More Affordable Housing to Be Built on Public Land in NYC
In line with New York City Mayor Michael C. Bloomberg's stated goal of locating and using public land to increase the supply of affordable housing, a new housing project is scheduled for construction on Manhattan's Lower East Side.
The New York City Housing Authority (NYCHA) plans to expand an existing housing project called Fabria Houses, says Barry Jacobs of the legal publication Housing and Development Reporter. The site, which consists of three distressed buildings in which Section 8 recipients are currently residing, will be renovated, and two new buildings will be constructed on two lots adjacent to the existing site. The agreement provides that the city will convey the two lots to NYCHA, which, in turn, will lease the land to the new ownership entity for a 99-year term.
In return for the land and the right to build on it, the developer, Phipps Houses, paid $85,000 to NYCHA at the closing in December 2007, Jacobs says. Phipps Houses will also pay $100,000 annually to NYCHA for the next 10 years, he notes. After that, NYCHA will receive a percentage of the cash flow generated by all buildings at the site, he adds. The agreement also requires NYCHA to use this income to preserve and create affordable housing.
Details of the Deal
Phipps Houses, a nonprofit organization, was started in 1905 by Henry Phipps, a partner of U.S. Steel magnate Andrew Carnegie, with an investment of $1 million. Since then, Phipps Houses has developed more than 5,000 housing units, owning 4,000 of them. One of its subsidiaries, Phipps Housing Services, Inc., which operates 12,000 housing units, will be the managing agent for Fabria Houses.
The deal reached in 2007 to expand the site will cost the developer $21.4 million, says Jacobs. A combination of public and private funds is financing the project, he notes. The Housing Development Corporation (HDC) issued 30-year tax-exempt bonds to provide the developer with a $1.55 million loan. Low-income housing tax credit equity amounting to $8.9 million was provided by a syndicator affiliated with Richman Housing Resources. And HDC made a further construction loan of $11.5 million.
The Fabria Houses’ renovation includes redesigned unit layouts, new elevators, laundry rooms, and landscaped yards. In addition, the height of the buildings will be raised, from five stories to six stories, and two of the buildings will be joined together. Units will be made available to applicants who earn up to 60 percent of area median gross income (AMGI), with 20 percent of units set aside for households earning only 20 percent of AMGI.
During renovation, the developer will have to temporarily relocate 39 residents who have been living at the site, Jacobs says. Those residents will have first option to return, he notes. All residents will receive Section 8 rental housing assistance vouchers, he adds. After existing occupants return, the remaining units will be made available to eligible households in accordance with their assigned positions on NYCHA's Section 8 waiting list, he says.
Insider Source
Barry Jacobs: Housing and Development Reporter; Washington, DC