The Bond Buyer
August 22, 2003, Friday

HEADLINE: New York City HDC Approves $200M of Liberty Bonds for Rockrose Project 

BYLINE: By Martin Z. Braun

BODY:
The New York City Housing Development Corp. yesterday approved a controversial $200 million Liberty bond issue to finance the construction of 650 luxury apartments in lower Manhattan and gave preliminary approval for another $175 million bond issue for the same developer.

The city agency approved the bonds for Rockrose Development Corp. -- which is building the 650-unit residential building at 2 Gold Street -- after the city's Department of Investigation concluded a probe into whether Rockrose got improper city subsidies on a separate luxury residential property at 45 Wall Street.

"There are no issues related to these claims," said HDC chairwoman Jerilyn Perine, speaking at the independent city agency's monthly board meeting.

Rockrose had applied for $215 million of the $800 million in tax-exempt bonds allocated to the HDC to foster the redevelopment of lower Manhattan after the Sept. 11, 2001, terrorist attacks.

HDC expects to sell the $200 million Sept. 10 in seven-day variable-rate obligations in two series -- up to $198 million in tax-exempt Series A bonds and between $2 million and $10 million in Series B bonds, which will not be exempt from federal income tax but will be exempt from state and local income taxes.

Bear, Stearns & Co. will serve as senior manager on the deal, and Hawkins, Delafield & Wood will serve as bond counsel. The bonds will be secured by a letter of credit issued by Fleet National Bank and are expected to be rated A-plus/A-1 by Standard & Poor's. Moody's Investors Service and Fitch Ratings will not rate the bonds.

HDC also passed a resolution giving preliminary approval for $175 million in Liberty bonds to finance a 583-unit luxury apartment building being built by Rockrose on Pearl Street. The 41-story building will include 459 one-bedroom apartments and 39,000 square feet of commercial and retail space.

The developments "will significantly add to the improvement of lower Manhattan, adding much-needed housing units to the market," said William Traylor, HDC's acting president.

But Bettina Damiani, a project coordinator with Good Jobs New York, said the tax-exempt bond issue would do nothing for the low and middle-income residents who most need affordable housing. The federal law creating Liberty Bonds did not mandate that developers use any of the money for affordable housing.

"Public officials will continue to use the excuse that the Liberty bond legislation doesn't mandate affordable housing requirements, but that's just unacceptable," Damiani said.