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March 15, 2010; Businessweek | Not all that long ago in the recession, Citigroup was on the financial schneid, its shares selling close to penny stock, its leadership suffering the withering scrutiny of government officials and flummoxed shareholders. Clearly a massive infusion of TARP funds bailed out Citi’s leaky ship.
Now that it has rediscovered prosperity, Citi and its banking brethren have several options to consider for moving forward with its 2009-2010 prosperity. Bonuses? Higher dividends to investors? In this instance, we can cite one piece of good news from Citigroup, a commitment of $576 million in loans and guarantees to help the New York City Housing Authority (NYCHA) construct or rehabilitate 20,000 units of public housing.
Citi and NYCHA would create a new nonprofit corporation, the Low Income Housing Tax Credit LLC. Citi would invest $366 million in tax-exempt bonds, purchase $230 million in low income housing tax credits, and provide the new nonprofit with a $28.3 million letter of credit to serve as a guarantee for the work on 5,674 units.
According to Andrew Ditton, the managing director of Citi’s Community Capital division, this deal with the bank would make NYCHA eligible for $66 million in federal stimulus funds and $55 million in annual operating subsidies.
This appears, on face value, to be an extraordinarily creative move on the part of Citi, which we would ascribe in part to Ditton’s presence. Ditton was the longtime Chief Operating Officer of the Local Initiatives Support Corporation (and a colleague of this writer for several years), where he consistently devised ingenious ways of financing and boosting the performance of community development corporations.
As Citigroup is 27 percent owned by the U.S. government, meaning that we all own more than a quarter of this deal, we congratulate Citigroup for its creative use of public, private, and hybrid resources to help New York City progress toward a public goal of building or preserving 165,000 units of low- and moderate-income housing.—Rick Cohen
