WASHINGTON -- The new Republican majority in Congress may try to make deep cuts in a key housing subsidy program that provides the revenue stream for many bond financed multifamily housing projects, industry officials and lobbyists said this week.

Those housing proponents said they are concerned about the future of the so-called Section 8 program, which subsidizes low-income apartment buildings directly through "projectbased" assistance and indirectly through rent vouchers given to tenants.

"lt's early to tell, but we're sufficiently worried" said Denise Muha, the executive director of the National Leased Housing Association, which represents multifamily project owners.

Section 8 is "a program that may be on the cutting block," said Robin Salomon, a principal with DFC Group, a real estate consulting firm.

Section 8 is an umbrella term used to describe a number of rental assistance programs that were created by Congress in 1974. Under the rental certificate program, a tenant pays only a small portion of the rent charged by the apartment owner. The Department of Housing and Urban Development requires the participating owner to charge a so-called fair market rent, which is determined by a formula set up in the law. HUD then agrees to pay the difference between the total rent charged and the amount paid by the tenant.

The certificates come in two forms, both of which are disbursed and regulated by local public housing authoriremained near day's end.

Serial bonds were reoffered to investors at yields ranging from 4.60% in 1995 to 7% in 2014. The deal also contained three term bonds.

A 2017 term, containing $27 million, was reoffered at 7.05%; a 2020 term, containing $27 million, was reoffered at 7.10%; and a 2024 term, containing $32.5 million, was reoffered at 7.15%.

Financial Guaranty Insurance Co. insured the term bonds as well as serials in 2003 and 2004 and from 2009 to 20!4. Moody's Investors Service assigned an underlying rating of A1, while Standard & Poor's Corp. and Fitch Investors Service assigned underlying ratings of A.

Gorzeman said the 7% "handle" on each of the term bonds made them "very attractive" to both institutional and retail investors. Institutions participating in the offering were mainly insurance companies, he said.

"The bond funds did sit on the sidelines for this," he said.

California assistant state treasurer Hal Geiogue said the state was "extremely" pleased with the sale, adding that the BA Securities bid was "better than we expected."

Goldman had the cover bid with a 6.80% TIC, while Prudential placed third with a 6.81% TIC, he said.

Smith, who manages Vanguard's $900 million California Insured LongTerm Fund, said pricing, not dissatisfaction with the credit, kept him from participating in the offering.

"We're very positive on the credit," Smith said. "We think the state of California has reached a bottom."

The portfolio manager noted that the state was able to get by a Nov. 15 target date in healthy enough financial shape to avoid triggering a mechanism that could have forced automatic spending cuts in the general fund.

Vanguard had stayed away from California paper "for a number of years" before participating in the state's last GO sale in August. Smith said, however, that while the California economy appears to be improving, "it's going to be a long and slow process."

The portfolio manager also noted that the spread between insured and uninsured paper appeared to be widening since the last time California GOs came to market. While in California's last GO deal, the spread between insured and uninsured bonds was seven basis points, yesterday's deal had a 10basis-point spread, he said.

The spread widening could be an indication that bond insurers' exposure to California is getting pretty full, he added.

Benham's Silva said he passed on the deal mainly because of the way it was structured. Silva was looking for premium bonds in the shorter maturities and discounts in the long end.

"There was nothing that was really attractive to me in the ranges that I was looking for, so I let it go," he said.

While yesterday's deal had some slight discounts in the long end, they were "closer to par than anything else," Silva said, adding, "most of the serials were discounts with a couple of premiums in the short end."

In the negotiated market, a Goldman, Sachs & Co. group priced and repriced $108.6 million of ChicagoO'Hare International Airport special facility revenue refunding bonds, Series 1994, for American Airlines Inc. Tentative pricing had shown a yield of 8.25% in 2024, but was later lowered to 8.20%.

In light secondary activity yesterday, dollar bonds ended unchanged, after having been down 1/8 point earlier. Yields on high-grade issues ended mostly unchanged, though yields rose by three basis points in the intermediate range.

In the government market, the 30year bond closed up 3/4 point to yield 8.04%. In debt futures, the December municipal contract closed up more than 1/2 point to 81 27/32. Yesterday's December MOB spread was negative 490, compared with negative 496 on Monday.

The 30-day visible supply of municipal bonds yesterday totaled $3.29 billion, up $424.5 million from Monday. That comprised $1.875 billion of competitive bonds, up $208.9 million from Monday, and $1.419 billion of negotiated bonds, up $215.6 million from Monday.

Standard & Poor's Corp.'s Blue List of municipal bonds was down $15.8 million yesterday, to $1.902 billion.

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