Mayor Michael R. Bloomberg announced today that former New York Met Mo Vaughn and his company Omni New York LLC will purchase and renovate two apartment developments in the Mott Haven section of the Bronx. The purchase is being made possible through a $28.6 million New York City Housing Development Corporation (HDC) loan of which $5 million will be used to renovate 300 apartments in once neglected Bronx developments. As the new owners of the developments, Omni New York LLC will install new kitchen cabinets and new floors in apartments, tiles, tubs and toilets in bathrooms, boilers, hot water heaters, make electric, plumbing upgrades and install security cameras. The average rent for each apartment in both developments is $270 per month. Mayor Bloomberg, HDC President Emily Youssouf, former New York Met Mo Vaughn, Omni New York LLC Principal Eugene Schneur, Citibank Community Group Market Director Marc Jahr, U.S. Department of Housing and Urban Development (HUD) Director of Multi-family Housing in New York Deborah Van Amerongen, and New York City Housing Preservation and Development (HPD) First Deputy Commissioner John Warren announced the purchase and rehabilitation of the two Bronx properties in the community room at Thessalonica Court Apartments, one of the two developments that will be rehabilitated.
"We're preserving affordable housing for the next generation of New Yorkers," said Mayor Bloomberg. "As we meet our commitment to preserve and build 65,000 units of affordable housing throughout every Borough, we are relying on innovative public/private partnerships to rehabilitate apartments, revitalize neighborhoods and ease our City's urgent demand for affordable housing. It is precedent-setting for the City's housing agency to work with the federal government and a developer to both ensure necessary rehabilitation work for the buildings and plan for long-term affordability for low-income residents. It's a win for the tenants and a win for the City. I want to thank Mo Vaughn for investing in the Bronx."
The $28.6 million loan was made through HDC and secured with a letter of credit from Citibank to allow Mo Vaughn and Omni New York LLC to purchase the two properties. Mo Vaughn's Omni New York LLC has earmarked nearly $5 million for rehabilitation of both developments and has worked with HUD, HPD and HDC to ensure that rents for tenants remain affordable under the project-based Section 8 program which is administered by HUD.
"I am thrilled that I was able to give back to the people of New York City by being involved with Mayor Bloomberg to preserve 286 units of affordable housing in the Bronx," said Mo Vaughn, co-Managing Director and majority owner of Omni New York LLC. "I would like to thank Mayor Bloomberg and all of his staff as well as all of the employees of the U.S. Department of Housing and Urban Development (HUD) who contributed in getting these transactions done. Mayor Bloomberg's devotion to provide and preserve affordable housing in New York City has been a true inspiration to me, and I look forward to continue my involvement in New York City affordable housing."
The Thessalonica Court Apartments at 350 St. Ann's Avenue, and Brookhaven I Apartments which includes four buildings located at 197, 205 Brook Avenue, 198 and 202 Brown Place, were originally financed by HDC in 1983 with Federal project-based Section 8 HAP (Housing Assistance Program) contracts and insured by the Federal Housing Administration (FHA). Brookhaven contains 95 low-income units, and Thessalonica Court contains 191 low-income units.
"As the leading issuer of multi-family bonds in the country we are constantly looking for new ways to create and preserve affordable housing," said HDC President Emily Youssouf. "Hopefully by successfully putting this transaction together we will be able to look at other project-based Section 8 developments. All parties who helped make this transaction possible should be exceedingly proud of their willingness to think out of the box and make something happen that many doubted was possible."
"This is an example of the City's efforts to find solutions to the HUD troubled properties," said HPD First Deputy Commissioner John Warren. "We had success in East Harlem when HUD foreclosed on the prior owner and then worked with New York ACORN Housing Company to ensure that the buildings would be renovated and continue being affordable housing for 111 low-income families. And now we've had success here in the Bronx, and we have identified additional buildings in need of rehabilitation that we hope to transfer from HUD to responsible new owners with similar guarantees of infrastructure investment and affordability."
Over the last few years, both HUD and the City's housing agencies had become increasingly concerned with the growing deterioration of both Brookhaven I and Thessalonica Court Apartments. The previous owner did not maintain the developments according to Federal and local standards. Subsequently, the properties failed two consecutive inspections and HUD received numerous tenant complaints about the deplorable and unsafe conditions. HUD then insisted the owner sign a compliance agreement mandating that the properties be sold. As HUD was urging the owner to sell and also considered moving to foreclosure, Omni New York LLC had independently approached HPD officials seeking to enter the New York City real estate market with the objective of preserving affordable housing. After reviewing Omni's record in other housing developments, HPD, which has been active in proposing solutions for troubled HUD properties, suggested that Omni should consider purchasing Brookhaven I Apartments and Thessalonica Court Apartments. As the section 8 contract administrator for HUD, HDC had a vested interest in preserving these properties. HDC's ability to issue tax exempt bonds made for an attractive financing structure that also included the owner's eligibility to receive tax credits which helped the owners to raise additional equity.
The loan financing was made through HDC's Low-income Affordable Marketplace Program (LAMP) in which tax-exempt bonds are sold and the proceeds made from the sale are used to finance a mortgage. The additional benefit to financing this transaction through LAMP is to ensure the long-term affordability of these developments.
The project-based Section 8 contract was renewed for Brookhaven for an additional 20 years, and is expected to be renewed for Thessalonica in 2006. However, in the event this contract is no longer available, the developments will remain affordable according to the income guidelines set by the LAMP program. LAMP requires that apartments are reserved for low-income families earning no more than $37,680 for a family of four. HPD extended the existing partial real estate tax exemptions to preserve affordability.
The new owners of each of the properties are Omni New York, LLC, whose principals include the former major league baseball player Mo Vaughn and Eugene Schneur; D&F Consultants, LLC, whose principals are Peter Florey and Leonard D'Amico; and Mill Plan Properties, LLC, whose principals are Robert Bennett, Shawn Horwitz, and Scott Kotick.
"This unique partnership among HUD, the City of New York and Omni New York LLC fulfills two of HUD's primary missions: preserving affordable housing and strengthening neighborhoods," said HUD Acting Regional Director Frank McKay. "I am grateful to both the City and Omni for providing the necessary resources to help turn these developments around. And I am also especially grateful to baseball great Mo Vaughn, for his contribution and remembering the importance of giving back to your community."