DEAL OF THE DAY: Pacific Housing’s $52M Project Will Restore, Retain Affordable Housing in East Harlem
- Apr 06, 2010
New York–Pacific Housing Advisors acquired an apartment complex that was slated for market-rate conversion, and plans to renovate and preserve the property as affordable housing.
The acquisition and renovation of Lexington Courts, a nine-building, 229-unit multifamily property in East Harlem, will cost $52 million, announces Francine Kellman, director of the company’s newly established New York office.
The deteriorating property had initially been earmarked by a competing buyer for future market-rate housing when the dynamic Harlem residential market rebounded. But that transaction faltered, and Pacific, working in cooperation with a local social services group and Councilmember Melissa Mark-Viverito, was able to move forward instead with its rescue effort. The units will remain affordable to tenants earning no more than 60% of the Area Median Income.
“This neglected and troubled property had no major improvement for 35 years and was in danger of going into foreclosure once the luxury bid failed. Either result would have been tragic. This essentially sturdy structure has the potential to serve current and future low-income New Yorkers for many decades to come. We are pleased to have the opportunity to improve and maintain this precious East Harlem community resource,” says Kellman.
Acquisition and rehabilitation financing was provided by the New York City Housing Development Corporation (HDC) through HDC bonds, with additional funding provided by the New York City Department of Housing Preservation and Development (HPD).
“The gentrification taking place in East Harlem over the past five years has created a strong demand for new housing. Keeping families and communities together in stable and safer neighborhoods is the solution of preserving developments in East Harlem,” says Marc Jahr, president of HDC.
Lexington Courts will be permanently financed with tax-exempt bonds, credit enhanced by Freddie Mac through its Low Income Housing Tax Credit Mod Rehab program. A portion of the bonds will be supported by two separate series of Section 236 Interest Reduction Payments, which will benefit the project through March, 2017. Wachovia is the Delegated Underwriting and Servicing (DUS) lender for Freddie Mac.
The buildings will be upgraded with new elevators, roofs, windows, boilers, heavy duty re-wiring, trash compactors, flooring and matching new masonry facades. All units will be improved with new bathrooms, and half will receive new kitchens. All buildings will have new laundry rooms — there were none before. The entire project will also benefit from a new computerized security system.
All of the apartments will benefit from a federal Section 8 affordable housing contract stipulating that rents cannot exceed 30 percent of tenants’ household income. Prior to the acquisition, because of its poor condition, the property had failed a pivotal inspection by the U.S. Department of Housing and Urban Development.
Operation Fight Back, a local social services group also provided assistance with the financing arrangements and generated community support for the sale to Pacific Housing Advisors. Operation Fight Back will continue to provide tenant services including after school programs, job placement and case-by-case family needs services.
The Lexington Courts complex is located between Lexington and Third Avenues and East 118th and 122nd Streets in Manhattan.
The 229 unit project includes one studio unit, 44 one-bedroom units, 117 two-bedroom units, 40 three-bedroom units, 22 four-bedroom units, five non-income generating superintendent units, and eight commercial spaces. It consists of 2 four-story, 2 five-story, and 5 six-story buildings.
Grenadier Realty Corp. will be the property manager for the project. MDG Design & Construction will be the general contractor for the rehabilitation.