NYCHA Chairman John B. Rhea announced the recent receipt of $44 million in low-income housing tax credit equity payments associated with NYCHA’s Federalization transaction. The purpose of the Federalization transactions was to make necessary repairs to the portfolio of 21 housing developments while also securing an additional $65-75 million in recurring annual federal operating and capital subsidies for 11,743 apartments at 13 of the 21 sites. In March of 2010, NYCHA entered into transactions known as “Federalization” which involved the financing of $212 million in direct rehabilitation improvements at 21 housing developments. Through the financing structure employed by Federalization, NYCHA was able to leverage American Recovery and Reinvestment Act (ARRA) funds with tax-exempt bonds and New York State modernization funds. Additionally, NYCHA was able to secure an equity investment of over $200 million for 13 of the 21 developments using low-income housing tax credits. The low-income housing tax credit equity generated by Federalization has been and will be used to repay construction loans borrowed for the rehabilitation of the 13 developments.
“Originally, this transaction represented a very creative way to help us address our fiscal challenges, while helping us maintain and preserve the homes of thousands of NYCHA families residing in formerly unfunded City and State developments,” said NYCHA Chairman John Rhea. “This groundbreaking initiative continues to provide hundreds of millions of dollars for capital rehabilitation and operating expenses. We are proud of what we’ve been able to accomplish so far and look forward to completing all close-out requirements for our remaining developments to ensure that our Federalized properties continue to receive their fair share.”
The rehabilitation work funded by low-income housing tax credit equity has included replacement of roofs and façade repair work for nine developments, major elevator modernization for three developments and building entrance upgrades at one development. Additionally, NYCHA has also undertaken approximately $30 million in additional interior repairs. This rehabilitation work has benefited the more than 14,000 families living at these developments.
As is customary in low-income housing tax credit transactions, the majority of equity proceeds are payable to NYCHA only upon the successful completion of the underlying rehabilitation projects and several post-completion milestones. To date, NYCHA has funded roughly $169 million of rehabilitation work at the 13 tax credit properties, and $40 million at the eight other Federalization properties. Ten of the rehabilitation projects that were funded with low-income housing tax credit equity are now complete with the remaining three expected to be complete by the end of 2012. In addition to the recently received $44 million in low-income housing tax credit equity, NYCHA expects to receive approximately $156 million in additional tax-credit equity by mid-2013 once it successfully fulfills the close-out requirements for the remaining ten developments.
The transaction was one of the largest tax credit bond deals in the nation’s history, with support from the New York City Housing Development Corporation (HDC) agency, which issued the tax-exempt and taxable bonds to finance the acquisition and rehabilitation of the units.