New Ownership and Substantial Rehabilitation Bringing Relief to Tenants and Preserving 81 Affordable Apartments
Bronx, NY - New York City Department of Housing Preservation and Development (HPD) Commissioner Mathew M. Wambua, Workforce Housing Advisors (WFHA) principal John Crotty, Banana Kelly Community Improvement Association President Harry De Rienzo, and Monadnock Construction President Nicholas Lembo celebrated the completion of the rehabilitation of the five formerly troubled Kelly Street buildings in the South Bronx, restoring 81 apartments and keeping them affordable to the New Yorkers who call them home. The previous owner, after refinancing the properties and incurring an unsustainable level of debt, allowed them to slide into such a deplorable state that all five were placed in HPD’s Alternative Enforcement Program (AEP), an initiative that annually targets the 200 most distressed buildings in the City for remediation. Subsequently, HPD commenced 7A proceedings in which it was successful in obtaining the appointment of Harry DeRienzo as the 7A administrator of the property. HPD, the development team, lenders and other partners were able to affect a change in ownership, and put in place a comprehensive rehab and financing plan that got the buildings back into good repair and into a stable financial situation for the long-term.
“All five of these buildings were part of HPD’s Alternative Enforcement Program. When the former owners abandoned these families, HPD stepped in to replace essential systems,” said Commissioner Wambua. “HPD Enforcement and Neighborhood Services staff worked closely with tenants to ensure that their homes were stabilized, but our goal was always to see that these buildings could be completely restored and fully occupied. When WFHA, Banana Kelly and Monadnock stepped in to take the reins, we knew that the families were in good hands. When different stakeholders work together to affect a change in ownership and make a substantial financial commitment to the long-term stability of properties, the real winners are the families who gain peace of mind and regain a sense of community. It was that fierce pride that saved Kelly Street in the first instance, and Kelly Street flourishes now because of it.”
The preservation of the City’s existing affordable housing stock, and keeping people in their homes is a critical component 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 5,738 of those units in Bronx Community Board 2. 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.
“This finished product at Kelly Street clearly demonstrates the ability of government to work effectively with private sector partners to achieve long term sustainable solutions to a new and evolving problem.” “Many people inside and outside of government helped make this renewal occur,” said Workforce Housing Advisors Partner John A. Crotty. “The residents of Kelly St will be the first of many tenants throughout the city who will see their living conditions greatly improve as a result of this innovative thinking. Combined with the Garden, Kelly Street will be wonderful place to live for a long period of time. ”
“What this block and the residents of these buildings endured bordered on criminal,” said Banana Kelly President Harry DeRienzo. “But with the help of HPD, first through special enforcement and emergency repairs, then through sponsorship of the tenant’s petition for appointment of a court-appointed Administrator, and finally through provision of financing for the complete renovation of these affordable housing units, and with the collaboration of our partners and assistance from other elected officials and government officials, residents in these buildings and on this block can once again feel proud to call this home.”
"Thank you to the City and HPD for giving us the opportunity to bring these units back to life,” said Monadnock President Nick Lembo. As satisfying as it is to create new buildings, there's something just as special about reviving units and making sure they can still properly and proudly serve the same noble purpose for which they were created: as affordable homes for the hard-working families of this City. Our team worked very hard on this project, and along with our terrific partners, WFHA and Banana Kelly, we are very pleased with the results of our collaboration."
The Kelly Street portfolio consists of 916, 920, 924, 928, and 935 Kelly Street in the Hunts Point-Longwood section of the Bronx. There are a total of 81 apartments in all five buildings; 17 units in 916 Kelly Street, 16 units in 920 Kelly Street, eight units in 924 Kelly Street, eight units in 928 Kelly Street, and 31 units in 935 Kelly Street. In total, there are five studios, 15 one-bedrooms, 41 two-bedrooms, four three-bedrooms, and 15 four-bedrooms.
“Any time Bronx residents are given a chance to live in affordable and high quality apartments, it’s a victory,” said Congressman José E. Serrano. “I applaud the hard work of HPD, Workforce Housing Advisors and Banana Kelly along with their construction partners in this project. These renovated apartments will be a very valuable asset to the community for years to come.”
"The renovation of this critically needed housing has been a long process. I want to congratulate HPD and Banana Kelly for the successful renovation of the five buildings. For too long families who lived there endured sub-standard living conditions. More importantly, I congratulate the tenants who did not give up on our community and welcome them back as well as the new families who will make our community their home," said Council Member Maria del Carmen Arroyo.
With the buildings in a state of extreme disrepair, extensive rehab work was necessary to make them habitable and safe for the tenants to reoccupy. The work on Kelly Street buildings consisted of roof replacements, exterior sidewalk/concrete replacement, masonry work, replacement of public hall stairs, joist replacement, new kitchens and bathrooms, new apartment doors, window replacement, new entrance doors, replacement of the storm drainage system, plumbing, electrical and lighting upgrade, and new security systems. Tenants who occupied apartments in the buildings were temporarily relocated during construction, and moved back into their newly renovated units when work was complete.
In addition to aiding in the rehabilitation of the buildings, the funding provided by the City includes regulatory agreements that ensure the apartments remain affordable to low-income households. Existing tenants will not see a rent increase due to the renovation work done to their apartments. Throughout the portfolio, the apartments are affordable to families earning no more than 50% Area Median Income (AMI) or $41,500 for a family of four, and 60% AMI or $49,800 for a family of four. Following the rehabilitation, there were 31 vacant units available. An open housing lottery monitored by HPD was conducted to fill these units. The lottery is now closed and the developer is in the process of filling the remaining units with income-eligible tenants who applied to the lottery.
The total cost of acquisition and rehabilitation for the five buildings was approximately $16.5 million. HPD provided a $3.4 million acquisition loan through its Participation Loan Program, funded by the third round of the US Department of Housing and Urban Development (HUD) Neighborhood Stabilization Program. JP Morgan Chase provided a $9.37 million construction loan. A total of $9.28 million in equity raised through the sale of Low Income Housing Tax Credits (LIHTC) helped pay additional construction costs and pay down the bank loan to a supportable level. Morgan Stanley served as Tax Credit Investor. Developer equity and a first mortgage from JP Morgan Chase complete the funding package.
“HUD wishes to congratulate HPD, WHFHA, Banana Kelly and Monadnock Construction for their herculean effort and dedication in preserving the Kelly Street portfolio as an important affordable housing resource for New York City residents,” said Mirza Orriols, HUD Acting Regional Administrator. “HUD has no higher mission than the creation and preservation of affordable housing and we are proud that our funding from the Neighborhood Stabilization Program is playing an important part in the continued growth of the Hunts Point-Longwood section of the Bronx.”
“As New York’s largest bank and private employer, we are committed to investing in projects that have a positive and sustainable impact in communities where we operate,” said Priscilla Almodovar, head of Chase Community Development Banking. “The rehabilitation of the Kelly Street buildings was especially important because it directly improves the living situation for existing tenants, while keeping the 81 units affordable.”
In December 2010 the previous owner of the Kelly Street buildings was held in default on the mortgage and the portfolio went into foreclosure. On January 7, 2011 WFHA purchased the debt on the portfolio from Ridgewood Savings Bank with a short-term bridge loan from the New York Affordable Housing Preservation Fund (NYAH), a $100 million real estate equity fund created by Citi Community Capital and L+M Development Partners. WFHA pursued foreclosure proceedings against the original owner, eventually taking title to the five buildings after a foreclosure auction held on August 1, 2011.
In March 2011 Harry DeRienzo of Banana Kelly Community Improvement was appointed by the Bronx Housing Court as the 7-A administrator for the properties, effectively allowing him to address the unsafe and unsanitary conditions within the buildings, manage the day-to-day operations, establish legal tenancies, collect rent and perform the necessary repairs to keep the properties in stable condition until WFHA acquired title. Monadnock joined WFHA as a partner in the project and served as the general contractor during the rehabilitation process.
Prior to the sale of the buildings to WFHA, all five properties had been placed in HPD’s Alternative Enforcement Program (AEP), an initiative to effectively identify and increase the pressure on the owners of some of the City’s most distressed residential buildings to bring the buildings up to code. This program is credited with stabilizing the buildings, and ultimately leading to the partnership with Banana Kelly and Workforce Housing Advisors. Absent AEP, the properties would have continued to rapidly deteriorate and pose a health and safety risk, and possibly, orders to vacate the tenants may have been necessary – leaving the residents without permanent homes and threatening the stability and integrity of the surrounding neighborhood.
The AEP allowed HPD to target the buildings, do roof-to-cellar inspections and perform emergency repairs to the most hazardous conditions that the old owner refused to address. With the transfer of ownership and the extensive renovations complete, the City will no longer need to intervene on emergency repairs and the tenants can now look forward to the peace of mind that comes with new responsive management and safe, clean newly renovated homes.
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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
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
Banana Kelly Community Improvement Association
In 1977, thirty residents gathered to stop the demolition of their homes along Kelly Street, a crescent shaped block in the heart of the Longwood/Hunts Point neighborhood of the South Bronx. These original activists formed Banana Kelly Community Improvement Association, Inc. to continue the work that they had started. The organization was incorporated in New York State in 1978 and is registered as a 501(c)(3) non-profit with the Internal Revenue Service.
Banana Kelly's achievements to date include raising or leveraging over $100 million of investment in Longwood/Hunts Points; rehabilitating 2,000 units of affordable housing; conducting ongoing management and ownership of 1,000 units of housing in 47 buildings; weatherizing over 8,000 units of housing; providing 1,500 families per year with service referral and housing advocacy; establishing a program of assistance to small businesses; delivering education as well as construction training and building maintenance programs to over 750 youth; developing the first urban dormitory for homeless high school students; and attracting the first new health care clinic in the community in 22 years. www.bananakelly.org
About Monadnock: Established in 1975, Monadnock has steadily grown over the years into one of the largest and most reputable residential contractors and developers in the New York area. In that time Monadnock has built and developed over 12,000 units of housing, including luxury hi-rises, modular and site built town homes, mid-rise affordable housing, dormitories, supportive housing, and senior housing. Regardless of the size of the job, Monadnock delivers a commitment to quality and a focus on practical problem solving. For more information, , please visit www.moncon.com