Innovative Fund is a National Model for Financing of Affordable Housing Collaboration Among the City, Nine Prominent Philanthropies and the City’s Leading Financial Institutions
New York City Housing Commissioner Shaun Donovan was today joined by leading foundations and banks to announce the acquisition and preservation of 283 occupied low- and moderate-income apartments in the northwest Bronx. The sale is the first preservation agreement through the New York City Acquisition Fund, which was created in collaboration with nine prominent philanthropies and New York’s leading financial institutions. The Fordham Bedford Housing Corporation (FBHC), a not-for-profit developer of community-run affordable housing in the Bronx, has purchased and will renovate six privately-owned Bronx apartment buildings using acquisition loans totaling $23 million, equal to ten percent of the Fund. The six buildings will be preserved as long-term affordable housing and represent the first existing properties to benefit from the Fund. Enterprise, one of the country’s leading nonprofit providers of affordable housing, is the managing general partner of the Fund and was the originator of the loan.
“Preservation of our existing affordable housing is a challenge we are tackling head on. New York City has the most aggressive affordable housing construction program in the nation but we are also pioneering the most innovative thinking on affordable housing preservation to ensure that low- and middle-income New Yorkers who have affordable rents can stay in their homes,” said Commissioner Donovan. “To date, we have preserved nearly 30,000 units of housing through Mayor Bloomberg’s New Housing Marketplace Plan, including 20,000 units of Mitchell-Lama housing. The Acquisition Fund will allow us to sustain this momentum. The fact that the Fund has become a national model for collaboration on affordable housing speaks to its potential in continuing to stimulate affordable housing development for those who need it most. The strong commitment from foundations and banks has made the Acquisition Fund possible and is evidence of the need for new thinking and collaborations to build and preserve affordable housing. ”
The New York City Acquisition Fund is a $230 million initiative that will build and preserve 30,000 units of affordable housing over the next ten years. The Fundis a key element of Mayor Bloomberg’s $7.5 billion ten-year New Housing Marketplace Plan to provide affordable housing for 500,000 New Yorkers, more than the population of Atlanta. Of the plan’s 165,000 units, 73,000 are existing homes that will be preserved as affordable housing. In bringing together city government, financial institutions, and foundations, the Fund is a national model of collaboration and is being replicated throughout the country, including in Illinois and Louisiana.
“Solving New York’s affordable housing crisis demands creative solutions, including close cooperation between the public and private sectors,” said Doris Koo, Enterprise CEO. “The Acquisition Fund, like our 2004 Billion Dollar Promise, is an unprecedented initiative that demonstrates the private sector’s willingness to invest in and leverage affordable housing. The tremendous success of the Acquisition Fund in New York has inspired other cities to adopt this innovative way of creating and preserving affordable housing, and Enterprise is leading the expansion of the model across the country, including in New Orleans, Atlanta and Los Angeles.”
The supply of City-owned land for affordable housing is nearly exhausted. While the redevelopment of the formerly City-owned portfolio of land and buildings has produced more than 229,000 apartments and houses since 1987, New York City continues to experience a shortage of affordable housing. Many of the developers interested in developing affordable housing are non-profit organizations and local developers who typically do not have the financial resources to compete to acquire property in the private market. The New York City Acquisition Fund gives developers of affordable housing assistance in acquiring property while they assemble permanent financing for the project.
The New York City Acquisition Fund provides early stage capital for acquisition of privately owned land and buildings. An investment of $8 million in City funding through Battery Park City Authority revenues was blended with $32.6 millionin foundation funding to create a “guarantee pool” for securing loans. The Starr Foundation, headed by Maurice R. Greenberg, made the initial $12.5 million challenge grant that helped lead to the creation of the Fund. Up to $190 million has been made available from major banks and financial institutions such as Bank of America, Bank of Tokyo Mitsubishi, Citi, Commerce Bank, Deutsche Bank, Fannie Mae, HSBC, JPMorgan Chase, Merrill Lynch, Mizuho Corporate Bank, M&T Bank, US Trust, North Fork Bank, Signature Bank, Washington Mutual, and Wachovia. The foundations supporting the Fund include the F.B. Heron Foundation, Ford Foundation, Gimbel Foundation, MacArthur Foundation, New York Community Trust, Open Society Institute, Robin Hood Foundation, Rockefeller Foundation, and The Starr Foundation. The Fund will provide loans to borrowers through not-for-profit lenders including Enterprise, the New York City Housing Development Corporation, Local Initiatives Support Corporation, the Corporation for Supportive Housing, and the Low Income Investment Fund.
The Fund is managed by Enterprise, the managing general partner of the Fund and the originator of the loan, along with National Equity Fund, Inc. as co-member and manager, and Forsyth Street Advisors as Fund Manager. JPMorgan Chase Bank N.A. acts as the Administrative Agent of a 16-bank syndicate that provides a revolving line of credit to fund loans.
In acquiring and rehabilitating the Bronx properties, FBHC received two acquisition loans from the Fund, with additional financing from HPD’s Participation Loan Program as well as funds from the New York City Housing Trust Fund and New York City Housing Development Corporation’s Low-Income Affordable Marketplace Program. FBHC will provide management oversight for the buildings’ existing manager as well as asset preservation services after acquisition and renovation. FBHC will review rent collections, regulatory compliance, budgeting and escrow functions, auditing and tax filings, mortgage servicing, and insurance requirements. The FBHC buildings were acquired from Sachson Realty Corp.
"For more than twenty-five years, Fordham Bedford has worked with the public and private sectors to preserve affordable housing in the Northwest Bronx,” said John Reilly, Executive Director of FBHC. “The Acquisition Fund gives us an important new tool that not only protects the affordability of housing in our community, but also makes improvements in terms of upgrading and renovating buildings.”
“By selling our buildings to Fordham Bedford through the Acquisition Fund, we were able to ensure that the buildings would continue to provide safe, clean and well maintained affordable housing for the families in our community,” said Douglas Sachs of Sachson Realty Corp. “We are grateful to the City, Enterprise and all of the Fund partners for making this transaction possible.”
“The Acquisition Fund is an example of the remarkable results that can be achieved when the private and non-profit sectors come together,” said The Starr Foundation Chairman Maurice R. Greenberg. “Our belief in this model is what led The Starr Foundation to make the initial $12.5 million challenge grant to jumpstart the Acquisition Fund, and we are delighted to see the first preservation project come to fruition.”
“JPMorgan Chase is pleased to have helped lead the banks in this important effort to ensure access to affordable housing in New York City, which will provide local for profit and not-for-profit developers with much-needed financial resources for the construction and preservation of affordable homes for so many families,” said JPMorgan Chase Executive Vice President Mark Willis.
HPD Commissioner Shaun Donovan was joined in announcing the acquisition by Abby Jo Sigal, Vice President of Enterprise, Mark Willis, Executive Vice President of JPMorgan Chase, Florence A. Davis, President of The Starr Foundation, John Reilly, Executive Director of Fordham Bedford Housing Corporation, Douglas Sachs of Sachson Realty Corp. and tenants of the Bronx properties.
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The New York City Department of Housing Preservation and Development's (HPD) mission is to promote quality housing and viable neighborhoods for New Yorkers. The department is the nation’s largest municipal housing development agency and is implementing Mayor Bloomberg’s New Housing Marketplace Plan to build and preserve 165,000 units of affordable housing over ten years. The New Housing Marketplace Plan is the largest municipal affordable housing effort in the nation’s history. As part of Mayor Bloomberg’s PlaNYC HPD is working to create homes for almost a million more New Yorkers by 2030 while making housing more affordable and sustainable. HPD also encourages the preservation of affordable housing through education, outreach, loan programs and enforcement of housing quality standards.
Enterpriseis a leading provider of the development capital and expertise it takes to create decent, affordable homes and rebuild communities. For more than two decades, Enterprise has pioneered neighborhood solutions through public-private partnerships with financial institutions, governments, community organizations and others that share our vision. Enterprise has raised and invested $8 billion in equity, grants and loans and is currently investing in communities at a rate of $1 billion a year. Enterprise New York has been working to revitalize low-income communities across New York City since 1987. In that time, Enterprise New York has housed over 60,000 men, women, and children, developed more than 21,000 affordable homes, and committed $1.5 billion in equity, grants, and loans to community development projects across the city. Visit www.enterprisecommunity.org to learn more about Enterprise’s efforts to build communities and opportunity, and to meet some of the half a million people we have helped.
The Fordham Bedford Housing Corporation (FBHC) was established by tenant and community leaders in 1980. It was formed to prevent housing deterioration and abandonment so prevalent in many parts of the Bronx and New York City at the time. Today, FBHC oversees the management of more than 95 apartment buildings with 2700 units. FBHC is an expert in restoring and maintaining occupied buildings and keeping them affordable for their current and future residents.