Rehab Will Provide Tenants of East 147th Street Properties with Building-Wide Upgrades, Layout Changes, and Will Ensure Affordability for Years to Come
NYC Housing Preservation and Development (HPD) Commissioner Mathew M. Wambua, Council Speaker Christine C. Quinn, Workforce Housing Advisors (WFHA), Community Preservation Corporation (CPC) President/CEO Rafael E. Cestero, the Urban Homesteading Assistance Board (UHAB), and New York Community Bank announced the beginning of what will be a gut renovation of two multi-family residential buildings in the South Bronx. Located at 539-541 East 147th Street in Bronx Community Board 1, the previous ownership had allowed the buildings to fall into severe physical and financial distress, forcing the tenants to live in deplorable conditions. As part of a comprehensive effort, Workforce Housing was able to purchase the buildings from New York Community Bank through the innovative “First Look” initiative, and recently closed on a $4.7 million financing package with HPD and CPC that will allow the properties to be renovated and which will also ensure that they remain affordable to the current tenants.
Financing the rehabilitation and preservation of the Mott Haven 147th Street buildings is part of Mayor Michael R. Bloomberg’s New Housing Marketplace Plan (NHMP), a multibillion dollar 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 NHMP has funded the creation or preservation of more than 144,700 units of affordable housing across the five boroughs. More than 44,450 units have been created or preserved in the Bronx with more than 7,913 of those units in Bronx Community Board 1. For every dollar invested by the City, the Plan has leveraged $3.43 in additional funding for a total commitment of more than $21 billion.
“HPD is proud to lend $2.5 million to fund the rehabilitation of these properties, and to help ensure that the tenants will have safe, clean and affordable homes for decades to come,” said HPD Commissioner Mathew M. Wambua. “That a new, responsible owner is in place and the rehab work is on pace to start is a testament to a model of preservation that is a proven winner. When so many different stakeholders all work together to affect a change in ownership and make a substantial financial commitment to the long-term stability of these properties, the real winners are the families who will have better lives and peace of mind.”
“This deal is an example of what the City can accomplish when we work together to protect tenants’ homes,” said Speaker Christine C. Quinn. “The 'first look' agreement we reached with New York Community Bank ensures the City and good developers get first crack at purchasing loans and preserving buildings, and I thank Workforce Housing Advisors, UHAB and HPD for their hard work to save these homes.”
“539-541 is a collaboration between the private sector and the government to create real change,” said John A. Crotty, Partner of Workforce Housing Advisors. “These partnerships succeed because all of the parties in this deal want to tackle these types of problems in the NYC residential market. We at Workforce commend the entire team on their efforts to make this happen. We think the result will be transformative not only for the families of 539 and 541 but for the Mott Haven neighborhood as well.”
“Investing in overleveraged and distressed properties is at the core of CPC’s work to revitalize neighborhoods and to maintain the affordability of homes throughout New York City, and this project is an excellent example of how the collaboration of public and private partners can truly drive those goals,” said Rafael E. Cestero, President and CEO, The Community Preservation Corporation. “As a result of the diligent work of the City, the Speakers Office, HPD, Workforce Housing Advisors, UHAB and New York Community Bank, the Mott Haven 147th Street buildings will be fully renovated and remain affordable to its residents.”
Workforce Housing Advisors purchased these two Bronx buildings from the New York Community Bank in October 2011 as part of the First Look initiative. First Look is a program developed in partnership with the City Council and Speaker Quinn, HPD, and tenant/housing advocacy organizations which ask local banks to provide responsible preservation-minded developers with an early opportunity to purchase distressed multi-family properties in foreclosure. New York Community Bank was one of the first lenders to sign on to the initiative.
“NYCB is proud to work with Workforce Housing Advisors, HPD, UHAB, and our other 1st look partners. Workforce has a fantastic record of turning distressed assets into quality affordable housing. They have been a great resource for the bank, especially when the lengthy foreclosure process in NY has negatively impacted living conditions, as was the case with these buildings. The bank believes that collaboration between Workforce, HPD, CPC, and UHAB on 539-541 East 147th St. will yield a successful rehabilitation of the buildings, and ensure the preservation of these units as permanent affordable housing.”
Immediately upon taking title, WFHA began a dialogue with the tenants and UHAB, one of the city’s most established tenant advocacy groups who had been working with the tenants in these properties for some time prior to the purchase. UHAB counseled the tenants through the receivership period and continued to do so after WFHA took title. UHAB will continue in both an organizing role and as title holder of the properties.
“The tenants in these buildings were living in uninhabitable conditions,” said Kerri White Co-Director of Organizing and Policy at UHAB, “The conditions only deteriorated further during the foreclosure. Mold, leaks, collapsing ceilings and electrical fires had all plagued the families living here. These tenants along with residents from other buildings in foreclosure had long been organizing, with the assistance of their elected officials, to get NYCB to sell these overleveraged foreclosure buildings to good developers who would make the needed repairs and preserve affordability. Without the creativity of WFH and the City, these buildings would have been lost.”
At the time of the WFHA purchase, the buildings had over 300 hazardous and immediately hazardous violations issued by HPD. The physical conditions had significantly deteriorated, putting the health and safety of the tenants at risk. The buildings have substantial water penetration due to deteriorated masonry and mortar, there are large amounts of mold and mildew that must be remediated, and many of the major building-wide systems require replacement.
These conditions require considerable physical upgrade that will be addressed through the rehabilitation financing including the installation of a new roof, new windows, new plumbing, electric and heating systems as well as approximately 50% beam replacement. The rehabilitation plan will also include layout changes. The buildings were built in approximately 1898 with a railroad apartment configuration with only one private bedroom. In order to efficiently use the space the units have been reconfigured to create two private bedrooms. Since this is a substantial rehabilitation, WFHA has provided for the temporary relocation of the tenants during the 18-month construction period.
The total development cost of this rehabilitation project is approximately $4.7 million. HPD is providing $2.4 million in subsidy, CPC is providing a construction and permanent loan of $1.64 million, and the remainder is being funded with equity from WFHA. Prior to the commencement of construction, HPD and the City Council worked to facilitate an Article XI tax exemption, which will help defray long-term costs and thus help to subsidize the affordability of the apartments.
539-541 East 147 Street is comprised of two adjacent properties located in the Mott Haven section of the Bronx. Each building contains 10 residential units plus a superintendent’s unit in the basement. The buildings are classified as Old Law tenements and were built in 1898 with railroad layouts. The properties were acquired by WFHA in October, 2011 from New York Community Bank. NYCB had acquired the buildings in a deed in lieu of foreclosure sale immediately prior to the WFHA transaction.
These buildings are a continuation of WFHA’s business plan to repurpose distressed multifamily buildings in New York City to help create change where it is most needed, and WFHA’s second rehabilitation loan with CPC.
Photos of the units can be found here: http://www.wfhadvisors.com/wfh/projects/bronx/bronx_2.html
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Workforce Housing Advisors (WFHA)
WFHA is a for profit affordable housing development firm that specializes in re-purposing distressed multifamily real estate in the New York metropolitan area. WFHA works collaboratively with for-profit, not-for-profit, and government partners to reposition financially and physically distressed properties as long term affordable housing resources. http://www.wfhadvisors.com
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 144,700 affordable homes have been created or preserved. For more information, visit www.nyc.gov/hpd
The Community Preservation Corporation (CPC)
The Community Preservation Corporation is a not-for-profit mortgage lender that finances residential multifamily development throughout New York. Since its founding in 1974, CPC has invested more than $8 billion in over 144,000 units of housing.
Urban Homesteading Assistance Board (UHAB)
UHAB is a non-profit organization which provides low-income residents with the training and support services they need to sustain their homes with an emphasis on using the self-help housing process as a catalyst for leadership development and broader community change. The majority over our 40 year history has focused on creating and preserving over 30,000 units of high quality housing co-operatives throughout New York City. UHAB’s Organizing and Policy department focuses on empowering residents in rent regulated and subsidized buildings to create tenant associations to advocate for the protection of affordability, to fight for safe, decent living conditions, and to foster preservation-friendly policy changes at the local, state, and national level.
New York Community Bank (NYCB)
New York Community Bancorp, Inc. is currently the 20th largest bank holding company in the nation and a leading producer of multi-family loans in New York City, with an emphasis on apartment buildings that feature below-market rents. The Company operates two bank subsidiaries—New York Community Bank, a thrift, with 240 branches in Metro New York, New Jersey, Ohio, Florida, and Arizona; and New York Commercial Bank, with 35 branches in New York City, Westchester County, and Long Island, including 18 branches that operate under the name Atlantic Bank. Additional information about the Company and its bank subsidiaries is available at www.myNYCB.com and www.NewYorkCommercialBank.com.