New York’s Green Bonds
By Darryl Hicks & Christian Robin
3 min read
$100 million in new funding
On November 29, 2016, Governor Andrew Cuomo announced that New York became the first state to secure international certification of nearly $100 million in “Green Bonds” to be used for the development of affordable housing that has a positive impact on the environment and climate. The housing bonds were certified by The Climate Bond Standards Board, on behalf of the Climate Bonds Initiative, an international not-for-profit organization that supports global projects that reduce the impact of climate change.
The bonds will be issued by New York State Homes and Community Renewal’s (HCR) and the proceeds will fund four developments that create more than 640 green, affordable and supportive apartments for Kings, Westchester, Monroe and Orange County residents.
“Green Bonds are an innovative tool to build cleaner, greener, affordable housing and place New York at the forefront of sustainable development,” Governor Cuomo said. “New York leads the nation in pioneering solutions to 21st century challenges. These Green Bonds will provide hundreds of new housing units to New Yorkers in need, while reducing carbon emissions, mitigating the impact of climate change and creating a more sustainable future for all New Yorkers.”
All four projects are new construction and the first issue will close on December 22 for a 266-unit project in Brooklyn, with remaining projects being funded in a second issue in early 2017. Arker Companies is developing the project, which has a companion building funded with 9 percent credits. Units will be set aside for incomes at 30 peercent, 40 percent, and 50 percent AMI, with the remainder of units at 60 percent AMI. Sixty-seven units will also be reserved for persons with intellectual and/or developmental disabilities.
Enterprise, which partnered with HCR on the green bond initiative, has developed criteria to certify “Green Communities,” including design, location/neighborhood, environmental and other site improvements, water conservation, energy efficiency, materials, healthy living, building operations and resident engagement.
James Rubin, Commissioner of New York State Homes and Community Renewal encouraged developers to work with HCR or Enterprise Community Partners if they wish to be made aware of future green bond offerings.
Commissioner Rubin told TCA he was optimistic that “there is a deep and expanding pool of investors who are interested in Green Bonds,” and he was “hopeful that other states will follow suit and adopt similar programs that expand access to affordable housing while simultaneously reducing the impact of climate change.”
“There’s interest from investors that we haven’t otherwise seen participating in our bond issue,” says Marian Zucker, HCR’s President of Finance and Development.
To be certified as being “Green,” a bond offering needs to meet rigorous criteria relating to reporting and transparency and the green characteristics of the underlying assets. Eligible projects funded with the bonds need to be clearly identified; internal processes and controls to ensure tracking of proceeds have to be set up; and reporting regarding assets involved is required. The bond needs to be verified by an independent external verifier approved by the Climate Bonds Initiative Board. Lastly, the issuer of a green bond has to commit to ongoing annual reporting of the assets funded with the green bond proceeds.
