Mamdani’s surprise win puts spotlight on New York City bond plans
6 min read
Bloomberg News
Zohran Mamdani, the presumptive Democratic nominee in New York City’s mayoral election, ran on an “affordability” platform.
The 33-year-old state assemblymember topped the field in Tuesday’s primary on a platform proposing free buses, free childcare and city-run grocery stores. The self-described democratic socialist’s plans for housing and education would expand the city’s bonding habits.
Market participants say the platform — if Mamdani wins the general election in November and can navigate his proposals through state and city politics — would have ripple effects on the city’s finances, although there’s disagreement on what the effects would be.
The city uses ranked-choice voting, and has yet to release the final results of the primary. Mamdani won 44% of the first-choice vote, and the second-place finisher, former Gov. Andrew Cuomo, has conceded. In the general election, Mamdani will face current Mayor Eric Adams, who is running as an independent; Republican Curtis Sliwa; and possibly Cuomo again in a third-party bid.
Housing
Mamdani’s housing platform says he will triple the amount of affordable housing built with the city’s capital budget. The city’s capital plan currently includes $30 billion for affordable housing, and Mamdani wants to raise it to $100 billion.
“Zohran will allocate $70 billion new capital dollars in the city’s ten-year capital plan to create new affordable housing, raised on the municipal bond market,” his
New York issues its affordable housing bonds as taxable general obligation bonds.
Adding $70 billion of debt over ten years could have consequences, according to John Hallacy, president of John Hallacy Consulting.
“I was hoping that maybe there would be a new name and a new program of some kind, and perhaps a new revenue stream,” Hallacy said. “But if you put it all on the GO, that potentially could weigh pretty heavily.”
There are also structural barriers to that level of GO debt, according to Ana Champeny, vice president for research at the Citizens’ Budget Commission. New York City has a debt cap for its GO bonds, based on a five-year rolling average of the value of the city’s real estate. The city is already straining against that cap, Champeny said — it’s set to have $25 billion left at the end of fiscal year 2026.
Mamdani’s policy brief said he’ll “advocate in Albany to increase the city’s public debt ceiling and in Washington to remove the city’s volume cap for affordable housing bond financing.”
Major changes to the federal cap on private activity bond volume would require reforms to pass Congress, a
The campaign brief also described the caps as “arbitrary” and “archaic.”
Education
Mamdani’s plan for education involves more school renovations, converting asphalt schoolyards into green spaces, and transitioning schools to renewable energy.
The “
Most schools in New York state issue bonds through the Dormitory Authority of the State of New York’s
“The NY Green Bank — an institution with a mission to finance the transition to clean energy and address the climate crisis — is especially qualified to build capacities for project development and can provide low-to no-cost loans for school districts,” the policy memo said. “Green banks often have larger capacities to borrow, as their portfolios are likely more creditworthy than any school district’s; lenders trust that a green bank can manage energy projects.”
Mamdani also proposed involving the New York City teachers’ pension fund in the transaction.
“The mayor and comptroller can work together to incentivize the Teachers’ Retirement System (one of the country’s largest pension systems) to invest in green school bonds for NYC,” the memo said, “drawing from state financing authorities like the NY Green Bank to de-risk this investment by backstopping potential losses, setting lower interest rates, and charging fewer fees by working with green non-profit legal and financial advisors.”
Mamdani’s platform includes other capital projects, such as city-run grocery stores and green infrastructure, that would likely involve bonds.
The buy side
Mamdani’s victory in the primary “came as a surprise,” Barclays analysts said in a newsletter on Friday. New York City’s spreads widened in the wake of the election, Barclays said, but only three to five basis points for both the GOs and the Transitional Finance Authority.
“We are not overly concerned about NYC spreads and fundamentals at this point, but investors should keep in mind that supply from this and related entities should remain heavy in 2H25,” Barclays wrote.
“Most of [Mamdani’s] initiatives would have to be approved by the state,” Barclays noted, “which might be challenging, as [Gov. Kathy] Hochul will be facing gubernatorial elections next year and the polling has her in a tight race with Republican representatives Elise Stefanik or Mike Lawler.”
But this attitude isn’t universal.
Michael Pietronico, CEO of Miller Tabak Asset Management, said in a
“NYC debt will widen,” Pietronico wrote. “You cannot promise “free stuff” and expect financial markets not to notice. NYC = wider.”
Hallacy said it’s too early to react to Mamdani’s policies, but the higher volume and debt burden, if enacted, will have an impact on the city’s spreads.
On the other hand, the tax increases Mamdani has proposed could increase in-state demand for the state’s tax-exempts.
Tax increases
“New York City taxes everyone at the same rate, regardless of whether you make $50,000 a year or $5 million,” Mamdani’s
He proposed a new city income tax bracket for millionaires with a 2% tax, which he projects would raise $4 billion per year.
Mamdani also proposed raising New York state’s corporate tax rate, which would yield an annual $5 billion, according to the brief.
The policy brief argues that New York State has a lower corporate tax than fifteen states, including all of its neighboring states. Mamdani proposes increasing the corporate tax rate to 11.5%, the same as New Jersey’s.
Champeny disagreed with Mamdani’s framing. Unlike most localities, New York City has its own corporate tax, she said. Corporations pay an additional tax for the Metropolitan Transportation Authority. Taken together, corporations in New York City pay a higher tax rate than in most states.
New York has more taxes per capita than nearly any state, Champeny said. It also spends more per capita than any state except Alaska.
The city has seen out-migration in the last five years. Mamdani argues this is due to the cost of living. When the CBC surveyed New Yorkers,
“High-income households pay a disproportionate amount of state and city taxes, so out-migration lowers revenues,” the
Fiscal policy
Mamdani said the city’s current budget was fiscally sound, but had poor transparency, in
He said he would support legislation requiring mandatory deposits to the city’s rainy day fund when the economy is growing and limiting withdrawals to times of recession or other short-term emergencies.
“The city should build reserves to help protect communities from federal threats and stabilize the budget without short-term gimmicks,” Mamdani wrote. “Rainy Day plans should also allow for more mayoral discretion.”
Mamdani said he would implement a savings plan upon assuming office, but said he doesn’t see a current need for a Program to Eliminate the Gap, a tactic in which the
Mamdani said many city departments could increase their efficiency, calling out the departments of Education and Homeless Services. In his housing plan, said that nearly half of the federal housing vouchers and 80% of city housing vouchers are going unused.
“We can use this existing subsidy more efficiently by pooling individual rental assistance and providing project-based operating assistance to buildings that can then reliably use these stable income streams while providing very low rent,” the housing memo said.
