March 15, 2010 / 11:00 PM / 9 years ago

NYC partners with Citi to modernize public housing

NEW YORK (Reuters) - New York City will renovate 21 public housing projects, home to thousands of people, through two deals that allow it to for the first time tap federal funds for them, the city and state said on Monday.

Many of the projects have become dilapidated because the New York City Housing Authority, which owns and oversees them, has been “hemorrhaging” about $1 billion over 10 years, city officials said.

Congress included a one-time provision in the federal stimulus plan that requires the city to sell the projects to qualify for its help. The city authority will keep ownership of the land to ensure the apartments do not fall into private hands.

To qualify for the federal funds, the New York City Housing Authority will sell the 21 projects in two separate deals expected to close shortly before a March 17 deadline.

Citigroup is partnering with an affiliate of the New York City Housing Authority for 13 of the projects, which have some of the most run-down apartments, according to Marc Jahr, the president of the New York City Housing Development.

The other eight projects will be overhauled by the New York City Housing Authority and a nonprofit called the New York City Housing Partnership, he told Reuters.

As much as $485 million of tax-exempt bonds over three years will be issued by the New York City Housing Development, which is serving as a conduit agency, according to Citi.

Citi will buy about $360 million of the debt and remarket the rest, according to Andrew Ditton, a Citi managing director. The bank also will invest $210 million of equity in the 13 projects and receive $255 million of tax credits that will offset its federal tax bills.

The 21 projects were built after World War Two with city and state funds.

Over the years, both New York City and the state stopped subsidizing the 21 projects, which meant the city housing authority had to pay partly for their upkeep, with federal dollars that were intended for its other 313 projects.

With the new deals, the 21 projects will get at least $65 million a year from the federal government, city officials said.

“Nothing is going to change except for the better,” Mayor Michael Bloomberg told a news conference. “No one will be displaced. The land these developments occupy will always be used only for public housing and nothing else.”

New York City’s unemployment rate tops 10 percent and city officials said hundreds of construction workers will be hired to upgrade the projects, fixing everything from faulty elevators to leaking roofs.

Reporting by Joan Gralla; Editing by Dan Grebler

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