HUD, HCR, MDG Partner for $160M Bronx Preservation
- Jun 14, 2017
A $160-million-plus deal has been forged between HUD, New York State Homes and Community Renewal (HCR) and New York City-based MDG Design + Construction to preserve Michelangelo Apartments, a 494-unit affordable housing apartment community in the Melrose neighborhood of the Bronx, N.Y. Michelangelo Apartments is a 43-year-old Mitchell-Lama community that as a result of the deal will be renovated and preserved as affordable for another 40 years.
Helping make this possible is HUD’s Rental Assistance Demonstration (RAD) program, which guarantees residents need pay no more than 30 percent of their incomes for safe and healthy housing. Michelangelo Apartments is part of the Governor’s $1 billion House NY initiative, which seeks to transition 8,600 Mitchell-Lama apartments in serious need of repairs and upgrades into safe, quality housing by the end of next year.
The renovation will take place without need for residents to be temporarily moved elsewhere. Property renovations and improvements will include full kitchen and bathroom upgrades, conversion to an energy-efficient hydronic boiler system from electric heaters, modernization of lobby and elevators, repairs to the facade, public hall beautification, conversion to energy efficient LED lighting throughout the entire building and landscaping improvements.
“This is an entire square block of the Bronx, with a beautiful courtyard that was down to dirt and concrete,” MDG Design + Construction co founder and principal Michael T. Rooney told MHN. “You think Michelangelo, you think of art. So we will keep that name and create beautiful playgrounds, walkways and courtyards.
“Much of the old Mitchell-Lama housing was built with electric heating, and electric is 10 times the cost of what it was 40 years ago, and double the cost of natural gas. We are converting the building from electric heat to hydronic heat powered by natural gas. The savings for the heating plant alone are $493,000 per year just for heating the building, and another $130,000 for electric savings resulting from switching to LED lights. Those two savings alone got us an additional $6 million in financing. So basically all the beautification of the lobbies, courtyard and walkways is being 100 percent paid through these savings.”
Rooney noted that since his company was founded in the 1980s, its goal has been to preserve affordable housing in New York. “This is what we’re driven to do,” he said. “We love to find buildings that would not continue as affordable housing, unless a private company stepped in and found a way to preserve that building as affordable housing.”
Achieving that goal is not an easy task, Rooney reported.
HCR is providing $82.5 million in tax-exempt bond financing, which will finance a $39.3 million permanent loan, a $9.5 million IRP loan, and a $33.7 million short-term construction loan from Citi in its role as a Fannie Mae Delegated Underwriting and Servicing lender. In addition, Citi is providing $44.1 million in tax credit equity, arranged by Raymond James, as well as a $33.7 million rehabilitation period bridge loan. Through HUD’s RAD program, Michelangelo Apartments will receive a project-based rental assistance contract for 406 units, and 66 additional units will house eligible residents who previously held portable Section 8 vouchers. The new Section 8 contract guarantees the affordability of the development.