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MassDevelopment In The News
Massachusetts to Support Housing With Private-Activity Bonds
March 22, 2007: Bloomberg.com, by Michael McDonald
Massachusetts will support affordable housing projects with more than half of the $551 million in tax-exempt bonds that it can sell this year for private entities.
Governor Deval Patrick yesterday said he will divide the bonding authority between three groups: the Massachusetts Development Finance Agency, the Massachusetts Housing Finance Agency and the Massachusetts Educational Financing Authority. Of the $551 million, it will require that $297 million be sold to preserve or create affordable housing.
The Internal Revenue Service sets limits each year on how much in tax-exempt bonds states and local governments can use to fund mortgages, student loans, and small-scale industrial projects and redevelopment by private companies. The IRS has imposed the state-by-state limits on the so-called private-activity bonds since 1986 and adjusts the total amount each year based on population changes and other factors.
"Housing is the big winner here, as it has been in past years," said Jay Gonzalez, Patrick's assistant secretary for capital finance.
The state allocated $652 million between the three agencies last year, which included $511 million in new authorization and $142 million that was left unused from year's past and carried forward. This year's $551 million includes $4 million left from last year, Gonzalez said.
Multi-Family Housing
The Patrick administration is requiring that $225 million of the bonds be sold for multi-family housing in order to leverage federal tax credits, Gonzalez said. Last year there were no requirements, and more of the bonds were sold for single-family housing.
The Massachusetts Development Finance Agency gets $200 million of private-activity bonds this year, half for economic development and the other half for multi-family affordable housing projects, the administration said. The agency said it sold $1.3 billion in bonds last year, including $211 million under the private-activity cap.
Patrick set aside $175 million for the Massachusetts Housing Finance Agency, with $50 million reserved for below market rate mortgages to eligible homebuyers and $125 million for multi-family affordable housing projects.
The Massachusetts Educational Financing Authority got $154 million of the bonding authority. All three authorities testified at a public hearing last month on the bond program, and each asked for more than they got today.
"We are extremely pleased by the administration's demonstration of support for both our housing and business bond financing programs," said Robert L. Culver, president of the Massachusetts Development Finance Agency, in a statement.
The Patrick administration said it is lifting a restriction imposed by former Governor Mitt Romney that prevented the bonds being used to preserve, rather than create, affordable housing. The administration will also keep $22.1 million of the bonding authority for capital improvements to public housing, it said.
© Copyright 2007 Bloomberg.
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