December 18, 2003
HUD APPROVES LARGEST HOUSING BOND DEAL IN HISTORY TO MODERNIZE OVER 7,400 PUERTO RICO PUBLIC HOUSING UNITS
Innovative financing brings up to $693 million to improve public housing
SAN JUAN - U.S. Housing and Urban Development Assistant Secretary Michael
Liu today announced HUD's approval of the Puerto Rico Public Housing Administration
to issue up to $693 million in bonds that will be used to modernize 7,424 public
housing units throughout the Commonwealth. This marks the largest housing bond
issuance in history - more than doubling the Chicago Housing Authority's $291
million bond issuance 2001.
"The bond proceeds will allow Puerto Rico's housing officials to address major modernization needs in two years that would normally take five to 10 years," said Liu who joined Governor Sila M. Calderon at the Governor's Mansion for a signing ceremony. "This is a win for everyone - PRPHA, the Commonwealth and most importantly - the residents who live in units that are more than 60 years old."
This initial issuance of $663 million is part of a larger effort by PRPHA to accelerate major modernization of 20,830 public housing units - an investment of $1.2 billion is planned over seven years.
Joining Liu and Calderon at the signing were Illeana Echegoyen Santella, Secretary of Housing for the Commonwealth of Puerto Rico and Carlos Laboy-Diaz, Administrator for Puerto Rico Public Housing Administration (PRPHA).
The bond proceeds will be used to replace plumbing and electrical systems;
make units accessible and other general preventive maintenance measures. Upgrading
and other modernization work will be done in 41 developments throughout Puerto
Rico. Most of the Commonwealth's public housing units were built in the 1940s
and 1950s and suffer from outdated utility systems. It would be impossible to
rehabilitate this large number of units within this short time span relying
solely on annual HUD Capital Fund distribution.
The Quality Housing and Work Responsibility Act of 1998 included an amendment that allows public housing authorities (PHAs) to pledge a percentage of their future federal assistance, subject to annual appropriations, under the Capital Fund Program to repay debt. This gave PHAs the opportunity to function more like private landlords who can use their assets to access private funding. A number of PHAs throughout the United States have issued bonds to generate financing, including Maryland, Alabama, Chicago and Philadelphia.
PRPHA will repay the $663 million bond by using a portion of its annual federal
Capital Fund grants over the next 21 years. By only using a portion of its Capital
Funds to pay the debt, PRPHA still has the bulk of its federal funding to address
other modernization needs. The Puerto Rico Housing Finance Authority, an entity
of the Government Development Bank of Puerto Rico, will issue the bonds.
HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet.