State’s Largest Mitchell-Lama Development, Home to 55,000 Residents, Will Remain Affordable for 35 More Years
Governor Andrew M. Cuomo, Mayor Michael R. Bloomberg and U.S. Housing and Urban Development Secretary Shaun Donovan today announced the closing of a $621.5 million loan to the Co-op City development in the Bronx. The Federal, state and city governments announced that their respective agencies have joined together to jointly insure the mortgage loan made by Wells Fargo Bank, which will refinance Co-op City’s existing debt at historically low interest rates. Under the terms of the loan, Co-op City, the largest Mitchell-Lama co-op that first opened to the public in 1968, will remain affordable to residents for 35 more years.
“Keeping Co-op City affordable and viable is great news not just for current tenants but for thousands of Bronx residents who need affordable housing options,” said Mayor Michael R. Bloomberg. “We have a long-standing commitment to preserving affordable housing for this generation and for the generations to come – that’s why we’ve set an ambitious goal to finance the creation and preservation of 165,000 affordable housing units by the end of 2014 under the New Housing Marketplace Plan. Thanks to Governor Cuomo and HUD Secretary Donovan for their partnership on this important project.”
“If it were an actual incorporated city, Co-op City would be the twelfth largest in our state -- and so it is hard to exaggerate the critical role it has played for over 40 years in keeping housing in New York State and New York City affordable,” said Governor Cuomo. “I am proud and grateful that all levels of government were able to work effectively together to secure a deal that protects the middle and low-income New Yorkers who call Co-op City home.”
“This is about preserving affordable housing for the next generation of families living and working in one of the nation’s highest cost rental markets,” said HUD Secretary Donovan. “Working closely with the State of New York and New York City, we’re making certain that working families have a decent and affordable place to call home while saving private owners of affordable housing significant money that they can reinvest back into their properties.”
“Wells Fargo is a proud partner in financing, protecting and keeping Co-op City affordable for decades to come,” said Alan Wiener, Managing Director of Wells Fargo Multifamily Capital. “Structuring such a deal was not easy, but like most of the valuable community-based development that Wells Fargo does, the results are incredibly rewarding. Because of today’s historically low interest rates, our refinancing of its current debt will save Co-op City and its residents more than $150 million over the 14 year remaining term of the current loan and eliminate refinancing risk should interest rates rise. Wells would like to once again thank the Governor, Mayor and Secretary for making this important deal possible.”
The Wells Fargo loan to Riverbay Corporation, which controls Co-op City, is the largest ever insured under HUD’s 223(f) program, which protects lenders against loss on mortgage defaults at multi-family rental properties. It is also the first time the program has been applied to a co-operative development. The Mortgage Insurance Fund of the State of New York Mortgage Agency (MIF/SONYMA, within New York State Homes and Community Renewal, or HCR) and New York City’s Housing Development Corporation (HDC) will be providing credit support with $55 million and $15 million coverage of the loan, respectively.
Loan proceeds will be used to prepay Co-op City’s current mortgage and complete capital projects currently underway, and for the first time provides for additional new reserves to address future capital needs, as well as to fund ongoing maintenance.
“The hard-working residents of Co-op City, uncertain about the long-term fiscal and physical health of their development, needed to know that their government was behind them,” HCR Commissioner/CEO Darryl C. Towns said. “Today’s closing ensures that that is the case for many years to come.”
“Not only have we helped make it possible to raise the cash to complete essential renovations at Co-op City, we are saving the cooperators more than $150 million in debt service over the next ten years allowing them to fund additional rehab projects as they become necessary,” HDC President Marc Jahr said. “This is a benefit that yields immediate results and will continue to pay forward over the long term. I thank our great partners at Co-op City, HCR, at HUD and at Wells Fargo for their commitment to this irreplaceable New York City housing resource.”
“This is a great, historic day for all shareholders, our friends and neighbors who live here in Co-op City,” said Riverbay Board President Helen Atkins. “Thanks to the Governor, the Mayor, Secretary Donovan, Wells Fargo, the members of the Riverbay Board of Directors and our managing agency, we have reduced our mortgage interest rate dramatically. This new loan will allow Riverbay to continue the work of maintaining and improving our home for many years into the future, stabilize our finances and guarantee affordable housing for generations to come.”
Located in the Baychester section of the Bronx, Co-op City is situated on 330 acres located along the west bank of the Hutchinson River. In addition to 35 residential structures, the site includes three shopping centers, a 25-acre educational park, eight parking garages, three elementary schools, two middle schools, a high school, a weather station, 14 gymnasiums, two swimming pools, 15 churches, six nursery schools and day care centers, four basketball courts, five baseball diamonds, numerous restaurants, a power plant and a multiplex movie theater.
New York State’s Mitchell-Lama Housing Program was first proposed by State Senator MacNeil Mitchell and Assemblyman Alfred Lama and was signed into law in 1955 by Governor William Averell Harriman. Under the state’s Private Housing Finance Law, the program provided for the creation of affordable housing, both rental and co-operatively owned, for middle-income residents. Developers received tax abatements and low-interest mortgages, subsidized by the federal, state, or New York City government. In total, 269 housing developments with 105,000 units were developed with State aid under the Mitchell-Lama Program.
New York State Homes and Community Renewal (HCR) consists of all the State's major housing and community renewal agencies, including the State of New York Mortgage Agency, the Affordable Housing Corporation, the Division of Housing and Community Renewal, the Housing Finance Agency, the Housing Trust Fund Corporation and others.
Since 2003, when Mayor Bloomberg’s New Housing Marketplace Plan was launched, the NYC Housing Development Corporation (HDC) has raised more than $6.7 billion in financing and contributed in excess of $1 billion in subsidy from corporate reserves for the creation or preservation of more than 60,000 affordable units in privately owned and managed multi-family affordable housing developments.