WPCNR MR. & MRS. & MS. WHITE PLAINS VOICE. August 18, 2006: A reader parries with former Mayor of White Plains, Alfred Del Vecchio on the Urban Renewal Agency venture into issuing bonds to support the Ginsburg Pinnacle affordable housing project:
Low income housing is difficult to build in the Northeast due to the high cost of the underlying land. Developers often go to the local governments for help to allow the project to get off the ground, whether it is through a PILOT, below market rate low interest mortgage loans, or in this case a bond issue through the city. Most affordable housing gets local incentives, the below market rates that they must charge on the housing units limit the cash flow generated from the project, which is why they must seek low interest financing. These transactions are heavily scrutinized through due diligence.
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When Mr DelVecchio states “If someone will loan me one million dollars, I will be very happy to pay them back the original amount in 15 years”, is he implying that Ginsburg will not be paying the bond interest to the investors in his debt service payments, along with the $1,000,000 in fees? I’m not positive how Ginsburg will handle the bond fees, perhaps expensing them over the 15 year bond term. While the interest rate on these bonds might be less than other securities, their tax-exempt status is attractive to investors. They are most certainly getting a rate of return on them, and Ginsburg will be making those interest payments on the $11 million, regardless of what Mr. DelVecchio would like you to believe.
WPCitizen
