California State Treasurer Fiona Ma accepted the “Deal of the Year” award this week from the Bond Buyer newspaper, the independent publication that serves the nation’s municipal bond industry. The Deal of the Year recognizes innovation in municipal finance and represents the full diversity of the communities and public purposes that are served by the municipal finance market in the U.S.
The award was given to the inaugural $500 million offering of bonds for California’s “No Place Like Home (NPLH)” Program, which was sold by the State Treasurer’s Office in November 2019. The NPLH bond was unique because it was designated as a “social bond,” funding projects that produce positive social outcomes. The NPLH Program is the first large municipal bond program created to invest in homeless housing infrastructure and secured directly by taxes on high-income residents.
The $2 billion NPLH Program was established by the California Legislature in 2016.
“As the author of the ‘No Place Like Home’ initiative, we are delivering critical funds to build housing for tens of thousands of unhoused Californians and the way this bond sale was designed maximizes value for our taxpayers and homeless neighbors. I congratulate the collective Team on receiving this recognition,” said Senate President Pro Tempore Emeritus and Los Angeles City Councilmember Kevin de León.
The Program leverages a 1 percent statewide tax on taxable personal income over $1 million that was approved by California voters in 2004 to fund mental health services, and redirects a portion of those tax revenues to support bonds issued to fund permanent supportive housing for persons who are experiencing homelessness, chronic homelessness or are at risk of chronic homelessness and who are in need of mental health services.
The Program is administered by the California Department of Housing and Community Development (HCD), which awards grants under the program to local agencies based on, among other things, project readiness and the availability and magnitude of additional funding they have secured for their proposed permanent supportive housing projects.
The California Health Facilities Financing Authority, chaired by Treasurer Ma, was the issuer of the bonds, which was structured as a conduit issue on behalf of HCD. A conduit issuer sells the securities on behalf of another agency to raise funds for a program with a public purpose to be administered by the other agency, in this case, HCD.
To date, HCD has awarded $1.1 billion to local agencies in California under the Program, with Los Angeles County being the largest receipt of awards. HCD estimates that 4,500 NPLH housing units will be produced through these awards.
This year’s ten finalists for the award included debt issued by a major hub airport, a restructuring of another state’s tobacco settlement issue, a creative application of refinancing by a state power agency in the Northeast, and an undertaking by a city to catalyze the rehabilitation of its aging infrastructure. In receiving this recognition, the NPLH offering stands out in the nation’s $4.0 trillion municipal bond market, which typically sees 12,000 to 15,000 new issues each year.
“The success of this financing is the culmination of cooperation among numerous state departments, including the Department of Finance, the Housing and Community Development Department, the State Controller’s Office, the Attorney General’s Office, and the California Health Facilities Financing Authority that I chair,” said Treasurer Ma.
“People served by the No Place Like Home Program are amongst the most marginalized and left behind. This program is essential to solving our homelessness crisis and ensuring people are able to secure their footing on the ladder of opportunity” said HCD Director, Gustavo Velasquez. “We are grateful to be administering this program and partnering with Treasurer Fiona Ma in this effort.”
Treasurer Ma also offered praise for the staff of the Public Finance Division of the State Treasurer’s Office and of the California Health Facilities Financing Authority, which is part of the State Treasurer’s Office, for “turning a legislative concept into a reality which required the keen insights of a creative and collaborative financing team to make it functional.”
This article was released by the Office of the California State Treasurer.