bonds and notes  under  the  United  States
Internal Revenue Code of 1986, as amended, or any subsequent correspond-
ing internal revenue law of the United States, in an aggregate principal
amount  exceeding [nine] TEN billion two hundred twenty million dollars,
excluding from such limitation (a) an amount equal to any original issue
discount from the principal amount of any bonds  or  notes  issued,  (b)
bonds  and  notes  issued to refund outstanding bonds and notes, and (c)
bonds and notes not described  in  paragraph  (b)  of  this  subdivision
issued  to  refund  outstanding  bonds  and notes in accordance with the
provisions of the Internal Revenue Code of 1986 or the Tax Reform Act of
1986, as amended, where such bonds or notes  are  not  included  in  the
statewide  volume cap on private purpose bonds under section 146 of such

S. 4032                             3

code provided, however, that upon any refunding pursuant to  this  para-
graph  or  paragraph (b) of this subdivision, such exclusion shall apply
only to the extent that the amount of the refunding bonds or notes  does
not  exceed  (i)  the outstanding amount of the refunded bonds or notes,
plus (ii) to the extent permitted by applicable federal tax  law,  costs
of  issuance  of  the  refunding  bonds or notes to be financed from the
proceeds of the refunding bonds or notes.  No such bond or note shall be
issued by the agency on or  after  July  [sixteenth]  TWENTY-THIRD,  two
thousand  [eleven]  THIRTEEN, excluding bonds and notes issued to refund
outstanding bonds and notes. No more than five hundred  million  dollars
of  proceeds  of  bonds  or  notes issued by the agency pursuant to this
subdivision shall  be  used  for  mortgage  purposes  by  blending  with
proceeds of bonds issued pursuant to subdivision two of this section.
  (2)  In  connection  with  the  issuance  of  bonds for the purpose of
furthering programs described in this title, the agency is authorized to
covenant and consent that the interest on any of  its  bonds,  notes  or
other  obligations shall be includable, under the United States Internal
Revenue Code of 1986, as amended or any subsequent corresponding  inter-
nal revenue law of the United States, in the gross income of the holders
of the bonds to the same extent and in the same manner that the interest
on  bills,  bonds,  notes  or  other obligations of the United States is
includable in the gross income of the holders thereof under said  Inter-
nal  Revenue  Code or any such subsequent law. Pursuant to this subdivi-
sion, the agency shall not issue bonds, notes or other obligations in an
aggregate principal amount  exceeding  eight  hundred  million  dollars,
excluding  from such limitation bonds, notes or other obligations issued
to refund outstanding bonds, notes or other obligations. No  such  bond,
note  or other obligation shall be issued by the agency on or after July
[sixteenth] TWENTY-THIRD,  two  thousand  [eleven]  THIRTEEN,  excluding
bonds,  notes  or  other obligations issued to refund outstanding bonds,
notes or other obligations and no mortgages shall be purchased with  the
proceeds  of such bonds, notes or other obligations after such date. The
board of directors of the agency shall establish program guidelines  for
purposes  of  bonds,  notes or other obligations issued pursuant to this
subdivision. The board of directors shall establish from  time  to  time
maximum  income limits of persons eligible to receive mortgages financed
by bonds, notes or other obligations issued pursuant  to  this  subdivi-
sion, which income limits with respect to one-third of the total princi-
pal  amount  of  mortgages authorized to be so financed shall not exceed
one hundred twenty-five percent of  the  latest  maximum  income  limits
permitted under the Internal Revenue Code of 1986, as amended, for mort-
gagors  financed by mortgage revenue bonds, with respect to one-third of
such principal amount authorized to be so financed, shall not exceed one
hundred thirty-five percent of such income limits, and with  respect  to
one-third  of  such principal amount authorized to be so financed, shall
not exceed one hundred fifty percent of such limits.
  (3) The fixing of the statutory maximums in this section shall not  be
construed  as constituting a contract between the agency and the holders
of its bonds or notes that additional bonds and notes may not be  issued
subsequently  by  the  agency  in the event that such statutory maximums
shall subsequently be increased by law.
  S 6. Section 19 of chapter 555 of the laws of 1989 amending the public
authorities law and other laws relating to establishing a New York state
infrastructure trust fund, as amended by chapter  192  of  the  laws  of
2009, is amended to read as follows:

S. 4032                             4

  S  19.  This  act shall take effect immediately and shall be deemed to
have been in full force and effect on and after June 15,  1989  provided
that  the  amendments  to  law effected by sections six and nine through
seventeen of this act, as amended, shall cease to be of force and effect
on  and after July [16], 23 [2011] 2013, on which date the provisions of
the public authorities law amended by such sections  shall  be  as  they
were  in  force  and effect immediately prior to this act taking effect,
and provided however that the amendments to law effected by sections six
and nine through seventeen of this act, as amended,  shall  continue  to
apply  to  all commitments issued or policies or development corporation
credit support in force on or before July  [16]  23,  [2011]  2013,  and
provided  further  that  the  amendments to section 2429-b of the public
authorities law made by section 13 of chapter 3  of  the  laws  of  2004
which  amended  this  section  shall not cease to be of force and effect
prior to the time that full payment of all development corporation cred-
it support obligations has been made or provided for.
  S 7. Section 2 of chapter 172 of the laws of 2002 amending the  public
authorities law relating to the powers of the state of New York mortgage
agency,  as  amended  by  chapter 162 of the laws of 2010, is amended to
read as follows:
  S 2. This act shall take effect immediately and shall remain  in  full
force  and  effect  until  July 23, [2012] 2013, whereupon such date the
provisions of this act shall expire and be deemed repealed.
  S 8. This act shall take effect immediately.

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