Capital Improvements Over the Next Two Years Will Create Hundreds of Construction Jobs

Sale of 21 NYCHA Developments to Partnership - While Keeping them Within NYCHA's Domain and Control - Will Raise Equity for Capital Improvements and Enable the "Federalization" of the Buildings That Will Bring Annual Federal Subsidy to NYCHA

March 15th, 2010 – Mayor Michael R. Bloomberg, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan and New York City Housing Authority (NYCHA) Chairman John B. Rhea today announced HUD’s approval of New York City’s application to qualify 21 NYCHA developments – and their more than 20,000 housing units – for federal subsidies. In order to qualify for federal assistance, the developments will be sold to an entity created and controlled by NYCHA. As a result of the transaction, NYCHA will receive more than $400 million in public and private funding, the majority of which will go to capital improvements that will begin immediately and continue for two years. The upgrades, which will create hundreds of construction jobs, will include brick work, façade and roof repairs, elevator replacement, front and rear entrance renovations and heating upgrades. The sale will also enable HUD to include the buildings in a federal subsidy program that will deliver $65-$75 million every year for ongoing maintenance. Joining the Mayor at the announcement, which took place at the Henry Rutgers Houses development in Lower Manhattan, were Governor David A. Paterson, Senator Charles E. Schumer, Congresswoman Nydia M. Velazquez, Assembly Speaker Sheldon Silver, Senate Majority Leader John L. Sampson, Council Speaker Quinn, Assembly Members Vito Lopez and Brian Kavanagh, State Senator Daniel L. Squadron, Council Member Margaret S. Chin, New York City Housing Development Corporation President Marc Jahr, Housing Preservation and Development Commissioner Rafael E. Cestero, Citi Managing Director and Head of Municipal Securities Division Howard W. Marsh, and President of the Citywide Council of Presidents of NYCHA Residents Reginald H. Bowman.

“With the enormous budget challenges facing the City due to the national economic downturn, we’re constantly looking for creative ways to fill gaps and capitalize on private and federal dollars to maintain – and improve – City services,” said Mayor Bloomberg. “This transaction will generate hundreds of millions of dollars for shovel-ready work to upgrade our public housing stock and create hundreds of jobs, and – as importantly – at least $65 million in annual federal funding, which will help secure NYCHA’s long-term fiscal health. It’s a tremendous example of different levels of government and the private sector working together to get something important done.”

“HUD is proud to join with the State, the City and NYCHA to safeguard affordable housing for thousands of families well into the future,” said Secretary Donovan. “HUD’s approval of this agreement and the funding the Obama administration is providing through the Recovery Act will not only help the families who live in these apartments, but will create hundreds of jobs and ensure necessary repairs can take place. This is a great day for the future of New York City’s public housing.”

“Residents’ long term quality of life will be improved as dedicated funding and subsidies will result in improvements in building standards and conditions, as well as service enhancements into the future,” said NYCHA Chairman Rhea. “NYCHA understands and values the strong partnerships with our colleagues at City Hall, HUD, State government, as well as the New York City Housing Development Corporation and the Department of Housing Preservation and Development, its labor unions and residents. Working together, we’re enabling New York City to qualify for substantial, permanent increase in federal funding for public housing.”

Last month, the State Senate and Assembly passed legislation necessary to approve the sale of the developments to the entity managed by NYCHA. The bill, championed by Assembly Housing Chair Vito Lopez and State Senator Daniel Squadron, was signed by Governor Paterson.

“Today we ensure that NYCHA will have the resources to maintain and operate affordable housing opportunities for the more than 400,000 New Yorkers they serve,” said Governor Paterson . “I am proud to have provided the State resources necessary to make this possible, and of the work of my partners in the Senate and Assembly, who crafted the legislation enabling NYCHA to qualify for an estimated $65 million in annual operating subsidies from HUD –plus hundreds of millions of dollars in capital assistance. I thank President Obama, Secretary Donovan and our Congressional Delegation for making today's announcement possible and will continue to work with my colleagues in government to build a brighter future for every New Yorker.”

“This plan now pulls these abandoned NYCHA complexes back from the brink by opening up vital federal resources to ensure that more than 20,000 units of public housing are properly maintained and their tenants receive quality housing they need and deserve,” said Senator Schumer. “I am proud to have worked hard with Congresswoman Velazquez, and Secretary Donovan on behalf of all NYCHA tenants to see this plan come into fruition. All New Yorkers deserve a first-rate, safe home and this plan will get us one important step closers to achieving this goal.”

“New York’s working families face 10 percent unemployment, skyrocketing food costs and rent that keeps rising at an unrelenting pace,” said Congresswoman Velázquez. “Given the state of our economy, affordable housing is even more important than ever before. This agreement will not just make an immediate investment in public housing, but also help ensure residents have safer and healthier homes in the long term.”

“I am proud to stand here today to celebrate the passage of this important law, which will deliver millions of dollars in much needed federal funds to my constituents here at Rutgers Houses and throughout our city's public housing complexes,” said Speaker Silver. “I commend NYCHA Chairman Rhea for his work in developing this great initiative. Every family deserves a safe, affordable place to live, and through the joint efforts of my colleagues in New York and Washington, we have helped ensure that our public housing facilities get the resources they need to make vital improvements to enhance the well-being of all residents.”

“For years, public housing was dangerously under-funded, risking the lives of thousands of New York families,” said Senate Majority Leader Sampson. “Today’s action means families struggling with the fiscal crisis will get the safe and affordable housing they need to survive. The Senate Majority will continue to invest in the development and preservation of affordable housing to prevent houses from crumbling and families from collapsing during these difficult times. I applaud the work of Governor Paterson, Mayor Bloomberg, Senators Schumer and Gillibrand, our congressional delegation, Speaker Silver, Assembly Housing Chair Lopez, and Senator Squadron, the Senate sponsor of this historic legislation, without whom this bill would not have become a reality.”

“The public housing legislation passed in Albany will provide 21 state and city housing developments with the necessary funding to complete desperately needed modernization and upgrades,” said Assembly Member Lopez. “NYCHA and Mayor Bloomberg deserve enormous credit for the creativity involved in this initiative, providing hundreds of millions of dollars in capital rehabilitation from tax credit syndication as well as $70 million federal dollars in annual operating expense funds. This bill is by far the most significant passed in Albany that addresses the necessary preservation of public housing. I am proud to have been a part of this significant legislation.”

“Year after year, our public housing residents have suffered the effects of underfunding, including delayed maintenance, broken elevators, and inadequate security,” said Assembly Member Brian Kavanagh. “I am proud to join with my colleagues in city, state, and federal government, with the residents and advocates who fight for public housing, and with the Housing Authority, to take this important step to put our public housing on a sounder financial footing for many years to come.”

“This agreement will allow us to address NYCHA’s operating deficit and dramatically improve housing conditions for more than 400,000 residents, who have for too long lived with broken elevators, heating outages, and basic maintenance problems because of the funding gap left by the City and State,” said State Senator Squadron. “I was proud to be the Senate sponsor of the legislation that allows for these much-needed federal funds, and thank Governor David Paterson, Mayor Michael Bloomberg, HUD Secretary Shaun Donovan, U.S. Senator Chuck Schumer, Congresswoman Nydia Velázquez, Democratic Conference Leader John Sampson, Assembly Speaker Sheldon Silver, Assembly Housing Chair and Assembly sponsor Vito Lopez, and NYCHA Chairman John Rhea for making this a reality.”

“Today’s announcement is a real example of what happens when everyone pulls together to get results for New Yorkers,” said Speaker Quinn. “This is a tremendous step on the road to full and fair funding for the nation’s best public housing authority and I’m proud to stand with those who made it happen. New York City’s 180,000 families who live in NYCHA developments deserve this and I thank everyone here today for their work in making today’s announcement a reality.”

Of NYCHA’s 334 housing developments, 21 of them, accounting for 20,139 housing units, were built by the City and State – with no Federal funding – after World War II. Unlike NYCHA’s other developments, the 21 City/State buildings received no federal funds, although they were operated and maintained as public housing. Their City and State subsidies gradually were eliminated beginning in 1995. As a result, NYCHA has had to maintain them by sharing the federal funds it receives for the other 313 public housing developments, decreasing NYCHA’s capacity to repair, renovate and maintain all its public housing units.

The sale of the 21 developments takes advantage of a one-time opportunity in the American Recovery and Reinvestment Act of 2009 to qualify NYCHA’s unfunded units for federal funds. It allows for a one-time opportunity – expiring March 17, 2010 – for public housing authorities to bring additional money in from the federal government to fund public housing if a mix of public and private sector money is used to finance the transaction. NYCHA began pursuing such an agreement in September 2009. Once the transaction closes, NYCHA will immediately qualify for dedicated annual allocation of HUD operating and capital funding—about $65 million a year.

All 21 developments would remain public housing and residents will retain all of their rights and protections as public housing residents. NYCHA’s existing federal developments would also benefit as less of its federal public housing subsidy will have to be diverted to support units that receive no federal money, or other funds. The 21 developments are: Bay View, Boulevard, Bushwick, Independence, Linden, Marlboro and Williams Plaza in Brooklyn; Baychester, Castle Hill, Marble Hill, Murphy and Saint Mary’s Park in the Bronx, 344 East 28th Street, Amsterdam Addition, Chelsea, Drew-Hamilton, Manhattanville, Rutgers, Samuel and Wise Towers in Manhattan; and Stapleton in Staten Island.

The transaction is one of the largest tax credit bond deals in the nation’s history. New York City Housing Development Corporation will issue tax-exempt and taxable bonds to finance the acquisition and rehabilitation of the units. The bonds, which will be issued over the next three years, will be backed by credit support from Citi Community Capital. In all, the transaction will generate more than $400 million for the 21 developments – including $108 million in previously-announced stimulus funds that until now couldn’t be used for work on these properties and another $42 million in State modernization funds.

“In a single action, the New York City Housing Development Corporation has authorized the issuance of bonds the proceeds of which will help to preserve 20,000 affordable homes, and enable NYCHA to cut its structural operating deficit by up to $75 million,” said New York City Housing Development Corporation President Jahr. “While it is remarkable in scale, this is the sort of transaction that the Housing Development Corporation was designed to do: create and preserve affordable housing for the residents of the City of New York, and strengthen the City’s communities. We applaud all our public and private sector partners who have contributed to making this extraordinary venture possible.”

“Citi is America’s global bank and since our founding in 1812 as City Bank of New York, our heart has been in New York City,” said Citigroup CEO Vikram Pandit. “We are pleased to structure this transaction together with NYCHA and our other partners, as our investment will improve the living standards of thousands of New Yorkers, create construction jobs and contribute to the economic recovery in New York City. This is one of the largest affordable housing transactions in history and highlights Citi's commitment to helping our neighbors in the communities in which we live and work and to supporting the economic recovery locally and around the U.S.”

“On behalf of NYCHA’s residents and on behalf of the Citywide Council of Presidents, I extend our full and enthusiastic support of this transaction, with its assurance that the families we represent remain as public housing residents,” said President of the Citywide Council of Presidents of NYCHA Residents Reginald Bowman. “We have been assured that we will not be displaced and all the rights and protections that we have received as public housing residents will continue.”