NEW YORK CITY — The New York City Housing Authority (NYCHA) has closed on a financing package totaling approximately $400 million that will be used to renovate and modernize more than 20,000 units of public housing throughout New York City. The deal included private financing, low-income housing bonds, state funds and funds from last year's American Recovery and Reinvestment Act.
A primary component of the financing package is the approximately $108 million in stimulus funds that will be used for the projects. Because of the complicated prerequisites related to receiving stimulus funds for public housing construction projects, NYCHA had to transfer ownership of the 21 public housing communities to be renovated to two limited liability companies. NYCHA will manage both companies. Other investing partners in the limited liability companies include Citigroup and the New York City Housing Partnership.
Citigroup will play an important role in the renovation projects, contributing approximately $209 million in financing for the project. In return, the lender will be the recipient of low-income housing tax credits related to the renovations as well as help satisfy its obligations under the Community Reinvestment Act. Other investments include $42 million from the state of New York and $50 million in Section 8 bonds.
The construction timetable for the renovations is 3.5 years. Afterward, an additional $65 to $75 million will be provided each year for the ongoing operation of the properties. Prior to the financing deal, the properties had been operating without city or state subsidies, which began phasing out in 1995. The new financing deal will provide them with adequate financial assistance and take less of the strain off NYCHA.
Paul Casey, a partner and co-chair of the housing practice group for Ballard Spahr, which represented NYCHA in the financing deal, was impressed with the speed in which multiple government agencies worked to complete the deal. To receive the stimulus funding for the project, the financing had to be closed by mid-March, and all parties worked hard to make that deadline possible.
“You had governmental bodies and you have private entities all working together for this high-priority deadline,” Casey says.
— Coleman Wood