Velázquez Looks to Save Affordable Housing Financing Program
Washington, DC – Rep. Nydia M. Velázquez (D-NY) is working to save a federal program that helps finance the completion and preservation of affordable rental housing. Absent action by the Trump Administration, the Federal Financing Bank & Risk-Sharing Program may expire at the end of September. Earlier this week, Velázquez led New York City Democratic Members of Congress in writing to the Secretary of Housing and Urban Development (HUD), Dr. Ben Carson, calling on the agency to extend the program, which is a partnership between HUD, the Treasury Department, and state and local Housing Finance Agencies.
The public-private initiative has been credited with creating more than 20,000 units of affordable housing representing more than $2.2 billion in loan volume. New York City Housing Development Corporation has used the program for seven transactions totaling $345 million in loans for over 3,000 units of affordable housing. It anticipates a future pipeline of at least twenty-one developments totaling over $488 million in loans and over 7,800 units.
“With New York and much of the nation facing a housing crisis, it would be the height of irresponsibility to allow the expiration of a program that has a proven track record of expanding affordable housing stock,” said Velázquez.
In addition to Velázquez, the letter was signed by Reps. Meeks (D-NY), Maloney (D-NY), Engel (D-NY), Clarke (D-NY), Espaillat (D-NY), Nadler (D-NY), Crowley (D-NY), Jeffries (D-NY), Serrano (D-NY) and Meng (D-NY).
The letter is online here and the full text is below.
September 4, 2018
The Honorable Dr. Ben Carson
U.S. Department of Housing and Urban Development
451 7th Street SW
Washington, DC 20410
Dear Secretary Carson:
As members of New York City’s Congressional Delegation, we write to you today to urge the Department of Housing and Urban Development (“HUD”) to extend the Federal Financing Bank & Risk-Sharing Program, a successful partnership between HUD, the U.S. Department of Treasury, and state and local Housing Finance Agencies (“HFAs”) around the country.
There is little doubt that New York City—like much of America—is in an affordable housing crisis. And as more and more individuals and families struggle to find safe, quality, housing they can afford, this program continues to efficiently leverage private investment with state and local government resources to help finance thousands of affordable homes in New York City and around the country.
Under the program, the Federal Financing Bank (“FFB”), an arm of the Treasury Department, uses its authority to effectively finance mortgages insured by HUD’s Federal Housing Administration (“FHA”) at very low interest rates in order to support the construction and preservation of rental housing. This innovative model significantly reduces the interest rate for affordable multifamily apartment buildings compared to the cost of tax-exempt bonds under current market conditions.
This partnership model has been an important tool for both the new construction and preservation of affordable housing as it replicates Ginnie Mae financing prices with the streamlined process of FHA/HFA risk-sharing. Low cost capital, distributed through a strong network of state and local HFAs, is an efficient way to finance affordable housing with little risk to the federal government.
New York City has always been on the forefront of the nation’s affordable housing fight. In 2014, the New York City Housing Development Corporation worked with HUD and the FFB to create this important federal initiative and was the first HFA to benefit from its important cost savings. Since that time, New York City HDC has used this program for seven transactions totaling $345 million in loans for over 3,000 units of affordable housing and anticipates a future pipeline of at least twenty-one developments totaling over $488 million in loans and over 7,800 units.
The program has also been great success nationwide, creating more than 20,000 units of affordable housing since its inception.
Unfortunately, however, it is our understanding that HUD is considering letting the FFB Risk-Sharing Program expire at the end of this fiscal year. Were that to happen, New York City HDC and state and local HFAs around the country would lose a powerful tool to finance much needed affordable housing. For example, New York City HDC estimates that they would be forced to finance 1,000 fewer affordable homes, in the next year alone, if HUD were to allow the FFB Risk-Sharing Program to expire.
At a time when we are facing an acute affordable housing shortage in every state, HUD and Treasury should extend the program agreement and allow additional loan authority to help finance the pipeline of affordable housing developments in need of this low-cost capital.
Thank you for your consideration of this pressing issue. We look forward to continuing to work with you and your team to help ensure New Yorkers, and all Americans, have a safe, decent home they can afford.
Pamela Patenaude, Deputy Secretary
Brian Montgomery, Assistant Secretary of Housing
Len Wolfson, Assistant Secretary for Congressional and Intergovernmental Relations
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