WASHINGTON -- The first three multifamily housing deals under the federal government's new risk-sharing pilot program are close to coming to market, and all three are expected to involve bond financing, state housing officials said yesterday.

A project in New York State will be financed with $4.15 million of taxable multifamily housing bonds, while Massachusetts officials expect to issue $2.74 million, also in taxables. In New Hampshire, officials have not made a final decision, but are likely to issue $12 million in tax-exempt bonds for their project.

The bonds will be used to finance loans insured by the Department of Housing and Urban Development's Federal Housing Administration and the state agencies. The Massachusetts and New York agencies decided not to issue tax-exempts because their projects also involve the low-income housing tax credit. Federal law limits use of the credit when it is mixed with tax-exempt bonds.

The total of 540 multifamily housing units created by the three projects are the first of about 11,000 that are expected to receive insurance under the new pilot program, which is testing the idea of allowing state and local housing agencies to share the risk of backing multifamily housing loans.

The program is designed to revive the FHA's moribund insurance program, and housing proponents have predicted that if risk sharing succeeds, the program could trigger a resurgence in the issuance of multifamily housing bonds.

In all three cases, the officials said the deals may not have gone forward or would at least have had enormous difficulty coming to market had the risksharing program not been available.

"We felt that going conventional FHA would make the project infeasible both from a financial standpoint because of delays, and also administratively," said Dean Christon, the deputy executive director of the New Hampshire Housing Finance Agency.

Christon said that, normally, "the process of getting FHA insurance is long and complicated and expensive." Under the risk-sharing program, however, things moved much more quickly and efficiently, Christon said.

"We found this process to be extraordinarily refreshing in terms of our dealings with HUD," Christon said. "They did what they said they would do when they said they would do it all the way along the line, and it moved very fast."

The New Hampshire project was the first to receive a formal approval letter from HUD, which permitted $13.8 million in mortgage insurance for the Mariner's Village Redevelopment Project in Portsmouth. The project involves 329 units of multifamily housing and $20 million in total financing.

Christon said that although the final decision has not been made, "the likelihood is that we will bond it." A statement by the New Hampshire agency said the project will probably also be financed with funds from the federal HOME and Community Development Block Grant programs.

The $2.74 million in taxable bonds to be issued by the Massachusetts Housing Finance Authority will finance a loan for the 73-unit South End Cooperative Housing project in Boston, said Robert Pyne, director of development for the authority.

The New York State Housing Finance Agency will issue $4.15 million for the 138-unit Hertel Park Senior Housing project in Buffalo, said Howard Marder, a spokesman for the agency.

The Massachusetts and New York agencies avoided tax-exempt bonds because a federal tax law restriction would make it financially infeasible to combine tax-exempts with the low-income credit.

Generally, the law allows developers a tax credit equal to 70% of the present value of the low-income portion of their multifamily housing projects. But the law penalizes developers that combine the credit with tax-exempt bonds, permitting them only a 30% credit in those cases. Because taxable bonds will be issued for the Massachusetts and New York projects, those developers will be eligible for the 70% credit.

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