CHICAGO -- Gov. George Voinovich of Ohio signed a bill last week that expands the ability of state and local governments to issue tax-exempt bonds for housing purposes.
The legislation, which went into effect immediately after it was signed last Thursday, extends the use of general obligation, mortgage revenue, and industrial development bonds to Ohio cities and counties. It also expands the use of tax-exempt bonds on the part of the state.
But government and public finance officials in the state said they do not expect to see an immediate rush to the bond market by the governments.
Gordon Reis 3d, a partner at Seasongood & Mayer in Cincinnati, out that because Ohio is a conservative state, the state and local governments "will move forward conservatively in implementing" the new law.
John Mahoney, assistant to the director of the Ohio Municipal League, said -- given the fact cities are in the fourth quarter of their fiscal 1991 budgets 00 it may be several months before cities are ready to take advantage of their new bonding powers for housing.
"There will be quiet discussions at first, maybe at the initiative of developers and bankers rather than the city councils," he said.
Cleveland, which was a major proponent of the local issuance of mortgage revenue bonds, is in the process of evaluating its new powers, according to William Resseger, an executive assistant to the city's community development director.
He said while affordable housing was a "critical need" in the city, it would be a while before Cleveland determines the feasibility of using mortgage revenue bonds for private home repairs and lease-purchase programs -- the two areas allowed under the law.
For the state, the new law expands the use of IDBs beyond the former limitation of elderly rental housing to include any multifamily rental housing. The law also extends the maximum maturity of the Ohio Housing Finance Agency's issues to 45 years from 40 years in order to secure federal mortgage insurance on a housing project. While the agency would not be able to issue GO bonds for housing, it would continue to be able to issue single-family mortgage revenue bonds under the new law.
Officials from the Housing Finance Agency were not available to comment on the new law.
For the first time, counties will be able to issue bonds for public or private housing purposes, as long as the projects meet certain income restrictions, according to the County Commissioners Association of Ohio. Larry Long, the group's executive director, has said he did not expect many counties to issue GO bonds because they would be reluctant to put their full faith and credit on the line for housing projects.
The law requires local governments, which will also be able to tap into bonding for housing, to set up a local housing advisory board prior to the issuance of GO housing bonds.
Local and county housing-related mortgage revenue and IDB issues will also face the constraint of obtaining an allocation under Ohio's private-activity volume cap.
The legislation, passed by the General Assembly earlier this year, followed the adoption of a constitutional amendment by voters last November that made housing a public purpose in the state. The so-called Issue One amendment also allowed the state and local governments to work with private entities, such as developers and banks, on a variety of housing programs.