Citibank (NYSE: C) will provide $576 million in loans and cash to help New York City create more than 20,000 affordable housing units for low-income families over the next four years, according to the company’s chief of community development banking.
Citi’s participation in the renovation program will allow NYC to restructure its housing authority, making it eligible for $66 million in federal stimulus funds and $55 million in new annual operating subsidies, said Andrew Ditton, Citibank’s managing director of community capital.
“We want to send a signal to the city where our headquarters is located that we are going to pay a much more active role in community development,” said Ditton, in an interview with Business Week. He continued, “This is a showcase for how we can use our financial resources and brain power to create a complex transaction for the public’s benefit.”
The community development initiative, which was announced during a news conference at a lower Manhattan housing project, was attended by NYC Mayor, Michael Bloomberg, Senator Chuck Schumer and HUD secretary, Shaun Donovan.
The plan is part of a larger goal in New York City to create 165,000 low and moderate income units by 2014.
The terms of the deal call for Citigroup to purchase $366 million in tax-exempt bonds issued by the City’s Housing Development Corp and to spend $210 million to purchase $230 million worth of tax credits held by a newly created corporation called the Low Income Housing Tax Credit LLC, which would own 14,465 of the units.
Citibank will own 99% of the newly created corporation as a limited partner, but the city’s housing authority would set policies for the company as a general partner.
