C o m b i n e d F i n a n c i a l S t a t e m e n t s a n ...

1 C o m b i n e d F i n a n c i a l S t a t e m e n t s a n d O t h e r I n f o r m a t i o n N e w Y o r k C i t y H o u s i n g D e v e l o p m e n t C o r p o r a t i o n O c t o b e r 3 1 , 2 0 1 1 New York City Housing Development Corporation Combined Financial Statements and Additional Information Year Ended October 31, 2011 Table of Contents Independent Auditors Report ..1 Management s Discussion and Analysis ..3 Financial Statements ..10 Notes to the Financial Statements.

2 15 Required Supplementary Additional Information ..65 Report of Independent Auditors The Members of the New York City Housing Development Corporation We have audited the accompanying financial statements of the business-type activities and the aggregate discretely presented component units of the New York City Housing Development Corporation (the Corporation), a component unit of the City of New York, as of and for the year ended October 31, 2011, which collectively comprise the Corporation s basic financial statements, as listed in the table of contents.

3 These financial statements are the responsibility of the Corporation s management. Our responsibility is to express opinions on these financial statements based on our audit. The prior year summarized comparative information has been derived from the Corporation s 2010 financial statements and, in our report dated January 18, 2011 we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States.

4 Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Corporation s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation s internal control over financial reporting.

5 Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities and the aggregate discretely presented component units of the Corporation as of October 31, 2011, and the respective changes in financial position and where applicable, cash flows, thereof for the year then ended in conformity with generally accepted accounting principles.

6 Management s discussion and analysis and the schedule of funding progress on pages 3 to 9 and page 64, respectively, are not a required part of the basic financial statements but are supplementary information required by the Government Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding methods of measurement and presentation of this required supplementary information. However, we did not audit the information and express no opinion on it.

7 A member firm of Ernst & Young Global Limited Ernst & Young LLP 5 Times Square New York, NY 10036-6530 Tel: +1 212 773 3000 Fax: +1 212 773 6350 Our audit was conducted for the purposes of forming opinions on the financial statements that collectively comprise the Corporation s basic financial statements. The supplementary information included in Schedule 2 on pages 65 to 67 is presented for purposes of additional analysis and is not a required part of the basic financial statements.

8 Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. EY January 18, 2012 3 NEW YORK CITY HOUSING DEVELOPMENT CORPORATION Management s Discussion and Analysis Year Ended October 31, 2011 INTRODUCTION The New York City Housing Development Corporation ( HDC or the Corporation ) is a State public benefit corporation that finances affordable housing in New York City.

9 HDC issues tax-exempt and taxable debt and uses the proceeds along with other monies of the Corporation to make loans to finance new residential construction and the rehabilitation of existing multi-family housing. HDC, which is financially self-supporting, also lends its own internally-generated funds for these purposes. All of these activities are reported in the financial statements under the heading Housing Development Corporation. HDC currently has two active subsidiaries that are discretely presented as component units in the financial statements.

10 The Residential Mortgage Insurance Corporation ( REMIC ) insures residential mortgages in New York City. The Housing Assistance Corporation ( HAC ) made mortgage loans for affordable housing in the 1980s. Presently, it provides rental subsidy assistance to a small number of residential developments. The Corporation s annual financial report consists of three parts: management s discussion and analysis (this section), the basic financial statements, and required supplementary information which includes the schedule of funding progress and follows directly after the notes to the financial statements.