Key Facts
- Massachusetts Housing Finance Agency (MassHousing) is a quasi-public agency charged with financing affordable housing in Massachusetts
- Mintz has served as bond counsel on MassHousing’s multifamily rental housing development programs since 1996, helping the agency issue more than $1.3 billion in bonds over the last 15 years
- In July 2024, Mintz closed a revolving note purchase agreement for MassHousing that allows the agency to borrow up to $100 million in private activity bonds, providing funds to be lent to developers creating low-income housing in the Bay State
- This transaction creates the means for MassHousing to maximize lending for affordable, multifamily housing
The Situation
Seeking to address the state’s shortage of affordable housing, our long-term client, MassHousing, sought Mintz’s legal services to maximize the state’s access to tax-exempt financing to support the construction and renovation of affordable, multifamily housing. Tax-exempt private activity bonds are a valuable tool for increasing the availability of lower-cost rental housing, unlocking access to Low Income Housing Tax Credits. However, federal limits on the amount of private activity bonds each state can issue (the so-called “volume cap”) restrict this tool’s impact. Congress authorized the “recycling” of the tax-exempt multifamily housing bond volume cap, allowing states to use the proceeds from the repayments of bonds to finance more housing construction.
The Approach
Mintz attorneys developed the legal framework under which MassHousing can maximize the use of private activity bonds funding multifamily, affordable housing through the creation of a new finance facility. Work towards this transaction began in April 2024 and included several phases:
- Drafting a new resolution and other supporting documentation, allowing MassHousing to issue the housing bond anticipation notes.
- Negotiating and working with counsel to the bank on the terms of the revolving note purchase agreement.
- Close communication with MassHousing, its financial advisor, the bank and the bank’s counsel to negotiate the structuring and accurately capture the mechanics of the facility.
The Outcome
In July 2024, we closed a revolving note purchase agreement for MassHousing’s Housing Bond Anticipation Notes, Issue Three, which established a recycling multifamily volume cap. The finance facility allows MassHousing to borrow an aggregate principal amount of up to $100 million in private activity bonds. Tax-exempt private activity bond funds will be lent to developers creating housing for low-income Bay State residents. As developers repay their loans to MassHousing, the proceeds can be relent to other developers for additional housing projects, avoiding the need for additional volume caps.
