Bill S4032-2011

Extends various chapters relating to the powers of the New York state housing finance agency and the New York state mortgage agency

Extends various chapters relating to the powers of the New York state housing finance agency and the New York state mortgage agency.

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Actions

  • Jun 28, 2011: SIGNED CHAP.100
  • Jun 28, 2011: DELIVERED TO GOVERNOR
  • Jun 16, 2011: returned to senate
  • Jun 16, 2011: passed assembly
  • Jun 16, 2011: ordered to third reading rules cal.319
  • Jun 16, 2011: substituted for a8249
  • May 2, 2011: referred to housing
  • May 2, 2011: DELIVERED TO ASSEMBLY
  • May 2, 2011: PASSED SENATE
  • Apr 12, 2011: ADVANCED TO THIRD READING
  • Apr 11, 2011: 2ND REPORT CAL.
  • Apr 6, 2011: 1ST REPORT CAL.323
  • Mar 15, 2011: REFERRED TO HOUSING, CONSTRUCTION AND COMMUNITY DEVELOPMENT

Meetings

Calendars

Votes

VOTE: COMMITTEE VOTE: - Housing, Construction and Community Development - Apr 6, 2011
Ayes (8): Young, Bonacic, Gallivan, Grisanti, Ritchie, Espaillat, Diaz, Krueger

Memo

BILL NUMBER:S4032               REVISED 05/02/11

TITLE OF BILL:

An act to amend the private housing finance law, in relation to an increase in bond and note authorization of the New York state housing finance agency; to amend chapter 514 of the laws of 1983, amending the private housing finance law and the real property tax law relating to the powers of the New York state housing finance agency to finance certain multi-family housing; to amend chapter 396 of the laws of 1984, amending the private housing finance law and the real property tax law relating to the powers of the New York state housing finance agency to finance certain multi-family housing, in relation to the effectiveness of such chapters; to amend chapter 915 of the laws of 1982 amending the public authorities law relating to the powers of the state of New York mortgage agency, in relation to the effective date thereof; to amend the public authorities law, in relation to the powers of the state of New York mortgage agency; to amend chapter 555 of the laws of 1989 amending the public authorities law and other laws relating to establishing a New York state infrastructure trust fund, in relation to the effective date thereof; and to amend chapter 172 of the laws of 2002 amending the public authorities law relating to the powers of the state of New York mortgage agency, in relation to extending the provisions thereof

PURPOSE OF BILL:

This bill would extend certain statutory authorizations of the New York State Housing Finance Agency ("HFA"), State of New York Mortgage Agency ("SONYMA") and SONYMA Mortgage Insurance Fund ("MIF"), and increase the bonding authority of SONYMA and HFA.

SUMMARY OF PROVISIONS:

Section 1 of the bill would increase HFA's bonding authority by $1 billion to a maximum aggregate of $16.28 billion.

Sections 2 and 3 of the bill would extend HFA's authority to finance certain multifamily housing projects until July 23, 2013.

Section 4 of the bill would extend SONYMA's authority to purchase forward commitment mortgages until July 23, 2013.

Section 5 of the bill would extend SONYMA's authority to issue new money taxable and tax-exempt bonds until July 23, 2013, and increases SONYMA's tax-exempt bonding authority by $1 billion to a maximum of $10.22 billion.

Section 6 of the bill would extend until July 23, 2013, the sunset date of (i) sections six and nine through seventeen of Chapter 555 of the Laws of 1989 that broadened the scope of MIF to provide primary mortgage insurance on a statewide basis to individual homeowners and to provide pool insurance to all of SONYMA's loans, and (ii) section 13 of Chapter 3 of the laws of 2004 concerning development corporation credit support relating to the Jacob Javits Convention Center.

Section 7 would extend until July 23, 2013, the sunset date of the requirement that at least 20% of a rehabilitation loan given by SONYMA be used for rehabilitation or construction of improvements.

Section 8 of the bill would provide for an immediate effective date.

EXISTING LAW:

HFA

Current law authorizes HFA to issue bonds and notes for its housing programs for any of its corporate purposes in an aggregate principal amount not to exceed $15.28 billion. HFA's authority to finance certain multi-family housing projects is scheduled to sunset on June 30, 2011.

SONYMA

Under existing law, SONYMA's authority to purchase forward commitment mortgages and to issue new money taxable bonds are scheduled to sunset on July 16, 2011. SONYMA is currently authorized to issue up to $9.22 billion of new money tax-exempt bonds and up to $800 million of new money taxable bonds by July 16, 2011.

MIF

Chapter 555 of the Laws of 1989, as amended, authorizes MIF to provide primary mortgage insurance on a statewide basis to individual homeowners and to provide pool insurance to all of SONYMA's loans and is scheduled to sunset on July 16, 2011. Chapter 3 of the Laws of 2004, as amended, enabling SONYMA to provide credit support for the Jacob Javits Convention Center, is scheduled to sunset on July 16, 2011.

SONYMA is currently authorized through July 23, 2012 to insure rehabilitation loans, which are defined in Public Authorities Law §2426 (12) as loans wherein at least 20% of the mortgage loan amount is attributable to the cost of rehabilitation or construction of improvements.

LEGISLATIVE HISTORY:

Numerous similar extensions and increases in HFA and SONYMA bonding authority have been made. The HFA provisions were extended in Chapter 407 of the Laws of 2010; Chapter 176 of the Laws of 2009; Chapter 151 of the laws of 2008; Chapter 85 of the Laws of 2007; Chapter 398 of the Laws of 2006; Chapter 124 of the Laws of 2005; Chapter 204 of the Laws of 2004; Chapter 99 of the Laws of 2003; Chapter 48 of the Laws of 2002; Chapter 363 of the Laws of 2001; and Chapter 131 of the Laws of 2000.

The SONYMA provisions were extended in Chapter 218 of the Laws of 2010; Chapter 177 of the Laws of 2009; Chapter 148 of the Laws of 2008; Chapter 227 of the Laws of 2007; Chapter 138 of the Laws of 2006; Chapter 121 of the Laws of 2005; Chapter 147 of the Laws of 2004; Chapter 141 of the Laws of 2003; Chapter 103 of the Laws of

2002; Chapter 111 of the Laws of 2001; and Chapter 132 of the Laws of 2000.

The MIF provisions contained in section 6 of this bill were extended in Chapter 192 of the Laws of 2009; Chapter 230 of the Laws of 2007; Chapter 125 of the Laws of 2005; Chapter 145 of the Laws of 2003; and Chapter 110 of the Laws of 2001. The MIF provisions contained in section 7 of this bill were extended in Chapter 162 of the Laws of 2010; Chapter 150 of the Laws of 2008; Chapter 137 of the Laws of 2006; Chapter 309 of the Laws of 2005; and Chapter 172 of the Laws of 2002.

STATEMENT IN SUPPORT:

HFA

This bill would increase the maximum amount of new money bonds which HFA is authorized to issue, and would extend HFA's authority to finance certain multifamily housing projects until July 23, 2013. The Agency currently has a substantial pipeline of financing requests that will result in both the creation and preservation of affordable housing across New York State. The bill would increase HFA's authority to issue bonds up to $1 billion for a maximum aggregate of $16.28 billion, which will enable the Agency to continue to meet the housing demands of New Yorkers, as well as create jobs and provide economic stimulus.

SONYMA

SONYMA's statutory authorizations to issue new money tax-exempt bonds and to purchase forward commitment mortgages are scheduled to sunset on July 16, 2011. SONYMA's statutory authorization to issue new money taxable bonds is also scheduled to sunset on July 16, 2011. This bill would extend the sunset dates for the issuance of new money tax-exempt bonds and new money taxable bonds, and for the purchase of forward commitment mortgages, until July 23, 2013.

This bill would also increase the maximum amount of new money tax-exempt bonds which SONYMA is authorized to issue. The increase being requested is intended to address the borrowing needs of the Agency in 2011, 2012 and the first half of 2013, which borrowing needs also include issuing bonds for student loan purposes.

The Agency, like most state housing finance agencies throughout the country, has been adversely impacted in its ability to continue to offer low interest rate fixed rate mortgage financing to eligible first-time homebuyers, due to the dramatic events in the financial markets during late 2008, the impact of which is still being felt in the capital markets. In order to ameliorate this situation, the US Department of Treasury announced in 2009 a program that will permit state housing agencies such as SONYMA to sell tax-exempt bonds to Fannie Mae and Freddie Mac (the "GSEs"). The GSEs securitize the bonds and simultaneously sell the securities to the Department of Treasury. The program has enabled the Agency to lower its borrowing costs and as a result, the Agency has once again been able to offer its mortgages at attractive interest rates. The program runs through the end of 2011, by which time the capital markets should have fully recovered.

In early 2009, the Agency's statute was amended to modernize the Agency's authority to issue bonds to finance student loans. The Agency completed its first bond sale in December 2009. Demand for the program has been slow to develop, but the Agency will need to use bonding authority to issue bonds in the future.

Given the Treasury Department program and the implementation of the student loan program, the Agency expects a continuing demand for its products. SONYMA's current authorities to issue new money tax-exempt bonds and taxable bonds are insufficient to cover the current expected demand for mortgages and student loans in the next few years. The bill would increase SONYMA's authority to issue additional tax-exempt bonds and notes up to a total maximum amount of $10.22 billion which will enable SONYMA to satisfy its expected mortgage and student loan demand.

MIF

Enactment of Chapter 575 of the Laws of 1989 and of Chapter 3 of the Laws of 2004 enabled SONYMA to provide primary mortgage insurance on a statewide basis, provide pool insurance for mortgages on one-to-four family homes and on multi-family projects where the loans are made by lenders who meet certain criteria and provide credit support to the Jacob Javits Convention Center. However, these provisions will sunset on July 16, 2011. The bill would extend these sunset provisions until July 23, 2013.

Without an extension, the MIF will only be able to insure mortgages for projects located in "blighted" neighborhoods and provide per project mortgage insurance in amounts not exceeding $5 million or $10 million depending upon project type. In addition, the MIF will be unable to provide primary mortgage insurance, pool insurance and credit support.

SONYMA's primary tool for promoting new construction and rehabilitation of affordable housing is its authority to insure Rehabilitation Loans. The statutory authority that reduced the percentage of a rehabilitation loan that must be attributable by SONYMA to the cost of rehabilitation or new improvements from 25% to 20% of the mortgage loan is set to expire on July 23, 2012.

The 25% requirement is inconsistent with the provisions of the Internal Revenue Code ("Code") concerning the issuance of tax-exempt bonds for multifamily housing. Under the Code a minimum of 15% of such bonds must fund construction or rehabilitation costs. Several of the most important users of SONYMA's mortgage insurance are public benefit corporations, such as the New York State Housing Finance Agency, that issue tax-exempt bonds subject to the standards set by the Code.

The 25% requirement also encourages lenders and borrowers to pad prospective loans with additional improvement not otherwise necessary for the project so that they are eligible under the current definition of Rehabilitation Loan.

The reduction of the percentage requirement from 25% to 20% has resulted in SONYMA's insurance product matching more closely the needs of some of its primary users without in any way negatively affecting

the programmatic or financial integrity of the Mortgage Insurance Fund.

BUDGET IMPLICATIONS:

This bill does not affect the state budget.

EFFECTIVE DATE:

This bill would become effective immediately.


Text

STATE OF NEW YORK ________________________________________________________________________ 4032 2011-2012 Regular Sessions IN SENATE March 15, 2011 ___________
Introduced by Sen. YOUNG -- (at request of the Division of Housing & Community Renewal) -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Communi- ty Development AN ACT to amend the private housing finance law, in relation to an increase in bond and note authorization of the New York state housing finance agency; to amend chapter 514 of the laws of 1983, amending the private housing finance law and the real property tax law relating to the powers of the New York state housing finance agency to finance certain multi-family housing; to amend chapter 396 of the laws of 1984, amending the private housing finance law and the real property tax law relating to the powers of the New York state housing finance agency to finance certain multi-family housing, in relation to the effectiveness of such chapters; to amend chapter 915 of the laws of 1982 amending the public authorities law relating to the powers of the state of New York mortgage agency, in relation to the effective date thereof; to amend the public authorities law, in relation to the powers of the state of New York mortgage agency; to amend chapter 555 of the laws of 1989 amending the public authorities law and other laws relating to establishing a New York state infrastructure trust fund, in relation to the effective date thereof; and to amend chapter 172 of the laws of 2002 amending the public authorities law relating to the powers of the state of New York mortgage agency, in relation to extending the provisions thereof THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph (c) of subdivision 1 of section 47 of the private housing finance law, as amended by chapter 407 of the laws of 2010, is amended to read as follows: (c) The agency shall not issue bonds and notes other than state university construction bonds and state university construction notes,
hospital and nursing home project bonds and hospital and nursing home project notes, health facilities bonds and health facilities notes, youth facilities project bonds and youth facilities project notes, community mental health services and mental retardation services project bonds and community mental health services and mental retardation services project notes, community senior citizens services project notes or community senior citizens services project bonds and mental hygiene improvement bonds and mental hygiene improvement notes and bonds and notes for the housing program for any of its corporate purposes in an aggregate principal amount exceeding [fifteen] SIXTEEN billion two hundred eighty million dollars, excluding bonds and notes issued to refund outstanding bonds and notes. S 2. Section 6 of chapter 514 of the laws of 1983, amending the private housing finance law and the real property tax law relating to the powers of the New York state housing finance agency to finance certain multi-family housing, as separately amended by chapters 76 and 176 of the laws of 2009, is amended to read as follows: S 6. This act shall take effect immediately and shall remain in full force and effect until [June 30, 2011] JULY 23, 2013 at which time it shall be repealed. S 3. Section 7 of chapter 396 of the laws of 1984, amending the private housing finance law and the real property tax law relating to the powers of the New York state housing finance agency to finance certain multi-family housing, as amended by chapter 176 of the laws of 2009, is amended to read as follows: S 7. This act shall take effect immediately, except that sections one, three, four, five and six of this act shall remain in full force and effect until [June 30, 2011] JULY 23, 2013 at which time such sections shall be repealed. S 4. Section 16 of chapter 915 of the laws of 1982 amending the public authorities law relating to the powers of the state of New York mortgage agency, as amended by chapter 218 of the laws of 2010, is amended to read as follows: S 16. This act shall take effect immediately except that the amend- ments to law effected by sections one through ten of this act, as amended, shall cease to be of force and effect on and after July [16] 23, [2011] 2013, on which date the provisions of the public authorities law amended by such sections shall be as they were in force and effect immediately prior to this act taking effect. S 5. Section 2407 of the public authorities law, as amended by chapter 218 of the laws of 2010, is amended to read as follows: S 2407. Bond limits. (1) Except for notes issued in nineteen hundred seventy and nineteen hundred seventy-one, the agency shall not issue bonds and notes, the interest on which is not included in the gross income of the holders of the bonds and notes under the United States Internal Revenue Code of 1986, as amended, or any subsequent correspond- ing internal revenue law of the United States, in an aggregate principal amount exceeding [nine] TEN billion two hundred twenty million dollars, excluding from such limitation (a) an amount equal to any original issue discount from the principal amount of any bonds or notes issued, (b) bonds and notes issued to refund outstanding bonds and notes, and (c) bonds and notes not described in paragraph (b) of this subdivision issued to refund outstanding bonds and notes in accordance with the provisions of the Internal Revenue Code of 1986 or the Tax Reform Act of 1986, as amended, where such bonds or notes are not included in the statewide volume cap on private purpose bonds under section 146 of such
code provided, however, that upon any refunding pursuant to this para- graph or paragraph (b) of this subdivision, such exclusion shall apply only to the extent that the amount of the refunding bonds or notes does not exceed (i) the outstanding amount of the refunded bonds or notes, plus (ii) to the extent permitted by applicable federal tax law, costs of issuance of the refunding bonds or notes to be financed from the proceeds of the refunding bonds or notes. No such bond or note shall be issued by the agency on or after July [sixteenth] TWENTY-THIRD, two thousand [eleven] THIRTEEN, excluding bonds and notes issued to refund outstanding bonds and notes. No more than five hundred million dollars of proceeds of bonds or notes issued by the agency pursuant to this subdivision shall be used for mortgage purposes by blending with proceeds of bonds issued pursuant to subdivision two of this section. (2) In connection with the issuance of bonds for the purpose of furthering programs described in this title, the agency is authorized to covenant and consent that the interest on any of its bonds, notes or other obligations shall be includable, under the United States Internal Revenue Code of 1986, as amended or any subsequent corresponding inter- nal revenue law of the United States, in the gross income of the holders of the bonds to the same extent and in the same manner that the interest on bills, bonds, notes or other obligations of the United States is includable in the gross income of the holders thereof under said Inter- nal Revenue Code or any such subsequent law. Pursuant to this subdivi- sion, the agency shall not issue bonds, notes or other obligations in an aggregate principal amount exceeding eight hundred million dollars, excluding from such limitation bonds, notes or other obligations issued to refund outstanding bonds, notes or other obligations. No such bond, note or other obligation shall be issued by the agency on or after July [sixteenth] TWENTY-THIRD, two thousand [eleven] THIRTEEN, excluding bonds, notes or other obligations issued to refund outstanding bonds, notes or other obligations and no mortgages shall be purchased with the proceeds of such bonds, notes or other obligations after such date. The board of directors of the agency shall establish program guidelines for purposes of bonds, notes or other obligations issued pursuant to this subdivision. The board of directors shall establish from time to time maximum income limits of persons eligible to receive mortgages financed by bonds, notes or other obligations issued pursuant to this subdivi- sion, which income limits with respect to one-third of the total princi- pal amount of mortgages authorized to be so financed shall not exceed one hundred twenty-five percent of the latest maximum income limits permitted under the Internal Revenue Code of 1986, as amended, for mort- gagors financed by mortgage revenue bonds, with respect to one-third of such principal amount authorized to be so financed, shall not exceed one hundred thirty-five percent of such income limits, and with respect to one-third of such principal amount authorized to be so financed, shall not exceed one hundred fifty percent of such limits. (3) The fixing of the statutory maximums in this section shall not be construed as constituting a contract between the agency and the holders of its bonds or notes that additional bonds and notes may not be issued subsequently by the agency in the event that such statutory maximums shall subsequently be increased by law. S 6. Section 19 of chapter 555 of the laws of 1989 amending the public authorities law and other laws relating to establishing a New York state infrastructure trust fund, as amended by chapter 192 of the laws of 2009, is amended to read as follows:
S 19. This act shall take effect immediately and shall be deemed to have been in full force and effect on and after June 15, 1989 provided that the amendments to law effected by sections six and nine through seventeen of this act, as amended, shall cease to be of force and effect on and after July [16], 23 [2011] 2013, on which date the provisions of the public authorities law amended by such sections shall be as they were in force and effect immediately prior to this act taking effect, and provided however that the amendments to law effected by sections six and nine through seventeen of this act, as amended, shall continue to apply to all commitments issued or policies or development corporation credit support in force on or before July [16] 23, [2011] 2013, and provided further that the amendments to section 2429-b of the public authorities law made by section 13 of chapter 3 of the laws of 2004 which amended this section shall not cease to be of force and effect prior to the time that full payment of all development corporation cred- it support obligations has been made or provided for. S 7. Section 2 of chapter 172 of the laws of 2002 amending the public authorities law relating to the powers of the state of New York mortgage agency, as amended by chapter 162 of the laws of 2010, is amended to read as follows: S 2. This act shall take effect immediately and shall remain in full force and effect until July 23, [2012] 2013, whereupon such date the provisions of this act shall expire and be deemed repealed. S 8. This act shall take effect immediately.

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