Project Vivienda Modernization Announcement
PREPARED REMARKS FOR
ROY BERNARDI, DEPUTY SECRETARY OF HOUSING AND URBAN DEVELOPMENT
NEW YORK, NY
THURSDAY, AUGUST 7, 2008
Good afternoon. Thank you all for coming. At a time when the national attention is on the housing market, we are very mindful of the need for safe, secure, healthy, and decent affordable rental housing. Affordable housing must remain a priority for every city, as we recently reaffirmed in preserving Starrett City, the nation’s largest affordable housing complex here in New York City.
One way to meet the needs of low-income renters is to renovate or redevelop existing affordable housing units. This can be done through a program at the Department of Housing and Urban Development (HUD) called the Capital Fund Financing Program (CFFP). The CFFP allows housing authorities to borrow funds through bond offerings on the private markets. This funding is used to build new housing or modernize existing housing. HUD and innovative housing authorities such as the Puerto Rico Public Housing Administration (PRPHA) have created ways to stretch this financing even further, by combining the borrowed funds with equity from investors via the Low Income Housing Tax Credit (LIHTC) program.
In 2003, HUD approved a $693 million bond transaction for the Puerto Rico Public Housing Administration (PRPHA) as part of the housing agency’s effort to repair a portion of its public housing. Today I have come to the heart of the U.S. economy, New York City, to join Governor (Aníbal) Acevedo Vilá in an important, landmark announcement of a new financial package for the Puerto Rico Public Housing Administration. I am pleased to announce that, together, we will sign an updated agreement that will refinance a portion of the 2003 bonds. Today’s agreement will allow for $600 million in new financing. The new transaction allows for the issuance of over $380 million in new bond financing. But more importantly, the transaction will bring in approximately $235 million of new funds in the form of a tax credit equity investment.
This is an important program for the people of Puerto Rico. I was just on the island yesterday. You could see that the cities are challenged by the need for more affordable housing. The cities strain to keep up with a growing need to provide affordable options for those who make the cities run and function: teachers, nurses, firemen, and all of those who are the human infrastructure of our urban and rural communities. A community must remain economically integrated, home to people of all incomes, not economically divided between the rich who live in the city and the poor who must commute in from great distances, but who are indispensable to the city’s well-being and public services.
The agreement we sign here today is the product of a lot of work, of a rigorous process of fact checking and examination, and of a transparent process of negotiation and agreement.
Simply put, we are agreeing to the largest single equity investment in the history of the tax credit program, which was created by Ronald Reagan in 1986. It is a groundbreaking effort, a partnership between our department, the housing authority, involving some of our nation’s financial powerhouses, such as J. P. Morgan Securities, Bank of America Securities, and Citigroup Global Markets. With approval of this package, Puerto Rico will be able to renovate thousands of affordable housing rental units, approximately 4,000 units in 32 projects, and begin construction of 84 units in another project.
The most important point is that the people of Puerto Rico will benefit through the availability of both better and additional affordable housing. If I may put this in perspective, the Puerto Rican Public Housing Administration is one of the largest in our country. This action today greatly enables them to help more people, to do more good work for our citizens in need. This visionary, unique effort to improve a vast number of public housing units is breath-taking in its scope, and a powerful reaffirmation of the importance of the efforts in Puerto Rico.
The great writer Carlos Fuentes once said that "there is no culture without connections." Today we see new connections established, created, that will make communities in Puerto Rico stronger, more successful, more vibrant, and more compassionate. We see these connections strengthen the bonds between people and between institutions. This agreement will enable people who need affordable housing to remain at the heart of the community, involved, not isolated. It will make Puerto Rico even stronger, even more effective in meeting the needs of its people.
I thank J. P. Morgan Securities, Bank of America Securities, Citigroup Global Markets, and everyone who helped make this agreement possible.
And I congratulate you, Governor, on this important agreement to assist the people of Puerto Rico.