New York City Receives Harvard University’s Ash Institute Award for Innovation in
Government for Pioneering Financing Mechanism Developed to Help Achieve Plan

$7.5 Billion Plan to Build and Preserve Affordable Housing for
500,000 New Yorkers Reaches Halfway Point of 82,500 Units Funded

Mayor Michael R. Bloomberg today announced the New Housing Marketplace Plan, New York City’s $7.5 billion plan to build and preserve affordable housing for 500,000 New Yorkers, has funded more than 82,500 units – half of its 165,000 goal. Initiated in July 2003 as a 65,000 unit plan, the New Housing Marketplace Plan was more than doubled in February 2006 and is now the largest municipal affordable housing plan in the nation. To sustain the plan’s 165,000-unit goal despite the increasing pressure on the national housing market, the City developed an array of new financing tools, including the New York City Acquisition Fund - this year’s recipient of Harvard University’s Ash Institute Award for Innovation in Government. The Mayor announced the milestone at the groundbreaking ceremony for La Casa de la Luna y de la Estrella and the celebration of the opening of La Casa del Sol, two developments in the Morrisania section of the Bronx financed through the housing plan. The Mayor was joined at the announcement by Deputy Mayor for Economic Development Robert C. Lieber, Housing Preservation and Development (HPD) Commissioner Shaun Donovan, Housing Development Corporation (HDC) President Marc Jahr, New York University’s (NYU) Robert F. Wagner Graduate School of Public Service Dean Ellen Schall, Nos Quedamos Executive Director Yolanda Gonzalez and Kingspoint Heights, LLC Principal Kiumarz Geula.

“Since 2002, we have worked and invested to make New York City’s five boroughs better places to live and to raise families, and as a result, our city continues to grow,” said Mayor Bloomberg. “Any growing city faces challenges, and we recognized long ago that the pressure on housing affordability needed to be addressed. To do it, we embarked on an ambitious plan to build and preserve affordable housing for a half million New Yorkers. Today, we’re halfway there and we remain poised to achieve our long-term goal. The downturn in the nation’s housing market is substantial, but we have sought partnerships and designed new tools like the New York City Acquisition Fund, so that, despite these challenges across the country, our crucial investments in housing can continue.”

“Reaching the midway point of what is the nation’s largest affordable housing plan on schedule is an indication that we are making great strides addressing New York City’s great demand for housing and preparing for long-term growth,” said Deputy Mayor Lieber. “Roughly three-quarters of the affordable housing financed through the plan is set aside for low-income New Yorkers – helping address a clear need. But its impact on middle-income New Yorkers – the City’s police officers, nurses, teachers and public employees, among others – should not be lost. Developments like that at Hunters Point South along the East River in Queens will go a long way towards ensuring that middle-income New Yorkers remain in New York City.”

A broad range of affordable housing opportunities have been created in all five boroughs under the New Housing Marketplace Plan, including new construction and preservation of rental and homeownership units for low-, moderate- and middle-income households. Of the more than 82,500 units funded to date, approximately 30 percent are for homeownership. In addition, 75 percent are affordable to low-income households, surpassing the Housing Plan’s initial goal of 68 percent.

“The families that will live at La Luna y La Estrella and opening of La Casa del Sol will continue to revitalize the South Bronx, an area made infamous by Sports announcer Howard Cosell’s statement, ‘the Bronx is burning,’” said HPD Commissioner Donovan. “By developing City-owned land over the past two decades, the City has invested in local communities, like Morrisania, and laid the groundwork to transform neighborhoods once written off and abandoned.  But our success has created a challenge of affordability.  We have responded by implementing Mayor Bloomberg’s historic housing initiative and, using innovative financing tools and rezonings, made the reborn housing market a partner. Through our continued efforts, we are ensuring that longtime residents will be able to enjoy the renaissance occurring throughout New York City neighborhoods.”

Nearly 40,000 of the units funded to date were financed by HDC, well ahead of schedule of its initial commitment to finance 42,000 units over the life of the plan. Over the course of the last three years, HDC has issued more than $4 billion in bonds, ranking HDC as the nation's largest multifamily bond issuance entity during that period.

“Today we celebrate the halfway point of New York City’s New Housing Marketplace Plan at the Las Casas apartments in the Bronx, and HDC is proud to have played a role in its success thus far,” said HDC President Marc Jahr. “Together with HPD and our other public and private partners, we continue to transform neighborhoods – and lives – throughout the City. Including these Las Casas apartments, HDC has financed over 39,000 of the housing units being celebrated today. We are pleased to provide substantial support to the Mayor’s Housing Plan, which is making the dream of affordable housing a reality for more and more New Yorkers.”

Many of the developers interested in creating affordable housing are not-for-profit organizations and small for-profit developers that typically do not have the financial resources to compete to acquire property in the private market. The New York City Acquisition Fund – a collaboration among ten national philanthropies, leading financial institutions and the City – levels the playing field for developers seeking to acquire property prior to assembly of a project’s permanent financing. The $240 million fund provides low-interest capital at higher advance rates and lower recourse levels than are available from conventional financial institutions, and it can respond faster than typical government funding cycles. Using a self-sustaining model that will allow it to continue indefinitely without further investments fromfoundations or taxpayers, the Fund will build and preserve 30,000 affordable housing units over 10 years. With the withdrawal of banks from the finance market and possible decline of property values, the fund is likely to become even more essential in the creation and preservation of affordable housing.

The Acquisition Fund was created as part of an overall effort to help address the increasingly difficult fiscal environment and sustain the 165,000 goal. While the City’s budget faces multi-billion dollar shortfalls, Mayor Bloomberg addressed the Department of Housing Preservation and Development’s capital plan this summer when he announced as part of the FY 2009 Budget agreement, the City would stretch the next four years of the Capital Plan into five. The details of this capital plan adjustment, the equivalent of a 20 percent savings, will be released this fall. 

While the City’s budget faces multi-billion dollar shortfalls beginning next year, Mayor Bloomberg already addressed the Department of Housing Preservation and Development’s capital plan this summer when he announced as part of the FY 2009 Budget agreement, the City would stretch the next four years of the Capital Plan into five.  The details of this capital plan adjustment, the equivalent of a 20 percent annual savings, will be released this fall.

“An exceptional model of government innovation, the Acquisition Fund’s success has translated into increased affordable housing opportunities for New York City residents,” said NYU Wagner Dean Ellen Schall, who served on Harvard’s Innovations in American Government selection committee. “But its impact reverberates across the nation, too: Los Angeles, New Orleans, Washington D.C. and Atlanta are amongst the group of cities adopting similar strategies. A testament to New York City’s trailblazing role in creating and preserving affordable housing, we anticipate the New Housing Marketplace Plan’s continued success.”

In 2003, the City rezoned the Morrisania area of the Bronx, which is bounded generally by East 168th Street to the north, East 163rd Street to the south, Washington Avenue to the west and Third Avenue to the east, to increase housing supply and encourage economic development opportunities in an area that had experienced disinvestment in past decades.  Since the rezoning was approved, the City has financed nearly 900 units of affordable housing, including the Las Casas units, within the community, none of which could have been achieved without the rezoning. Through the Mayor’s Housing Plan, the City has funded more than 27,000 affordable housing units throughout the Bronx. 

“Long-time South Bronx residents understand what it means to live in a neighborhood that has been written off, one that is blighted,” said Nos Quedamos Executive Director Yolanda Gonzalez. “In recent years, however, these residents have become visionaries and leaders of the neighborhood’s housing and urban redevelopment efforts. In partnership with the City, we will continue to foster the transformation underway to build an economically productive, sustainable and cohesive South Bronx.”

When complete, La Casa de la Luna y la Estrella will provide 227 units of affordable housing with retail, office, and community space.  Forty-seven units will be set-aside for formerly homeless families and individuals. The apartments will be affordable to tenants earning up to 60 percent of the U.S. Department of Housing and Urban Development (HUD) Income Limits, which is equivalent to $32,300 for a single person or $46,000 for a household of four. La Casa del Sol, located across the street, is a 114-unit building with a ground-floor child care center. All of the units comprising this development are affordable to households earning up to 60 percent of the HUD Income Limits. Of these, 34 units will be set aside for formerly homeless individuals.  The Las Casas sites were developed through HPD’s Mixed-Income Rental Program (MIRP) and combined will provide 341 units of affordable housing in the Morrisania section of the Bronx.  

La Casa de la Luna y la Estrella was funded with nearly $37 million in tax-exempt bond proceeds, with credit enhancement provided by Bank of America. HDC provided about $19.1 million in loans, and HPD provided $4.3 million of additional funding through MIRP and $2.3 million under HUD’s HOME Program. Richman Housing Resources (RHR), LLC arranged the sale of Low Income Housing Tax Credits, generating $23.2 million in project financing.  La Casa del Sol was funded with $12.8 million in tax-exempt bond proceeds, with credit enhancement provided by Citibank. N.A. A $6.3 million loan from HDC and a $3.5 million loan from HPD were also included in the project. RHR arranged the balance of the financing, $9.7 million, through the sale of Low Income Housing Tax Credits. HPD’s MIRP finances the new construction or substantial rehabilitation of rental housing affordable to households earning up to 60 percent of the HUD Income Limits, which is equivalent to $32,300 for a single person or $46,100 for a household of four. Kiumarz Geula, Principal of Kings Point Heights LLC, is the developer of both La Casa de la Luna y de la Estrella and La Casa del Sol.

“La Casas are the fruit of the vision and hard work of the city agencies under the leadership of Mayor Bloomberg,” said Kingspoint Heights LLC Principal Kiumarz Geula. “It is this vision that has now brought a thriving community into the heart of the South Bronx. In a place where boarded warehouses were prevalent, today we see new retail establishments, community facilities and residential units. I am privileged to be a part of this renaissance and would like to thank the city agencies and all professionals involved in bringing this project to fruition.”

“We are proud to have invested $33 million in these two projects and in the future of New York City,” said Richard P. Richman, chairman of The Richman Group of Companies of which RHR is a member company. “The City is a terrific partner; its innovative financing initiatives and its willingness and ability to work through the complicated issues that arise throughout the development process has made our nearly $900 million of private investment in New York's neighborhoods possible.”

“Bank of America is pleased to be working with Kiumarz Geula, HPD, HDC and the Richman Group to provide construction and permanent financing for the creation of an additional 227 affordable housing units in New York City,” said Bank of America Community Development Banking Northeast Region Executive Maria Barry. “Kiumarz Geula strives to develop quality housing that will be enjoyed by the future residents of La Casa del Luna y Estrella for many years to come.”

  “We are excited to be playing an important role working to rebuild and revitalize the Morrisania section of the Bronx,” said Citi Global Consumer Group Community Relations Director Edward Odom. “Over the last five years Citi has invested over $400 million in the Bronx, helping to finance affordable housing and commercial real estate development. Throughout our 200-year history, Citi has been a leader in financing projects that have made New York one of the great cities in the world. La Casa del Sol is an example of our continued commitment.”

HPD defines moderate-income as between 80 percent and 120 percent of the HUD Income Limits, which is equivalent to $43,000 to $64,560 for single households and $61,450 to $92,160 for a family of four. Middle-income is defined as more than 120 percent of the HUD Income Limits which is equivalent to $64,560 for a single household and $92,160 for a family of four.

###