Last spring, Gov. Mario M. Cuomo unveiled a program under which foreign banks would invest $100 million to finance housing in New York City's poorer neighborhoods.

The program, called Global Reinvestment in Affordable Neighborhood Development, or GRAND, is expected to create 2,500 new housing units throughout the five boroughs of New York City. It is designed to assist families whose incomes fall within what the state defines as low to moderate income households, which range from $20,000 to $50,000.

As has become more and more common in the quest for ways to finance housing in the state, this program does not require large doses of state capital funds. Rather, it is an example of how the public and private sectors have joined together to find ways to deal with the state's chronic housing problems and fill the funding gap left by the retreat of the federal government.

Royce Mulholland, assistant secretary to the governor for housing affairs, said GRAND represents a housing strategy put in place almost 10 years ago by the state.

After the federal housing budget was severely cut in the early 1980s, Gov. Cuomo realized the state would have to begin to deal immediately with the its housing needs, Mr. Mulholland said. State officials began to eye alternative ways to finance and develop housing. One of the first projects to be developed was a $25 million program for housing assistance for the homeless through not-for-profit organizations, he noted, and the money was drawn from the state's general fund, not from bonds.

Foundation for Housing

That was the foundation," Mr. Mulholland said. Since then, the state, its various agencies, and numerous not-for-profit groups have joined together to develop and finance housing programs for the homeless, as well as low- and middle-income families, he said. Even Battery Park City's luxury housing program, which came to fruition under the Cuomo administration, has generated funds for low income housing programs in New York City.

The alliance between the state, not-for-profits, and corporations is a trend that will continue, said the state's housing czar, Angelo J. Aponte.

Mr. Aponte, appointed as the state's director of housing by Mr. Cuomo in July, said, "Our partnerships with these groups have not been exploited enough."

He said not-for-profit groups like the Community Preservation Corp., which works on projects in the mid-Hudson Valley area, and the New York City Housing Partnership, which works in the city, are representative of just some of the joint efforts with the state in recent years.

And for the future, Mr. Aponte said he working to make the relationships with these groups more cohesive. For example, he said he is working to organize the 17 state agencies charged with housing programs of one kind or another. He would like to create a board that would include officials from the state's housing finance agency, its mortgage agency, and other agencies. This would create "a one stop kind of shopping" for non-profit groups seeking funding for housing, he said.

Another project Mr. Aponte's staff is working on is the state's first comprehensive housing plan that will project what the state's housing needs will be over the next five years. The plan, called the Comprehensive Housing Assistance Affordability Strategy, is being developed as part of a new federal housing initiative.

Invest Where You Work

The projections -- due Oct. 31 -- will first be presented to Gov. Cuomo and the state Legislature before being forwarded to the federal government. The Legislature will then wrestle with its contents and how to deal with the state's pressing housing needs, Mr. Aponte said.

Returning to the GRAND program, the group of banks -- which include Barclay's Bank, Canadian Imperial Bank, Sumitomo Bank, and Banco Popular -- will get investment credits that will help them meet their federal and state Community Reinvestment Act obligations. The act requires the banks to invest in the neighborhoods they serve.

On the state's part, its Affordable Homeownership Development Corp. will offer grants to developers to lower the purchase price of the homes in the program. The State of New York Mortgage Agency is expected to guarantee the foreign banks 75% of their construction loans and offer potential homeowners mortgages at about 2% less than the market rate.

The total cost to the state is estimated at about $35 million, with about $25 million going into those grants. The developments will range in size from 20 to 250 housing units, most of them garden apartments, with prices ranging from $70,000 to $100,000.

The GRAND program is just one of many programs that include private sector participation. Domestic banks, for example, have committed about $100 million for housing projects to be developed by the not-for-profit New York City Housing Partnership.

Despite these alliances, the housing needs in the state, and especially New York City, remain staggering.

The problem with finding housing for the homesless, for example, remains one of the burning issues in New York City. A recent proposal by Mayor David N. Dinkins to build and place smaller shelters for the homeless in all five boroughs -- many in neighborhoods that have never seeen such housing -- sparked angry responses from residents and their representatives on the city council, who expressed concern about the siting of the shelters.

And the recession, which has eroded the city's tax base, has spoiled a number of housing programs that require bonding programs.

"The first thing that suffers is housing," Mr. Aponte said. Thirty-three states are home to 85% of this nation's population and each one of those states are suffering budget problems, he noted.

"The recession and the problems in the banking industry in general" have slowed or even stopped some of the New York City Housing Development Corp.'s bonding programs, said Martin Siroka, a vice president and general counsel to the housing development corporation. The corporation, which issues bonds for multi-family housing projects, has about $2 billion of outstanding revenue bonds and similar amount of outstanding mortgages.

Bond Programs Held Up

The soft real estate market in the city and the problems commercial banks are enduring has held up the corporation's bonding program for multi-family rentals housing because the corporation has been unable to get credit enhancements for their bonds, Mr. Siroka.

"We are unable to do them because of a lack of credit enhancement," Mr. Siroka said, noting that several projects with over 200 units each are waiting to be built. "The las deal we did was in February," he noted. And that was a refunding issue.

Other programs affected by the city's recession bitten economy include those that receive subsidies from the city, which has had to pare back its funding for certain housing grant programs, Mr. Siroka said.

Nevertheless, the corporation is still working on developing ways to continue to finance housing. For one, officials are looking to make the New York City Rehabilitation Mortgage Insurance Corp. a subsidiary of the development corporation, Mr. Siroka said. Officials would seek a credit rating so the corporation can provide credit enhancements, similar to what the state's mortgage agency does.

Also on the agenda are bonding programs for housing projects already on line. "We hope to do another Housing New York bond sale," Mr. Siroka said. The last such deal was a $200 million offering sold in 1987, he noted. These bonds are secured by excess revenues generated by commercial and residential rental and mortgage payments from occupants of Battery Park City.

Over the last four years, Mr. Siroka said, the corporation has used its own funds, generated from investments, to develop a service program that provides loans to not-for-profit corporations for housing programs.

Statewide, private and public sector efforts will probably increase, Mr. Mulholland said, adding "the role of the state is to be a stimulant in these localities."

Mr. Aponte said, "We have never taken the position of using housing as economic development."

That is now changing he said. Not only will the state look to assist individuals with housing, but also tie the housing programs into stimulating a locality's economy.

A $7 billion capital plan to rejuvenate New York City, for example, contains housing proposals that would use some state money but be primarily funded from private developers. And the projects are designed to not only provide residential housing, but also commercial space.

As a result of the state's track record with joint housing ventures with not-for-profits, it is well poised to take advantage of the new federal housing program, which allocates 15% of the money given to a state to projects handled by not-for-profit groups.

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