Former Illegal Hotel in New York to Undergo SRO Renovation

Chase and varied city institutions are providing financing, with Citizens Bank investing tax equity.

The former Morningside Inn will be renovated as housing for adults with a history of chronic homelessness. Image courtesy of Rockabill Development and Goddard Riverside

An illegal hotel on Manhattan’s Upper West Side is set to be transformed into 68 units of permanent supportive housing for single adults with a history of chronic homelessness. Construction will commence on the $38 million project, undertaken by Rockabill Development and community nonprofit Goddard Riverside, this month and is expected to be complete in late 2024 or early 2025.

Located at 235 W 107th St., the six-story building was first constructed in 1912. While legally zoned for residential use, the property had been illegally operated as a hotel, “The Morningside Inn”, by its prior owner.

New York City had issued more than $280,000 in fines over a nearly 10-year period before Rockabill and Goddard acquired the property in March 2021. The new owners intend for the property to serve as a model for the preservation of the city’s Single Room Occupancy housing. At one point, SROs represented more than 10 percent of the city’s housing stock and provided a flexible, affordable housing option for extremely low-income New Yorkers.

Financing for the project includes an $18.4 million capital subsidy from the New York City Department of Housing Preservation and Development’s Supportive Housing Loan Program, a $14 million construction loan from Chase and $700,000 in Reso A municipal funding from Manhattan Borough President Mark Levine and Councilmember Gale Brewer. SHLP loans are designed to advance the city’s goal of accelerating the creation of supportive housing.

The project will generate $13.6 million in equity through the sale of 9 percent Low-Income Housing Tax Credits allocated by HPD. Citizens Bank is the tax equity investor, with CREA acting as tax credit syndicator. A permanent loan will be provided by the New York City Employees’ Retirement System pension fund with State of New York Mortgage Agency Insurance. Acquisition financing was provided by Enterprise Community Partners and the New York City Acquisition Fund.

Roderick Jones, Goddard Riverside’s president, said in prepared remarks that the nonprofit’s outreach teams speak daily with people living on the street who say they would come indoors if they could have their own rooms. Jones said that the renovated building will be named the Stephan Russo Residence, in honor of Goddard Riverside’s former executive director who helped pioneer the supportive housing model. Goddard Riverside owns Capitol Hall and the Senate Residence, two pioneering SRO hotel conversions from the early days of supportive housing in the 1990s.

Katie Devine, principal at Rockbill, echoed the need for high-quality supportive housing, calling the responsible preservation of SROs smart public policy that adds to the social safety net for extremely low-income New Yorkers. The firm is pursuing three additional projects on the Upper West Side, in Harlem and in Chelsea, involving conversions of SROs to supportive and senior housing, in partnership with New York City nonprofits, Devine told Multi-Housing News.

As a consultant, Rockabill is also leading preservation and rehabilitation transactions with the nonprofit owners of eight separate SRO properties, all of which were converted to supportive housing in the 1990s, she added.

“From New York City to San Francisco, SROs once served as an essential component of urban life, and it’s encouraging to see a growing number of cities and states acknowledge the role this type of deeply affordable housing can play in alleviating today’s homeless crisis,” Devine told MHN. “We’ve already lost too many SROs and I’m proud to play a part in preserving those that remain as the valuable housing resource that they are.”

A new life as much-needed housing

While known as The Morningside Inn, the building operated with 84 individual units. The developers plan to reconfigure the units so each room has a private bathroom. Only about half of the existing units have private bathrooms, with the rest dependent on shared bathrooms. The reallocation of space will reduce the total number of units to 68, plus one superintendent’s apartment.

Two communal kitchens and dining areas will be built on each floor of the building and will be shared by six to seven residents. The first floor and cellar will be renovated to create a community room and dedicated space for case management and social services, which will be managed by Goddard Riverside. Passage to and from the building’s east and north courtyards will be improved so residents can fully enjoy the outside areas.

Other rehabilitation work will include repairing the exterior façade, modernizing elevators, installing new flooring and energy efficient measures designed to bring the building into compliance with city and state energy codes. The project will be certified and designed to Enterprise Green Community standards, including replacing the inefficient boiler and steam pipe system, with an all-electric variable refrigerant flow, or VRF, system for energy efficient heating and cooling with individually controlled thermostats in each unit.

ConRock Construction is the general contractor for the project.

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