By Dees Stribling, Contributing Editor
New York—The long and storied history of Co-op City in the Bronx added another chapter recently when owner Riverbay Corp. and Wells Fargo closed on a deal to refinance the mortgage on the property to the tune of $621 million. The loan is being backed by the federal government through the FHA Section 223(f) Program, the first time the program has ever been applied to a cooperative structure.
Dating from the 1960s, the behemoth property is the largest co-op structure in the world, home to about 57,000 people and a virtual city-within-a-city in New York. Located in the Baychester section of the Bronx, Co-op City is on 330 acres along the west bank of the Hutchinson River.
Co-op City includes 15,372 units in 35 residential structures, but also features three shopping centers, a 25-acre park, eight parking garages, three elementary schools, two middle schools, and a high school. The property has various sporting facilities, including gyms, pools, basketball courts and baseball diamonds, as well as churches, restaurants, movie theaters and day care centers. It even has a weather station.
Currently, the cooperative is organized under the state of New York’s Mitchell Lama Program, which was designed to provide affordable housing to low- and middle-income residents through low-interest loans and real estate tax exemptions. Co-op City will remain in the Mitchell Lama program for the 35-year term of the FHA-insured loan and will continue to provide affordable housing to its residents.
By guaranteeing the mortgage, FHA’s Section 223(f) Program allows the loan to be financed with Government National Mortgage Association (GNMA) Mortgage-Backed Securities. This eligibility for purchase in the secondary mortgage market improves the availability of loan funds and permits more favorable interest rates. As a consequence, FHA and GNMA’s security is helping Riverbay Corp. save an estimated $400 million in interest payments over the life of the mortgage.
Since 2004, over $310 million in renovations have been completed at Co-op City. This FHA-insured loan will be used to refinance the existing mortgage and provide capital for an additional $26 million in repairs. A portion of these repairs were made possible by J-51 tax abatements, which are administered by the city of New York.