The New York City Housing Development Corp. expects to price its inaugural sustainable neighborhood bonds transaction — the first social bond for U.S. affordable housing, say officials — the week of June 15.
With approval from its board, which will meet June 8, the corporation expects to price roughly $680 million of these bonds.
Building upon the rising interest in the municipal market for green bonds and in socially targeted investing, the corporation is creating a category of bonds under its multifamily housing revenue bonds program to finance socially beneficial projects, specifically the new construction and preservation of affordable housing projects.
HDC, the nation's largest local housing finance agency and the leading issuer of mortgage revenue bonds for affordable multifamily housing, is working closely with the New York City Department of Housing Preservation and Development to implement Mayor Bill de Blasio's 10-year plan, Housing New York, to create and preserve 200,000 affordable units for low- and middle-income persons across the five boroughs.
"Sustainable neighborhood bonds are a clear progression of our work," said HDC President Gary Rodney.
In June, HDC will designate its first series of bonds as sustainable neighborhood bonds, a category that will allow investors to invest directly in bonds that finance the new construction and preservation of affordable housing projects. These multifamily housing developments receive financing from HDC through a variety of subsidy programs.
Certain developments financed with these bonds will also receive allocations of federal low-income housing tax credits, which may generate additional sources of financing for the construction or rehabilitation of those affordable housing projects.
The bonds will also address environmental goals, say officials. The majority of projects that receive funding from HDC must comply with Enterprise Green Communities Criteria, the only comprehensive green building framework designed for affordable housing and administered through Enterprise Community Partners Inc.
"What HDC is unveiling is a game-changer in the municipal housing bond market and we hope that housing finance agencies around the country will also apply this ground-breaking and replicable formula," said Geoff Proulx, executive director of fixed income and commodities at Morgan Stanley.
Paul Palmeri, managing director and head of public finance at JPMorgan, praised HDC for its "unwavering commitment to and market leadership in the affordable housing sector."
Since 2003, HDC has financed in excess of 120,000 housing units using more than $13.7 billion in bonds, and provided more than $1.6 billion in subsidy from corporate reserves.