S4032-2011 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

S4032-2011 Meetings

S4032-2011 Calendars

S4032-2011 Votes

S4032-2011 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.

S4032-2011 Text

 S T A T E   O F   N E W   Y O R K
 
 
                                         4032
 2011-2012 Regular Sessions
 I N  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
 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,
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD09662-02-1
 
       S. 4032                             2
 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
 
       S. 4032                             3
 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. 4032                             4
 

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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