Ballard Spahr housing attorneys represented the New York City Housing Authority (NYCHA) in closing one of the largest public housing low-income housing tax credit bond deals—and the largest public-private partnership of its kind—in U.S. history.

The unprecedented transaction, which closed this week, provides approximately $400 million in initial public and private funding for the modernization of more than 20,000 public housing units and an additional $65 million to $75 million each year for ongoing operations. Before the deal closed, NYCHA was operating these units without any dedicated federal, state, or city funding.

"This deal is evidence of how well the public and private sectors can work together to make a substantive difference in people's daily lives," said Paul K. Casey, who has represented NYCHA since 2004 and is co-partner in charge of Ballard Spahr's housing practice. "The commitment of NYCHA to its residents is truly incredible. It is a privilege to represent them."

Under the terms of the arrangement, 21 public housing developments will be sold to two limited liability companies created and managed by NYCHA, making them eligible for federal assistance. The sale allows NYCHA to take advantage of a one-time opportunity under the American Recovery and Reinvestment Act of 2009 (ARRA). This large and complex deal—a unique collaboration among federal, state, and local government agencies and a major financial institution, Citibank—was completed in about six months.

"I don't think there will be another deal like this again," said NYCHA General Counsel Sonya M. Kaloyanides. "It was a cooperative effort, all levels of government working together with private industry to produce transformative results."

Ballard Spahr attorneys worked alongside NYCHA lawyers and business people as one cohesive team to orchestrate the deal, preparing and reviewing complex real estate, debt, bond, and equity documents; obtaining approvals and necessary waivers from the U.S. Department of Housing and Urban Development (HUD); addressing many legal and financing issues; and structuring the use of the ARRA funds. NYCHA and Ballard Spahr lawyers also dealt with issues of not-for-profit status, real property taxes, insurance, and rights of NYCHA in the future with respect to the projects.

The deal also required fast and effective work by New York state lawmakers, who passed legislation allowing the sale, and efforts by NY Congresswoman Nydia M. Velazquez and Senator Charles E. Schumer, who said the plan "pulled these abandoned NYCHA complexes back from the brink."

HUD approved the city's application to qualify for federal subsidies on Monday, March 12, with a special event at Rutgers Houses, one of the sites benefitting from the transaction, at which HUD Secretary Shaun Donovan and NYCHA Chairman John B. Rhea executed the federal public housing assistance contract between HUD and NYCHA for these developments. Secretary Donovan proclaimed it "a great day for the future of New York City’s public housing."

NYCHA will continue to manage the housing developments and own the land beneath them, but the units will be owned by two limited liability companies that comprise affiliates of NYCHA as the respective managing members. The residents' status will not change, and the community development arm of Citibank will receive the benefit of Low Income Housing Tax Credits and satisfy certain obligations under the Community Reinvestment Act, a federal incentive program to encourage lenders to support low-income neighborhoods.

"Through this transaction, we’re enabling New York City to qualify for a substantial, permanent increase in federal funding for public housing," Chairman Rhea said.

Ballard Spahr's nationally recognized housing practice represents more than 60 housing authorities across the nation. Its attorneys have closed hundreds of bond transactions as bond and underwriters' counsel and have been involved in thousands of tax-credit transactions. The firm's experience in public finance, banking, securities, zoning, litigation, and bankruptcy complements its housing practice.

The Ballard Spahr team consisted of Paul K. Casey, Teri M. Guarnaccia, Lila Shapiro-Cyr, Wayne H. Hykan, Douglas M. Fox, Christopher J. Fritz, Mark J. Maichel, Amy M. McClain, Amy Glassman, David M. Brenner, Era C. Calhoun, Cynthia A. Sivils, and Christine M. Patterson. Ballard Spahr represents housing and public finance clients nationwide.