Featured Bond – New York Housing Finance Authority $100 million
New York State Housing Finance Authority is scheduled to issue $100 million in Affordable Housing Revenue Bonds in two series to provide mortgage loans and fund housing construction in the state. The Bond is scheduled for sale on October 17th with JP Morgan, Bank of America Merrill Lynch, and Ramirez and Co, Inc. as lead underwriters.
About the Bonds
Proceeds of the Bonds will be used to finance 2019 Mortgage Loans for the construction or acquisition and rehabilitation of certain multi- family rental housing projects. New York State Homes and Community Renewal is the agency responsible for administering the program funded by the Bonds.
Series 2019 N comprises $87.3 million of the total amount and qualifies as both a Climate Bond Certified and Sustainability Bond Certified. Series 2019 O makes up the rest of the $13.6 million in the bond and is Sustainability Certified. Both types of certification are accredited through the Climate Bond Initiative.
The bulk of proceeds from Series N is intended to fund five new construction affordable housing developments which are expected to create 634 units in the aggregate of affordable housing located in Bronx, Westchester, Schenectady, Erie, and Kings Counties. The bonds are secured by a special revenue obligations of the Agency payable from the revenues generated by the mortgage loans.
In the opinion of counsel interest on the 2019 Bonds is excluded from gross income for Federal income tax purposes and personal income taxes imposed by the State of New York or any political subdivision thereof. However, tax-exemption is contingent on at least 40 percent of the housing units either built, acquired or rehabilitated be occupied by individuals or families whose income does not exceed 60 percent of the area median income, AMI.
Climate and Sustainability Bond Certification
The Climate Bond Initiative provides certification of bonds that meet certain standards related to low carbon and climate resilient economies. New York State uses such certifications to align their bonding efforts with the United Nations Sustainable Development Goals adopted by the General Assembly in 2015. Specific to this bond issuance, Goals 1, 7, and 11 (poverty alleviation, clean energy, sustainable cities) all inform the characteristics of this bond issuance.
To qualify as a Climate Bond, the housing units constructed with funds from Series N must meet energy efficiency standards as determined by Climate Bond Initiative. The Sustainability certification requires that all of the newly constructed housing units are reserved for households with incomes at or below a specified percentage of AMI.
Affordable housing is a major issue impacting cities, citizens, and the country. According to this Harvard study, nearly half of all renters in the United States were cost-burdened by housing costs. Cost-burdened in this context means that families are spending more than 30 percent or more of their income on rent.
In 2017, Governor Andrew Cuomo campaigned for and passed legislation to fund major initiatives to finance public investments in affordable housing and reduce homelessness in the state. These Bonds represent the government’s continued efforts to implement the plan with real financing and capital projects.
These facts and numbers are for informational purposes, and should not be considered an official disclosure for potential investors. Investors should consult the official statement. None of the information provided should be construed as a recommendation by MuniNet Guide, MuniNet LLC, or any of their employees. Information and analysis is for informational purposes only.