| HUD No. 06-072
June 22, 2006
HUD APPROVES BOND DEAL TO SAVE $70 MILLION FOR CHICAGO HOUSING AUTHORITY
CHA to accelerate public housing redevelopment
CHICAGO - The Chicago Housing Authority will save an estimated $70 million and will significantly accelerate redevelopment of public housing in the city because of a unique bond refinancing deal approved today by Housing and Urban Development Secretary Alphonso Jackson. Jackson announced the approval of this first-of-its-kind arrangement at a news conference at City Hall with Mayor Richard Daley and CHA Executive Director Terry Peterson.
"Chicago's Housing Authority is first again," said Jackson. "CHA was first to use HUD's innovative program to issue bonds to raise capital for major modernization. Now CHA is the first housing authority in the nation to refinance those bonds to reduce the housing authority's debt by millions and begin a new era of affordable housing in Chicago."
Daley said, "Along with reforming public education, transforming public housing is at the very center of our efforts to combat poverty. This money will help us move forward with our bold and ambitious effort to rehabilitate public housing units and improve the quality of life of their residents. I want to thank Secretary Jackson on behalf of all of Chicago."
Peterson said, "Thanks to HUD's flexibility and support for Chicago, we have these additional funds to help CHA's Plan for Transformation succeed."
CHA intends to use the savings made possible by this deal to speed up the rehabilitation of Trumbull Park Homes, Altgeld Gardens, Washington Park (low-rise units), and portions of Dearborn and Ickes Homes. CHA will repay the refunding bonds using future Capital Fund grants.
HUD's Capital Fund Financing Program (CFFP) allows public housing authorities to secure private financing by pledging their future year Capital Fund allocations as a form of collateral. As a consequence, housing authorities are able to significantly accelerate their public housing modernization programs, replacing aging housing units with modern homes for their residents. To learn more about this program, visit HUD's website.
In 2001, CHA became the first PHA to gain HUD's approval for a rated bond transaction. The deal, worth $291 million, was instrumental in financing CHA's massive public housing transformation plan. The plan includes replacing more than 18,000 distressed public housing units with 25,000 new or modernized units by 2010.
Since CHA's first approval, PHAs across the country have taken advantage of CFFP to raise funds to address major modernization needs in two years that would normally take five to 10 years. To date, 137 housing authorities throughout the U.S., including Chicago, New York City, Philadelphia, Puerto Rico, Seattle, Knoxville and Charleston, have HUD-approved CFFP transactions bonds or loans to generate financing that totals more than $2.8 billion. There are 17 similar deals, involving about 28 PHAs, currently under HUD review, worth approximately $85 million.
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 2000 that this financing tool was utilized.
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, and enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and espanol.hud.gov. For more information about FHA products, please visit www.fha.gov.