Program Will Create 46 New Affordable Rental Units From Formerly Stalled Private Site In Brooklyn Neighborhood of Prospect Lefferts Gardens
Full Pipeline of Projects To Utilize All $20 Million In HARP Funds – Developer Response Exceeds Funding And Waiting List Is Now Needed
New York, NY – City Council Speaker Christine C. Quinn, Comptroller John C. Liu, NYC Department of Housing Preservation and Development Commissioner Rafael E. Cestero, and Council Members today announced the first closing in the $20 million pilot program aimed at turning unsold condominiums, market-rate rental buildings and stalled construction sites into affordable housing opportunities for moderate and middle-income families. Originally proposed by Speaker Quinn in her 2009 State of the City address, the Housing Asset Renewal Program (HARP) is administered by HPD and focuses on two types of problematic developments: completed projects that are vacant and incomplete buildings that have stalled mid-construction. The formerly stalled site is located at 382 Lefferts Avenue in Brooklyn. While there is a minimum requirement that 50 percent of the units be made affordable under the program, all 46 units formerly planned as market-rate condominiums will now be rentals affordable to middle-income New York families.
“When the economic and housing crisis hit, the City was forced to look at new and innovative ways to solve age-old problems,” said Speaker Christine C. Quinn. “With the credit crunch leaving so many buildings empty and so many New Yorkers looking for an affordable place to live, it seemed natural to take those two problems and make them into a solution. That’s why I’m so thrilled to announce the closing of our first deal out of the Housing Asset Renewal Program. The fact that we not only have this agreement – which will provide 46 affordable housing units – but a full pipeline that is expected benefit from this program is a tremendous victory in providing affordable housing options to New Yorkers across the five boroughs.”
Of the $20 million allocated for HARP, $8 million consists of funding from the New York City Housing Trust Fund which is jointly managed by the Mayor and the New York City Comptroller.
“Most New Yorkers are forced to spend far too much of their budget on housing,” said Comptroller John C. Liu. “We live in the most expensive city in the U.S., and my office will continue to explore any means necessary to expand the stock of affordable housing.”
“When we first announced HARP it was a forward thinking program meant to deal with the effects of a national housing crisis that this city and others around the country had not seen in generations. Today we are not only celebrating our first HARP project and its 46 affordable units, we are looking at a robust pipeline with the potential to provide hundreds of new affordable homes to hardworking New Yorkers,” said HPD Commissioner Cestero. “Once again New York’s success can serve as an example to other cities on how to deal with their stalled sites and the challenges they are facing in today’s real estate market. Moving forward this is an opportunity to turn symbols of economic challenge into symbols of hope and resurgence; to make our neighborhoods stronger and more affordable. I thank Speaker Quinn for her leadership and support as we continue to move forward with what is a common agenda to see a housing stock that is as diverse and strong as the population it serves.”
The 46 affordable rental units at 382 Lefferts Avenue will be comprised of 5 studio units, 28 one-bedroom units, and 13 two-bedroom units. All of the units will have rents that will be affordable to households earning 100 percent of the Area Median Income (AMI), or what is equivalent to the annual household income of $55,500 for a single person or $79,200 for a family of four. The total HARP subsidy for this project is $2,965,300 which comes to $64,463 per unit. This is substantially less then the $75,000 per rental unit maximum under the program’s guidelines, and less than the typical cost for an affordable rental program which can be approximately $100,000-$125,000 per unit for low- to moderate-income rental buildings.
The developer is Tali Realty LLC and the architect is Amie Gross Architects. The Community Preservation Corporation (CPC) is the original and continuing lender on the project. 382 Lefferts Avenue initially was planned to be a 26-unit condominium building. Construction originally started in September 2007 and stalled by the fall of 2008, around the beginning of the downturn in the housing market and CPC was forced to commence foreclosure. Tali Realty sought alternative means of financing and was introduced to HPD and HARP through Amie Gross Architects. Tali applied for funding through HARP in 2010. After HPD approved this project for funding, CPC agreed to modify its loan to make the project work as an affordable rental. Through HARP, the City will provide a low-interest construction and permanent loan, making a rental project feasible with a CPC re-financed loan of $6.1 million. Taken together, the new CPC/HARP construction/permanent loan will be in the amount of $9,065,300. Construction is slated to resume within weeks now that financing has officially closed.
“One of the biggest concerns I hear from New Yorkers is that they can’t afford to live in this City,” said Housing Chair Erik Martin Dilan. “Under the leadership of Speaker Quinn, the City Council is constantly looking at ways to make what seems like an impossible feat, a feasible reality. HARP is a great example of that. We saw a hole in the housing market and made an opportunity to provide homes for New Yorkers. So now instead of seeing an unused building, or having another luxury condo building with few tenants, we have a community of affordable housing units.”
“I am delighted to know that 382 Lefferts Avenue, a stalled construction site affected by the downturn in the housing market, will now be developed as affordable housing through the HARP Program,” said Council Member Mathieu Eugene, whose district has the first closing. “When complete, the building will provide much-needed affordable housing to the community. I am proud to support the project and would like to thank Speaker Quinn and the Department of Housing Preservation and Development (HPD) for partnering on these efforts.”
“I applaud the City of New York and especially Council Speaker Chris Quinn and Housing Commissioner Rafael Cestero for this first-ever, history-making housing event,” said Michael Lappin, President and CEO of The Community Preservation Corporation. “We are proud to be part of the team of innovators who converted an unworkable 26-unit condominium project into an affordable, 46-unit affordable rental building.”
“I am pleased to be able to participate in HARP, and particularly proud to be the first participant in this important program that will increase the number of affordable housing units in New York City. Though the approval process is more complex than private financing, the staffs at HPD and CPC were very cooperative,” said Boaz Aviani, President of Tali Realty LLC.
Since HARP’s inception HPD has received dozens of applications from developers, and continued to hear from interested parties even after the application period closed in July 2010. There is presently a pipeline of projects that would utilize the full $20 million in funding available through HARP pending the successful closures of these deals. There are currently four projects totaling more than 200 units that are in negotiations, and HPD is reviewing applications for projects that have the potential to provide another 450 units. The subsidy requirements for these additional projects is more than the remaining funds, so a waitlist has been formed. The HARP subsidy on average ranges from $60,000 – $75,000 per unit, with all of the projects under consideration being affordable rentals. Projects are located in Brooklyn, Queens, and upper Manhattan.
“We’re very pleased that the City is taking innovative and comprehensive steps to create attainable affordable housing options for New Yorkers,” said Maxine Griffith, co-chair of the Affordable Housing Task Force that helped create HARP. “This program is tackling a complex, difficult problem in such a creative way. I applaud City Council Speaker Christine C. Quinn and HPD Commissioner Rafael Cestero for their work on turning buildings, which would otherwise be blights in the city, into a place New Yorkers can call home.”
In order to be eligible for funding consideration, a proposed project must be a completed or partially constructed, unoccupied, residential building in the City of New York where, due to market or construction conditions, the owner is unable to complete construction or to sell or rent a sufficient number of units to meet private lending requirements. The funding available through HARP is intended to convert market-rate units to affordable units and enable the owner to complete construction and/or rent or sell the units. Applicants must agree to restrict rents or sales prices for a minimum of 50 percent of the dwelling units in return for HARP subsidy and/or permanent financing.
Projects in neighborhoods that have been particularly hard hit by the downturn in the housing market may also qualify for subsidy from the federal Neighborhood Stabilization Program (NSP). Higher levels of subsidy may be made available for these projects. The project may be owned by the original owner of the project, a new owner or a lender foreclosing upon the project. New construction projects that have received prior government subsidies are not eligible.
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About The New York City Housing Preservation and Development (HPD)
HPD is the nation’s largest municipal housing preservation and development agency. Its mission is to promote quality housing and viable neighborhoods for New Yorkers through education, outreach, loan and development programs and enforcement of housing quality standards. It is responsible for implementing Mayor Bloomberg’s New Housing Marketplace Plan to finance the construction or preservation of 165,000 units of affordable housing by 2014. Since the plan’s inception, a total of more than 111,000 affordable homes have been created or preserved by HPD and the NYC Housing Development Corporation. For more information, visit www.nyc.gov/hpd