Red Hook Homes Brings Affordable Units to Brooklyn Neighborhood

Red Hook is rebounding, as evidenced by the grand opening of Red Hook Homes. The $18 million co-op brings the community 60 new housing units, 40 of them affordable, and another 20 market-rate and middle-income units.

New York—Brooklyn’s Red Hook enclave has seen a number of changes over the last 60 years. In the 1950s, it was home to longshoremen and their families, who filled the district’s apartment buildings. In time, many of the buildings were converted to public housing, which served many families by the 1970s. The community subsequently battled a number of woes characteristic of low-income areas.

Today, though, Red Hook is rebounding. Another step on the road back came last week, when a ribbon was cut at the grand opening of Red Hook Homes. The $18 million co-op brings the community 60 new housing units, 40 of them affordable, and another 20 market-rate and middle-income units. The greatest significance of the project is that it’s home to 40 first-time homeowners.

Red Hook Homes was developed under the New Housing Marketplace Plan, which aims to finance more than 165,000 units of affordable housing in New York City by the end of fiscal year 2014. The New York City Department of Housing Preservation and Development conveyed the site to Fifth Avenue Committee, a 33-year-old non-profit community development corporation advancing economic and social justice by building vibrant, diverse communities through the city‘s Cornerstone Program. That program is designed to spur development of mixed-income multifamily housing on underutilized land.

To get Red Hook Homes done, many challenges had to be surmounted over a decade-long period. “The acquisition of private property was one of the major hurdles involved in developing Red Hook Homes,” Fifth Avenue Committee Director of Housing Development Heather Gershen tells MHN.

“We had a friendly relationship with the owner of the property, Greg O’Connell, a large property owner in the Red Hook neighborhood . . . He and his partners saw a need for affordable housing in Red Hook, and saw Fifth Avenue Committee as the preeminent affordable housing developer to bring that about.”

At the time Fifth Avenue Committee began the effort to develop Red Hook Homes in 2001, there was no financial instrument in New York City to help not-for-profits acquire vacant land. “Now there is—it’s the Acquisition Loan Fund—but we were ahead of the launch of that fund by about five years,” Gershen says.

“So we had to source a lender who would take that risk with us and acquire that property. We found that in the Brooklyn Community Federation, then known as the Independence Community Foundation. That lender financed our acquisition, and did that with a project-related investment.”

By the time Red Hook Homes was being completed in 2008 and 2009, Fifth Avenue Committee faced another obstacle. The end-loan market underwent an enormous retraction in the wake of Lehman Brothers’ September 2008 collapse. Individual purchasers may have been “incredibly qualified,” Gershen recalls, but banks weren’t making loans that involved complicated mortgages.

“Not only was there not much liquidity, but the administrative work on the loans kept shifting due to banks’ efforts to reorganize after the debacle of 2008,” Gershen says. “Only a village can overcome that. Our home buyer education counselor, our construction lender Citi Community Capital, our other lenders and our government agency partners were all patient while we corralled lenders, and got 40 qualified families to the finish line. They were patient, and shared our vision for providing deep affordability for home ownership in Red Hook.”

Fifth Avenue Committee ultimately sold the vast majority of the affordable and market-rate units of Red Hook Homes, the largest affordable homeownership opportunity in Red Hook’s history, to local families.

That has helped stabilize families on an individual basis, and contributed to overall economic development by giving the community new homeowners.

Red Hook’s upswing, Gershen says, has resulted from the work of Fifth Avenue Committee, a group of investors and even long-time residents of public housing.

“Over time, the coordinated work of everyone has led to an economic resurgence in a really beautiful part of Brooklyn,” she says.