Rescued Stalled Site Will Provide 108 New Affordable Rental Units In Long Island City, Queens
New York, NY – City Council Speaker Christine C. Quinn and NYC Department of Housing Preservation and Development Commissioner Mathew M. Wambua announced the second closing in the Housing Asset Renewal Program (HARP), a $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, HARP is administered by HPD and focuses on two types of problematic developments: newly completed projects that are vacant and projects that have stalled mid-construction. The formerly stalled site, renamed Queensboro, is located at 23-10 41st Avenue in the Queens neighborhood of Long Island City. 108 of the 117 units formerly planned as market-rate condominiums will now be rentals affordable to middle-income New York families, greatly exceeding the program’s minimum requirement that 50 percent of units be made affordable.
“The Queensboro development is a perfect example of how our HARP program is really a win-win-win for New York City,” said Speaker Christine C. Quinn. “It’s a win for residents of Long Island City, who will no longer have to deal with the negative impact of a stalled construction site in their neighborhoods. It’s a win for middle class families who will be able to find affordable apartments in a great new building. And it’s a win for us in City government, giving us even more value for our housing dollars. I’m very grateful to Commissioner Wambua, my Council Colleagues, and everyone who continues to work on this great program.”
“I am delighted that we have been able to secure this site as permanently affordable housing. Long Island City is a burgeoning neighborhood that is evolving into an attractive destination,” said HPD Commissioner Mathew M. Wambua. “Given the pace of development we are seeing here in Long Island City, the need for affordable homes is growing. HPD’s efforts, along with those of Speaker Quinn and her colleagues on the Council, have pushed this site back into active development, creating jobs and eventually affordable housing that will keep this neighborhood growing while promoting continued economic diversity.”
Of the 109 subsidized rental units at Queensboro, 17 units will have rents affordable to households earning 100% of Area Median Income (AMI) or what is equal to a household income $79,200 for a family of four. Ninety-one units will have rents affordable to households earning 130% of AMI, or what is equal to a household income $102,960 for a family of four, and there will be one superintendent’s unit. The subsidized units will be comprised of 31 studio units, 42 one-bedroom units and 36 two-bedroom units. In addition, there will be eight market-rate condominium units. The property will also contain approximately 16,481 square feet of retail space and 30 parking spaces.
The total HARP subsidy for this project is $7.63 million which comes to $70,000 per unit; less then the $75,000 per rental unit maximum under the program’s guidelines, and substantially less than the typical subsidy for an affordable rental development which can be approximately $100,000-$125,000 per unit for newly constructed low- to moderate-income rental buildings.
“The affordable housing units created at Queensboro with HARP funding shows how successful this program can be and the impact that it can have on the City,” stated Council Member Erik Martin Dilan, the Chair of the Council’s Housing & Buildings Committee. “Instead of having an empty, stalled construction site that could have become an eyesore and taken many years to develop, these much needed units will become available to moderate and middle income families in 2013. I commend the Speaker and Commissioner Wambua for their diligence, hard work and creativity and look forward to the next HARP announcement,” added Council Member Dilan.
“I applaud this innovative effort by Speaker Quinn and the NYC Department of Housing Preservation and Development to create more middle-income housing options for growing city neighborhoods such as Long Island City. This initiative will help to reduce the number of costly stalled projects and offer yet another enticing reason for families to move to the thriving and vibrant LIC,” said Council Member Jimmy Van Bramer.
The new developer is Queensboro Development LLC and the architect is Karl Fischer. Bank of America Merrill Lynch is the lender on the project. The project originally got underway in early 2005 as a joint venture between the owners of two adjacent lots to create 117 market-rate condominium units. They secured institutional financing and entered into an agreement with the owner of a third lot to acquire that site. These developers spent a total of $9.7 million on the original condo project, including acquisition, demolition, excavation and pre-development costs. In August 2007, one of the original owners took full ownership of the site, and when the project stalled, sold it to Queensboro Development LLC in June 2009 for $6.4 million or what amounts to a 33% discount or $3.3 million loss. At that time the owner of the third lot had not yet been paid for his site. Queensboro Development LLC was able to renegotiate the purchase of the third lot for a discounted price.
Queensboro applied for HARP funding in early 2010. Through HARP, the City will provide a low-interest construction and permanent loan, making a rental project feasible with a Bank of America Merrill Lynch loan of $20.5 million. Taken together, the new HARP/Bank of America Merrill Lynch construction/permanent loan will be in the amount of $28.13 million. Direct developer equity will be $6.3 million. Construction has already commenced, and is expected to be complete by spring 2013.
“Queensboro Development is extremely proud to be reviving this stalled condominium project into a much needed affordable rental building for the middle income families of the Long Island City community. Residents will be able to enjoy the same high quality amenities and architectural features of the original market rate design,” said Hercules Hanjis, President of Queensboro Development LLC. “This project would not be possible without the vision of City Council Speaker Christine Quinn and the hard work of HPD and Bank of America. We would like to thank Speaker Quinn, Queens Borough President Helen Marshall, Council Member Jimmy Van Bramer, HPD Commissioner Mathew Wambua and HDC President Marc Jahr for their instrumental support.”
”Bank of America Merrill Lynch is proud to collaborate with the Department of Housing Preservation and Development and Queensboro Development LLC in this effort, which will provide much-needed affordable housing for moderate and middle-income families,” said Maurice Coleman, senior vice president in Community Development Banking at Bank of America Merrill Lynch. “This new Queensboro development is a perfect example of the type of project we are committed to as one of the nation’s top affordable housing lenders.”
The members of the Queensboro Development LLC have considerable experience in developing quality affordable housing in New York City, having worked as the developer or co-developer on several City-subsidized projects including the Cliffside, an 84-unit middle-income rental development in the Bronx; and Atlantic Terrace, an 80-unit mixed-income homeownership development in Brooklyn.
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. HPD is currently reviewing applications for projects that have the potential to provide another 214 units, and is currently accepting applications from parties interested in taking advantage of the HARP subsidy. According to program guidelines, HARP subsidy can range 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.
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 114,000 affordable homes have been created or preserved by HPD and the NYC Housing Development Corporation. For more information, visit www.nyc.gov/hpd