447 Apartments to Remain Affordable for Low-Income Families in groundbreaking tax credit restructuring
New York, NY July 6, 2011 – The New York City Department of Housing Preservation and Development (HPD), New York City Housing Development Corporation (HDC), L+M Development Partners Inc. (L+M), Harlem Congregations for Community Improvement, Inc. (HCCI), the Goldman Sachs Urban Investment Group, and New York State Homes and Community Renewal (HCR) today announced the closing of an innovative $75M transaction that will ensure 14 residential buildings in the Bradhurst area of Harlem remain affordable and livable for low-income New Yorkers. The buildings, which are part of a HCCI portfolio that was gut renovated in the 1990s, have reached the expiration of their 15-year Low Income Housing Tax Credit (LIHTC) compliance period and will be repositioned with a new round of LIHTCs, as well as financing provided by HPD and HDC. This unique exercise in financial restructuring and public/private partnership will serve as a model for expiring LIHTC projects around the country and is illustrative of the way city and state agencies can most efficiently use their resources to preserve affordable housing.
The project was financed under Mayor Michael R. Bloomberg’s New Housing Marketplace Plan (NHMP), an $8.5 billion initiative to finance 165,000 units of affordable housing for half a million New Yorkers by the close of the 2014 fiscal year. To date, the plan has funded the creation or preservation of more than 114,000 units of affordable housing across the five boroughs; of those more than 9,836 units are in Manhattan Community Board 10 where the 14 buildings are located.
The transaction will allow the apartments to remain affordable for low-income families for the next 30 years, while providing the capital needed to complete a comprehensive physical rehabilitation of the portfolio. The 14 buildings are clustered between West 145th and West 153rd Streets between 7th and 8th Avenues in Harlem and include a total of 447 residential rental units, together with ground floor commercial and community facility space.
“Preserving these buildings’ physical and economic integrity is key to the lives of the tenants as well ensuring that the properties contribute to the surrounding community's stability,” said HDC President Marc Jahr. “The fact that the structure of this deal is a first of its kind makes it all the more exciting. More than two decades ago, the City partnered with HCCI to restore vacant buildings and land to productive use as affordable housing in the center of Harlem. This neighborhood looked very different then – and these homes were the catalyst for the reinvigoration of Bradhurst. What we have accomplished here, with our partners, is a deal to upgrade this housing, protect the City’s original investment, while preserving it as affordable and putting it all under a single management structure. It’s a complex, unprecedented transaction and I am proud to say that it is the sort of transaction that is a hallmark of HDC’s work”
“The central focus of HPD’s mission to preserve affordable housing is keeping families in their homes,” said HPD Commissioner Mathew Wambua. “Years ago, HPD made sure that these buildings remained good homes for their hundreds of residents. With this transaction, we are doing the same thing again – following a solid investment with another, very creative infusion of capital. Thanks to HCCI, which has managed these properties over the years, their new partner L+M, and our partners, the State HCR and Goldman Sachs UIG, these 14 buildings will remain home for the current residents and the next generation of Harlemites.”
"We look forward to working with HPD, HDC, HCCI and Goldman Sachs so that together we preserve the 14 buildings and keep them affordable," said Ron Moelis, co-founder and CEO of L+M Development Partners Inc. “A project of this magnitude is exciting because, in addition to housing, it also creates much needed jobs for individuals who will be working with us to improve, maintain and manage the buildings. We hope the impact of this deal enhances the lives of the hundreds of families who call these apartments home, as well as the larger Harlem community."
“Harlem Congregations for Community Improvement (HCCI) has always been at the cutting edge in designing innovative ways to create and maintain affordable housing in New York City,” said Reverend Patricia A. Reeberg, Founding Board Member and Interim President of HCCI. “As a pioneer organization with 25 years of housing experience, HCCI has consistently broken new ground and creatively appropriated and implemented solutions to address the disparities faced by the residents of Harlem. It is only befitting to our history to be a part of this new dynamic partnership with L+M. Through this partnership, HCCI has once again broken new ground in the affordable housing sector.”
Innovative financing made this deal possible. The buildings were originally part of six separate ownership and financial structures, and had been renovated under the City’s original affordable housing plan, created under Mayor Edward I. Koch. Of the six initial tax credit partnerships, HPD was initially involved in five (Bethlehem, Nazareth, Patmos, Rev. Sass, and Phoenix). New York State Homes and Community Renewal (HCR) was both the tax credit allocating agency and lender for the sixth project, Exodus. HCR worked with the development team to restructure their existing debt. As part of the new transaction, the ownership entities are combined into a single joint venture between L+M and HCCI. The existing subordinate debt financing will be assumed by the new company, and LIHTCs will generate equity to undertake the capital construction work.
“L+M and HCCI deserve great credit for their creativity in bringing the many and complex component parts of this restructuring deal together,” said Darryl C. Towns, Commissioner and Chief Executive Officer of New York State Homes and Community Renewal (HCR). “HCR was proud to join several of our government partners in helping to close on this great project, which we believe will help to keep Harlem affordable for many years to come.”
“I am so happy that under my leadership, HCCI was able to form a new partnership with L+M to ensure that nearly 450 apartments that house low and moderate income families will receive the rehabilitation and energy efficiency work needed for long term sustainability,” said Lucille McEwen, former Chief Executive Officer of Harlem Congregations for Community Improvement (HCCI.) “Thank you HDC, thank you HPD, thank you Goldman Sachs for making a complicated deal work that will keep these units affordable for families in Harlem over the next 30 years.”
The project is financed under HDC’s LAMP Preservation Program, which will issue tax exempt housing revenue bonds paired with LIHTCs. HPD is also providing a $6 million subsidy, and is working with its government partners to restructure the existing debt on the project. The total HDC permanent blanket mortgage amount of $38.6 million will have a full 30 year term and a low interest rate.
“Goldman Sachs is pleased to work with our public and private sector partners to preserve this important portfolio of affordable housing,” said Alicia Glen, Managing Director and Head of the Urban Investment Group at Goldman Sachs. “We remain committed to using innovative financial tools to ensure that low-income people have access to quality housing and other services in their communities.”
As part of the deal, L+M will handle the day-to-day operation of the portfolio, and will bring its expertise to handle construction and tenant management. L+M, in cooperation with HCCI, will maintain tenant relations to ensure construction moves as smoothly as possible. The work is expected to be performed in several stages to minimize disruption to the residents and maximize efficiency. To date, in partnership with HPD and HDC, L+M has built more than 1,200 units in Harlem including the Kalahari, an award-winning 249-unit mixed-income condominium located in Central Harlem, and PS90, a rehabilitated public school along West 148th Street that completed the revitalization of 230 units on the same block.
About the NYC Housing Development Corporation (HDC)
The Housing Development Corporation (HDC) provides a variety of financing programs for the creation and preservation of multi-family affordable housing throughout New York City. In partnership with the NYC Department of Housing Preservation and Development, HDC works to implement Mayor Michael R. Bloomberg’s New Housing Marketplace Plan to finance the creation or preservation of 165,000 affordable housing units by the end of the 2014 fiscal year. Since the plan launched in 2003, HDC financed more than 50,000 homes for low- , moderate- and middle-income New Yorkers. The New York City Housing Development Corporation is rated AA by S&P and Aa2 by Moody’s.
About the NYC Department of Housing Preservation and Development (HPD)
HPD is the nation’s largest municipal housing preservation and development agency. Its mission is to promote quality housing and viable neighborhoods for New Yorkers through education, outreach, loan and development programs and enforcement of housing quality standards. It is responsible for implementing Mayor Bloomberg’s New Housing Marketplace Plan to finance the construction or preservation of 165,000 units of affordable housing by 2014. Since the plan’s inception, more than 114,000 affordable homes have been created or preserved. For more information, visit www.nyc.gov/hpd.
About L+M Development Partners
Since 1984, L+M Development Partners has been an innovator in developing quality affordable, mixed-income and market rate housing, while improving the neighborhoods in which it works. A full-service firm, L+M works from conception to completion, handling development, construction and management with creativity that leads the industry. L+M is responsible for more than $2 billion in development and construction and has created more than 10,000 high-quality units in the tri-state area alone. Community leaders, government officials and investment organizations turn to L+M because of its consistent track record of excellence.
L+M is a double bottom line company, where its success is measured not only in financial returns but also by the positive impact it makes. L+M takes pride in its long-standing dedication to the communities it serves, demonstrated through an annual scholarship fund, job training programs and substantial support for local nonprofits. L+M brings a superior level of commitment to its investments in developments, and equally important, to its investment in people. Additional information on the company can be found at www.lmdevpartners.com.
About Harlem Congregations for Community Improvement, Inc. (HCCI)
Harlem Congregations for Community Improvement, Inc. (HCCI) is committed to the holistic revitalization of Harlem. We provide economic development and empowerment opportunities to help Harlem residents rebuild and sustain their community.
Founded in 1986, HCCI is a coalition of more than 90 inter-faith congregations that has implemented a comprehensive portfolio of programs to provide affordable housing and safe streets; offer opportunities for individuals and groups to become and remain economically independent; increase understanding of and access to health care; and provide substantive educational programs for adults and young people. Through alliances with other community organizations, elected officials and local residents, HCCI has also helped reduce crime in the community; increase public sanitation; and preserve and transform open space. HCCI is a not-for-profit, 501(c)(3) corporation governed by a Board of Directors, and relies on support from grants, donations and government contracts funds. For more information, visit: www.hcci.org
About New York State Homes and Community Renewal (HCR)
New York State Homes and Community Renewal (HCR) consists of all the State's major housing and community renewal agencies, including the Affordable Housing Corporation, the Division of Housing and Community Renewal, Housing Finance Agency, State of New York Mortgage Agency, Housing Trust Fund Corporation and others.
Integrating these agencies under a single leadership and management structure has created new efficiencies and better coordination of the state's resources. Similar and complementary programs are aligned and working together, reducing costs, red tape and duplicative efforts while increasing the effectiveness of the state's housing and community renewal programs. www.nyshcr.org
About Mayor Michael R. Bloomberg’s New Housing Marketplace Plan
New York City’s affordable housing program to build or preserve 165,000 units of housing — enough to house half a million New Yorkers — is the most ambitious and productive in the nation—creating housing as well as jobs for New Yorkers. In April, 2010 the City reached the critical benchmark of 100,000 units financed—representing an investment of $4.5 billion to date by the City, not including roughly $5 billion in bonds issued by HDC.
The Plan has been recast to maintain production momentum while confronting head-on the economic challenges facing the City, the State, the housing industry, the financial sector and individual New Yorkers and their families. In order to fulfill the NHMP goal of 165,000 units, HPD and the NYC Housing Development Corporation (HDC) are responding to market realities and focusing on three primary goals: strengthening neighborhoods, expanding the supply of affordable and sustainable housing and stabilizing families by keeping them in their homes. To read more about the NHMP, please visit http://www.nyc.gov/html/hpd/html/about/plan.shtml.
About the Goldman Sachs Urban Investment Group
The Goldman Sachs Group, Inc. (NYSE: GS) is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.
Goldman Sachs established the Urban Investment Group (UIG) in 2001 to deploy the firm's capital by making investments and loans through comprehensive community development platforms that benefit underserved communities in the United States. UIG has committed more than $1.3 billion, facilitating the creation and preservation of approximately 9,100 housing units - 75% of which are affordable to low, moderate and middle-income families - as well as over 730,000 sq. ft. of community facility space and approximately 900,000 sq. ft. of commercial and retail space. To learn more about UIG, visit www.gs.com/uig.