Over 49,000 units of affordable housing have been created in New York City using tax-exempt private activity bonds (PABs) in the past nine years, and this resource will continue to be an important component for Mayor De Blasio’s Housing Plan to be a success. However, while information on other City, State and Federal housing resources is readily available, there has been limited publicly available information on the allocation, demand and use of PABs in New York State.

The total PAB volume cap in the State between 2005 and 2013 was $15.4bn. This study reveals that during this period the City and State issued a total of $13.4bn in PABs for housing. Industrial Development Agencies, in contrast, issued $1.6bn over the same nine years.

In light of this disparity, why does State legislation prioritize economic development over housing in determining which agencies will receive bond allocations? Why is there no public reporting on the PAB allocations made to each agency and the bonds actually issued? How does this impact the ability of housing agencies to plan their project pipelines and how do they make the decision to select the projects which will receive financing?

Our research study shows that multifamily housing makes for the best use of PABs, in part because it leverages Low-Income Housing Tax Credits and in part because housing is often the only feasible use of PABs due to onerous requirements that limit their usefulness for economic development. But, despite the reality that little non-housing activity is generated through the use of PABs, State legislation prioritizes allocating bond volume to economic development agencies rather than to housing agencies, whose annual allocations are not fully decided until late in the year.

As a result, New York Citys Housing Development Corporation (HDC) and the New York State Housing Finance Agency (HFA) are restricted in their ability to plan their pipelines fully and to more accurately manage the demand for PABs. The current allocation process also potentially creates an illusion of scarcity within the development community, when in fact in any given year there may be more bond allocation available for housing than is assumed because other agencies fail to use their allocations in full.

The lack of certainty over the bond allocations available to HDC and HFA can translate into uncertainty discerning how the two agencies make their funding decisions. HDC and HFA have an informal agreement to determine the types of housing projects that each agency will finance in New York City, but these guidelines were created for administrative ease rather than to address housing policy priorities.

Improving policy coordination for HDC and HFAs uses of PABs and making available information about each agencys priorities and pipeline would better ensure that the right mix of affordable and market-rate projects are developed to meet the Citys housing goals.

This research study,Pump Up The Volume, has led us to the following recommendations to improve the PAB allocation process, make it more transparent and advance New York City’s housing needs:


  • Reform the bond allocation process, either through administrative action or legislative change, to prioritize housing over economic development in order to ensure that housing agencies have sufficient upfront allocations to manage their project pipelines.
  • Change the recapture date to July in order to enable the State Division of the Budget to reallocate unissued state bond volume to housing agencies earlier in the year.
  • The State Division of the Budget should publicly report annually which agencies have received bond allocations, how they have been used and whether any volume cap has been carried forward or expired.
  • HDC and HFA should develop a coordinated strategy for using PABs to target identified priority housing needs.
  • This strategy should prioritize affordable housing developments where tax credits represent the greatest share of total development costs, while continuing to fund 80/20s and other projects to ensure that no bond volume is left to expire.
  • These priorities should be clearly publicized, along with the pipeline of development projects, in order to increase developers understanding of the process and to manage expectations that they will receive PAB financing

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By Daniel L. Parcerisas and Ilene Popkin

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