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February 17, 2004
HUD offers documents concerning capital fund bond issues
More and more housing authorities are leveraging future capital funds by issuing bonds. HUD recently issued some guidance that HAs may use to facilitate such transactions. The Department has made available four documents designed to assist HAs that are considering participating in Tax Exempt Bond issues for capital improvements. The four documents may be downloaded by clicking on the following bullet list:
The basic program parameters consist of the following:
- PHAs must request approval from the Assistant Secretary for Public and Indian Housing.
- CF Pledges. Generally no more than 33% of the PHA's current annual CF grant.
- Term. Generally, no more that 20 years.
- PHA Plan. The use of the proceeds and the debt service payments must be included in both the 5 year and annual plans.
- Management Assessment. PHAs must have an independent management assessment to determine its ability to successfully complete the financing transaction and proposed work, based on its staff capability (including Executive Director, PHA Board, Modernization and Financial Managers) and past experience in program compliance issues.
- Fairness Opinion. An opinion from an independent financial advisor not involved in the transaction attesting to the reasonableness based on current market conditions of the term, conditions, costs and rates.
A request for approval should sent to:
Michael Liu
Assistant Secretary for Public and Indian Housing
451 7th Street, SW
Washington, DC 20410
Attn: William C. Thorson
Director, Office of Capital Improvements
Room 4146
The package should include:
- A transmittal letter from the PHA.
- Copies of the loan documents.
- Items 5 and 6 above.
- Debt Service Schedule
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