April 20, 2005
HUD APPROVES $77.8 MILLION BOND DEAL TO MODERNIZE PUBLIC HOUSING
joins cities across country to push investment in public housing nationally over
WASHINGTON - The U.S. Department of Housing and Urban Development announced today that it has approved the District of Columbia Housing Authority (DCHA) to issue up to $77.8 million in bonds that will be used to modernize public housing throughout the city.
"DCHA is joining other forward thinking housing authorities who have recently taken advantage of this innovative financial tool to raise capital for major public housing improvements," said HUD Assistant Secretary Michael Liu at the housing authority's headquarters. "Many are beginning to see that investing in public housing makes sense for city's like Washington, D.C."
DCHA joins other housing authorities, including New York, Chicago, Philadelphia and New Orleans, that have utilized HUD's Capital Fund Financing Program (CFFP) to raise funds to address major modernization needs in two years that would normally take five to 10 years.
Although the Quality Housing and Work Responsibility Act of 1998 included an amendment that allowed PHAs to borrow funds on the private market to raise capital for major repairs to its housing stock, it was not until 2001 that this innovative financing tool was utilized. Public housing authorities (PHAs) pledge a percentage of their future Capital Fund, subject to annual appropriations, to repay debt.
To date, 96 housing
authorities throughout the U.S., including DCHA, have HUD-approved CFFP transactions -
bonds or loans - to generate financing that total $2.3 billion. There are
25 similar deals, involving about 38 housing authorities, under HUD review worth
approximately $130 million.
Joining Liu today were DCHA Executive Director Michael Kelly, DCHA Board Chairman Russell Simmons and District of Columbia Housing Finance Agency Executive Director Milton Bailey. The bonds will be issued by the DC Housing Finance Agency (DCHFA).
The senior manager for the transaction
was Lehman Brothers. Co-managers and counselors were M.R. Beal & Company,
UBS Financial Services Inc., Legg Mason Wood Walker Inc., Citigroup, GRE Capital
and Siebert Brandford Shank and Co, LLC, Hawkins Delafield and Wood, LLP, Columbia
Equity Financial Corporation, Kutak Rock, LLP, Wells Fargo Bank, NA and Ballard
Spahr Andrews & Ingersoll, LLP.
DCHA will use the proceeds to modernize 38 of its 41 public housing properties totaling more than 6,900 units. Properties will be modernized over the next three years. DCHA plans to use the bond proceeds to modernize aged roofs, windows and water, sewer and mechanical systems. Additionally funds will provide for public safety and public accessibility improvements. These improvements will provide better living conditions for residents and will increase the long-term viability of these units. The improvements are a significant step towards agency-wide revitalization.
DCHA will repay the $77.8 million bond by using a portion of its annual federal Capital Fund grants over a 20-year period. By only using a portion of its Capital Funds to pay the debt, DCHA still has the bulk of its federal funding to address other modernization needs.
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 and espanol.hud.gov.