Pataki's Housing Man Didn't See Crunch Coming

The former president of the state Housing Finance Agency said that the high demand for tax-exempt bonds only surfaced at the end of December. As a result, he and his board OK’ed two projects proposed by Larry Silverstein and Jeffrey Levine that have since been frozen by the Spitzer administration.

“In the middle of December it looked like we were in OK shape, and then the world changed,” Stephen Hunt told The Real Estate. “The pipeline has surged to $4.5 billion to $5 billion. You’ve got a real strong rental market. You’ve got the 421-a changes, the zoning changes.”

During the final meeting of the Pataki-appointed HFA, on Dec. 12, the board approved $847 million in tax-exempt financing for two rental projects with 80 percent market-rate apartments and 20 percent low-income units. At the time, Mr. Hunt said that HFA had about $300 million in bond cap left for 2006, and was promised at least another $300 million for 2007. Given that bonding can be allocated over three years, and not all deals work out, he even thought that another four projects in the wings that were worth $1.6 billion might eventually get backing.

“I was careful not to over-commit the agency for the future, but at the same time, I felt there should be continuity in government,” Mr. Hunt said. “You really don’t want to bind future administrations, but you don’t want to hold the developers up who are moving forward on a project.”

And as it turned out, he didn’t issue the letters of commitment that Mr. Silverstein and Mr. Levine’s approved projects needed before their banks actually issued the tax-exempt bonds.

As for incoming HFA President Priscilla Almodovar’s decision to limit all bonding for 80-20 projects to increase the production of low-income apartments, Mr. Hunt said, “You are dealing with a bunch of professionals. I believe there will be a solution.”

– Matthew Schuerman

Pataki's Housing Man  Didn't See Crunch Coming