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NEW YORK CITY-Fitch Ratings is upgrading its long-term rating on two series of New York State Housing Finance Agency bonds from A+ to AA+, based on a standby letter of credit from Bank of America. The higher rating, for HFA’s 2003 series L and M refunding service contract revenue bonds, is effective Jan. 14. Fitch is also assigning a short-term rating of F1+ based on the LOC.

According to a release, a total of $177.5 million of series L and M bonds are outstanding, including just under $63.8 million of sub-series M-1 and $25 million of sub-series M-2. Fitch says that in addition to the BofA LOC, other factors prompting its rating actions include conversion of the interest rate on the bonds from an auction-rate mode to a weekly rate mode and HFA’s reoffering of the bonds in a weekly rate mode.

The rating will expire upon Jan. 14, 2012, the stated expiration date of the LOC, unless the date is extended; any prior termination of the LOC; or defeasance of the bonds, whichever comes first. The LOC provides full coverage of principal plus an amount equal to 56 days’ interest at a maximum rate of 12%, based on a 365-day year and purchase price for tendered bonds, according to Fitch. The remarketing agent for the series L and sub-series M-1 bonds is Citigroup Global Markets, while Ramirez & Co. is the remarketing agent for the sub-series M-2 bonds.

Earlier this month, HFA issued an RFP to enable local governments, nonprofits and other providers to apply for $64.5 million in state and federal funds to buy, renovate and then resell or rent foreclosed and abandoned multifamily properties. The funds, provided under the federal Neighborhood Stabilization Program, are aimed at helping neighborhoods most affected by the foreclosure and subprime crisis.

According to a release from HFA, it’s expected that most of the NSP funds will be used to purchase and rehabilitate foreclosed and abandoned residential properties, as well as to redevelop vacant sites. Although a limited portion of the funds will be used for demolition and to create local land banks, these uses must be part of comprehensive plans for revitalization or redevelopment of the sites for affordable housing, according to HFA.

Under federal guidelines, priority will be given to areas with the greatest percentage of home foreclosures, areas with the highest percentage of homes financed with subprime mortgages, areas with the greatest amount of vacant homes and areas likely to face a significant increase in the rate of home foreclosures, the release states. HFA says proposals to purchase and renovate multifamily properties through this program must meet a number of criteria, including a strategy for neighborhood stabilization and demonstrated experience in supervising and administering block grant programs. Green building and energy efficiency measures are also on the agenda

New York City has been allocated up to $5.3 million through the NSP. Among counties in the New York City metro area, allocations are as follows: Nassau County has a cap of approximately $1.7 million; Suffolk County, $3.5 million, Westchester County, $4.6 million, Rockland Clounty, $1.3 million; Dutchess County, $2.1 million; and Orange County, $1.1 million. Upstate counties are in line for at least $250,000 each; in the case of Erie County, where Buffalo is located, the allocation is $3.8 million.

More than $54.5 million will come from federal funds authorized by the Housing and Economic Recovery Act of 2008, which Congress passed last July. Another $10 million in state funds will be made available by the New York State Affordable Housing Corporation, an HFA subsidiary. HFA is overseeing the distribution of NSP funds in New York State.

In the release, Priscilla Almodovar, president and CEO of HFA and AHC, says the program reinforces Gov. David Paterson’s goal of “utilizing our scarce resources as efficiently as possible during these difficult economic times.” Proposals must be submitted to HFA by Feb. 10, 2009.

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