HUD approves historic deal to modernize and build 4,000-plus new housing units on Puerto RicoMortgagePress.comHUD, Puerto Rico, Roy Bernardi, Anibal Acevedo Vila, Puerto Rico Public Housing Administration
U.S. Housing and Urban Development Deputy Secretary Roy Bernardi
and Puerto Rico Gov. Anibal Acevedo Vila today signed a financial
agreement worth more than $600 million that will permit the Puerto
Rico Public Housing Administration (PRPHA) to modernize and
construct more than 4,100 public housing units. The agreement
allows PRPHA to qualify for $235 million in tax credits to
accelerate the ongoing efforts to modernize public housing on the
Commonwealth.
The tax credit portion of this transaction represents the
largest single equity investment in the 22-year history of the
Low-Income Housing Tax Credit Program.
"Puerto Rico has taken HUD's bond financing program to a new,
extraordinary level with this deal," said Bernardi. "While it took
a sophisticated financial package and a complex interagency
agreement to get to this approval, the result is simple--better
housing for low-income families on this beautiful island."
In 2003, HUD approved a $693 million bond deal for PRPHA as part
of the housing agency's effort to repair a portion of its public
housing. That deal was the largest bond transaction in the history
of HUD's Capital Fund Financing Program (CFFP). Today's action is
HUD's approval of the refinancing of that bond transaction.
The PRPHA is refinancing the original 2003 bonds to qualify for
the tax credits. The Treasury Department's Low-Income Housing Tax
Credit Program encourages private developers to build affordable
housing. HUD's approval of PRPHA's refinancing allows for the
prepayment of a portion of the 2003 bonds; the new bond issuance of
approximately $380 million; and provides for a $235 million
tax-credit equity investment. The proceeds of the bonds will be
used for comprehensive modernization of approximately 4,100 public
housing units and the construction of 84 public housing units in
another public housing development.
PRPHA is using bond proceeds, tax credits, and Capital Funds
appropriated by Congress to make major improvements to its public
housing stock, including replacing plumbing and electrical systems;
making units accessible and other modernization measures. Most of
the Commonwealth's 56,000 public housing units were built in the
1940s and 1950s and have outdated utility systems. The bond
proceeds allows Puerto Rico's housing officials to address major
modernization needs in two years that would normally take several
years if it relied only upon its annual allocation of Capital Funds
from HUD.
PRPHA formed a separate business entity and entered into an
interagency agreement with the Department of Housing of the
Commonwealth of Puerto Rico, of which PRPHA is a subsidiary, to
make this action possible. The bond underwriters include JPMorgan
Securities, with Banc of America Securities, and Citigroup Global
Markets. Since PRPHA is using Capital Funds to pay the debt on the
bonds, HUD must approve such transactions of housing agencies. To
date, HUD has approved 114 financing proposals submitted by public
housing agencies totaling approximately $3.5 billion.
This program allows public housing authorities to borrow funds
on the private markets by pledging a percentage of future federal
assistance (Capital Funds) to repay the debt. The Quality Housing
and Work Responsibility Act of 1998 included a provision that
allowed housing agencies to use this HUD funding in this way to
raise funds to build new or modernize existing or build new public
housing.
For more informaiton, visit www.hud.gov.
