The D.C. Housing Finance Agency has successfully sold its first public bond issue, collecting $15.2 million from bonds that will be worth $57.4 million at maturity.
The money from the bond sale will be lent to developers who will build or renovate 257 apartments in five projects for families generally earning less than $20,000 a year.
In an offering completed last week, HFA sold three types of bonds including the new "zero-coupon" bonds which pay no interest. They are sold for a specified amount and return a specified larger sum at maturity. The zero-coupon bonds will mature in 2022. The HFA interest-bearing bonds sold for an average interest rate of 12.22 percent.
"We are very pleased that this is the beginning of the agency's participating in providing housing for low- and moderate-income families," said Carolyn Oakley, HFA executive director.
The agency, which functions much like a bank, was created formally in 1980 to sell tax-exempt bonds with low interest rates and then lend the money from the bond sales to developers.
Last June, the HFA announced that it would finance the renovation or new construction of 10 projects with 1,508 units but some of those projects were tenant-owned co-ops. Later the agency decided to only fund apartment projects for which federal subsidy funds were committed, and it is those projects that will be started with the proceeds of the bond sale.
Legislation giving the city authority to issue bonds was passed in 1981, but so far bonds issued by city agencies have been sold to financial institutions by mortgage bankers, not offered to the general public. Financial observers have said that a successful sale by HFA would help to improve prospects for any future public sale by the city.