An Iowa state authority sold $99.7 million in bonds to finance affordable housing development in the state.
The Iowa Finance Authority sold the bonds in two series. The tax-exempt 2023 Series E bonds, consisting of $75.2 million, mature between 2034 and 2053, paying interest at rates between 4.1% and 4.95%. The taxable 2023 Series F bonds, consisting of $24.5 million, mature between 2026 and 2048, paying interest at rates between 5.336% and 6.026%. The securities received a rating of Aaa from Moody’s Investors Service and AAA from S&P Global Ratings.
The bonds will finance mortgages for moderate- and low-income Iowans through two state programs and down payment assistance loans. “The authority’s mission is to enhance the quality of life for Iowans by making affordable housing possible for home and community,” according to the official statement accompanying the sale of the bonds.
The authority has financed more than 4,000 mortgages for first-time homebuyers over the past two years, according to the bond documents. Almost all of those mortgages went to Iowans who make the median income level or less. The average home purchase price was $144,467.
Still, Iowa is struggling with a shortage of affordable rental properties. The National Low Income Housing Coalition (NLIHC), a nonprofit which advocates for affordable housing, estimates that 26% of renter households in the state are extremely low-income, defined as making less than $26,500 for a four-person household. The state needs almost 60,000 more affordable and available rental homes, according to NLIHC.
The bonds are general obligations of the authority, backed by its full faith and credit and payable by pledged revenue.
RBC Capital Markets LLC, Morgan Stanley & Co LLC, BofA Securities Inc, and Piper Sandler & Co served as underwriters on the issuance, purchasing the bonds for close to par.