HUD APPROVES NEW YORK CITY HOUSING AUTHORITY PROPOSAL TO IMPROVE, PRESERVE AFFORDABLE HOUSING FOR THOUSANDS ACROSS THE CITY
Recovery Act funds and groundbreaking agreement improves, protects 180,000 public housing units

NEW YORK - U.S. Housing and Urban Development Secretary Shaun Donovan stood with New York elected officials and housing authority representatives today at Rutgers Houses in Lower Manhattan to announce HUD's final approval of a financial transaction that will keep the 721 public housing and Section 8 units at Rutgers Houses affordable, as well as thousands of similar apartments throughout the city.

This approval will provide public and private funds to rehabilitate a total of 20,139 units in 21 public housing developments in New York City and provide ongoing federal operating subsidy from the U.S. Department of Housing and Urban Development (HUD) for 11,743 of the public housing units in the 21 developments. Joining Donovan today were Governor David Paterson, Senator Charles Schumer, Congresswoman Nydia Velazquez, Mayor Michael Bloomberg and New York City Housing Authority (NYCHA) Chairman John Rhea.

"HUD is proud to join with the State, the City and NYCHA to safeguard affordable housing for thousands of families well into the future," said Secretary Donovan. "HUD's approval of this agreement and the funding the Obama administration is providing through the Recovery Act will not only help the families who live in these apartments, but will create hundreds of jobs and ensure necessary repairs can take place. This one agreement will benefit roughly the same number of public housing units in New York City as there are in the whole of Chicago's public housing inventory. This is a great day for the future of New York City's public housing."

Donovan and Rhea signed documents today that conclude a complex, multi-step process that gives NYCHA the go ahead to use $108 million it received from HUD though the American Recovery and Reinvestment Act of 2009 (Recovery Act), in addition to other funds, to rehabilitate the 20,139 units covered by the agreement. Last year, HUD awarded 3,400 public housing authorities nearly $3 billion in Recovery Act funding to make capital improvements to their public housing stock. NYCHA received $423 million in this funding.

In February 2010, HUD approved NYCHA's proposal to enter into two mixed-finance transactions that called for the New York Housing Development Corporation to issue bonds on the private market to raise capital that will be combined with the Recovery Act funding to accelerate the rehabilitation of these units. Citibank, N.A., a limited partner in one of the two transactions, will invest approximately $209 million to purchase low-income housing tax credits awarded to the development. The State of New York will also provide $42 million.

The 20,139 units that will be rehabilitated using Recovery Act and private and public funds were constructed from 1949 to 1978 using New York City and New York State obligation bonds. For almost a decade, these units were solely owned, managed and maintained by NYCHA without operating funding from the State or City of New York. HUD gave NYCHA approval in 1995 to bring the 21 developments under the housing authority's federal portfolio of public housing units, which allowed NYCHA to use its federal subsidies to maintain the housing. However, this arrangement was draining resources that are allocated to maintain NYCHA's original federal public housing units.

In 2008, HUD approved NYCHA's request to convert 8,400 units of the 20,139 former state units from public housing to the Housing Choice Voucher Program (HCV) or for non-dwelling use. Under the approval, beginning in fiscal year 2011, the remaining 11,743 units will be eligible to receive HUD operating subsidies, which NYCHA and housing authorities nationwide receive annually to maintain affordable housing for low-income families. HUD estimates, NYCHA will receive between $65 and $75 million more in operating subsidies to maintain these units. NYCHA's received approximately $991 million in operating funding in 2009.

The remaining units, 6,160 will be public housing, but will not receive federal subsidy. NYCHA will continue to provide operating subsidy for those units from other sources, such as federal subsidy provided to its remaining portfolio and sales proceeds and fees received during the development process. NYCHA has already converted 2,236 units to the HCV program and has been given the option to further convert them to project-based vouchers in the future.

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