Mayor's Office Press Release #353-04
FOR IMMEDIATE RELEASE
December 20, 2004
MAYOR MICHAEL R. BLOOMBERG, NYC HOUSING DEVELOPMENT CORPORATION PRESIDENT EMILY YOUSSOUF AND BANK OF AMERICA ANNOUNCE NEW CITY PROGRAM TO SPUR AFFORDABLE HOMEOWNERSHIP
Private and Public Partnership of $100 Million Will Create Affordable Cooperatives
Mayor Michael R. Bloomberg, New York City Housing Development Corporation (HDC) President Emily Youssouf and Banc of America Securities' Phil Smith announced today a low cost, innovative venture to increase the construction of affordable cooperative developments as a result of a Bank of America revolving loan fund of $100 million and loan financing provided by HDC. This collaborative lending program, which will increase affordable homeownership in the City, is expected to create 3,000 apartments over the next five years and allow HDC reserves to finance a greater number of homeownership units. Mayor Bloomberg, also joined by Department of Housing Preservation and Development (HPD) Commissioner Shaun Donovan and President and CEO for Harlem Congregations for Community Improvement Incorporated (HCCI) Lucille McEwen, announced the construction of affordable cooperative developments at a press conference at Madison Plaza, an HDC financed cooperative, located at 1825 Madison Avenue, between East 118th and East 119th Streets.
"Owning a home is the American Dream and homeownership is vital to neighborhood stability," said Mayor Bloomberg. "Now, with this partnership more working New Yorkers will be able to realize their dream. Our New Housing Marketplace plan challenged the private sector to invest in affordable housing. And Bank of America's commitment demonstrates the private sector's willingness to invest and leverage the City's own investment in affordable housing. This is another example of how we will reach our goal of creating and preserving 65,000 apartments."
Most of the funds in this program will finance developments that have not yet begun construction. This financing program will keep the sale price and monthly maintenance costs of co-ops affordable to middle-income New Yorkers in two ways. First, HDC and Bank of America will provide low-interest loans to finance co-op apartment developments. The
long-term nature of the HDC loans will allow the developer to pay off other costs and make a profit while keeping the sale price of apartments affordable. Then, once the apartments are built and sold, HDC will finance the underlying mortgage from a combination of bond proceeds previously sold to Bank of America at a fixed interest rate and HDC's 1% interest. This arrangement will significantly reduce transaction costs, and in turn help keep the sale price and monthly maintenance charges of the individual co-op apartments affordable.
"HDC continues to be innovative with creating financing programs that spur the development of affordable housing in New York City," said HDC President Emily Youssouf. "This program provides an opportunity to finance more homeownership developments than we have ever been able to before."
HDC teamed up with Bank of America to provide a financing package that would encourage housing developers to construct affordable cooperative developments. This financing package achieves a significant level of cost savings for the developers that are passed on to co-op purchasers in more affordable sales prices.
"As a leader in community development, Bank of America is committed to the future of New York as a City of vibrant neighborhoods where people can afford to live and work," said Bank of America New York President Carter McClelland. "We are proud to support Mayor Bloomberg and the City in this initiative as part of Bank of America's $750 billion commitment to community development programs nationally."
"The Bloomberg Administration has found new ways to meet today's urgent demand for affordable housing," said HDC Chairman and HPD Commissioner Shaun Donovan. "We're using every means possible to stimulate more affordable housing by creating innovative incentives and removing barriers to development, and we're encouraging the strong involvement of the private sector, which is absolutely crucial to preserving affordable homes for more New Yorkers. I thank Bank of America for this tremendous vote of confidence in New York City."
Prior to this program, HDC was able to finance just a few cooperative developments each year. In order to make it attractive to developers to construct co-op developments, HDC needed to provide twice as much financing than what is needed to finance a rental to make the apartments affordable to purchasers. This new program will allow the City of New York to increase the production of homeownership developments.
HDC is the nation's fourth largest housing finance agency based on the number of outstanding bonds used for multi-family housing. The corporation finances all of its affordable housing activities independent of tax levy. The Corporation issues tax exempt and taxable bonds to finance mortgages and also provides financing through its corporate reserves. In 2004, the Corporation issued $1.15 billion in taxable and tax exempt bonds to finance its affordable housing activities. Since its inception in 1971, HDC has financed over 120,000 apartments throughout New York City.
Contacts: Edward Skyler / Paul Elliott (212) 788-2958
Tracy Paurowski (HDC) (212) 227-9496
Jeff Hershberger (BOA) (212) 847-6160