Capital Partnership for Affordable Renovation (CPAR) Loan Program

The Capital Partnership for Affordable Renovation (CPAR) Loan Program is a low-interest loan program for multifamily building owners requiring moderate rehabilitation work. The program is designed to assist building owners to improve building conditions and facilitate the preservation of safe, affordable housing for low- and moderate-income New Yorkers.

HPD is partnering with select lenders to complete portions of the loan application and development process, increasing HPD’s capacity for closing loans. This program is most suitable for buildings that have the ability to support a new mortgage to, in part, address their capital needs along with HPD subsidy. Buildings that qualify for this program must also have moderate rehabilitation needs.

On behalf of HPD, Participating Lenders will evaluate projects for eligibility and feasibility, conduct all underwriting and other analyses, and prepare the documents for submission and approval by HPD, and will liaise between a borrower and HPD and track project progress. Participating Lenders must enter into an MOU with HPD to be a Lender in this program. Current participating lenders are Community Preservation Corporation (CPC) and the Local Initiatives Support Corporation (LISC).

Program Overview

The Capital Partnership for Affordable Renovation loan program relies on a mix of HPD subsidy and private financing. The maximum subsidy permitted is $80,000 per unit and the 30-year loan is provided at a below-market interest rate. Projects are generally eligible for a full or partial property tax exemption. Loan recipients will enter a regulatory agreement for at least the term of the loan and/or tax exemption. The agreement sets limits on allowable rents and initial household incomes and requires units to be rent-stabilized.

For more information on the loan terms, see the Capital Partnership for Affordable Renovation Term Sheet.

For Lenders interested in entering into an MOU to become a qualified lender in the program, please contact CPARloans@hpd.nyc.gov.

Eligible Buildings

Buildings with 3 or more apartments are eligible if rents average 80% AMI and below for rentals. HDFC Coops may apply and will be subject to income and sales restrictions with a maximum of 120% AMI for future sales. The proposed scope of work must meet HPD’s moderate rehab criteria; projects requiring substantial rehabilitation are not eligible.
Eligible owners may include limited partnerships, corporations, joint ventures, limited liability companies, 501(c)(3) non-profit corporations, housing development corporations, and individual owners including homeowners.
Buildings receiving federal financing (including tax credits), requiring acquisition, or with project based project-based vouchers are ineligible for the program among select other characteristics.
Applicants must apply to Capital Partnership for Affordable Renovation loan program through HPD’s Participating Lenders.

Process

Application: Complete the application materials on one of our Participating Lender websites:
- Community Preservation Corporation (CPC)
- Local Initiatives Support Corporation (LISC)
Building Assessment: An HPD pre-qualified third-party firm will conduct a roof-to-cellar assessment of the physical conditions and energy efficiency needs of your building ("Integrated Physical Needs Assessment" or “IPNA”). The amount of the loan will be based on the efficiency and renovation work identified through the assessment.
Scope of Work Development: Depending on the needs of your building, a third-party architect will complete a scope of work in accordance with HPD specification to be bid out to contractors of your choosing.
Bidding: HPD recommends bidding the scope to at least three contractors of your choosing (HPD cannot recommend any contractors). A third-party architect will review and recommend a bid, reviewed for cost-reasonableness by the lender. The lender will review and approve the contractor who will also need to pass HPD’s sponsor review process.
Loan Closing: Once the due diligence process is complete and HPD approves all required documents, the loan closing will take place.
Construction: A third-party Construction Monitor in partnership with HPD will monitor the construction process to ensure adherence to the scope of work and HPD specifications.

Resources

Integrated Physical Needs Assessment

Frequently Asked Questions

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FAQ for Lenders

Which lenders are participating?
- Current participating lenders are Community Preservation Corporation (CPC) and the Local Initiatives Support Corporation (LISC). Interested lenders can participate in the program by reaching out to each of these organizations.
How are lenders being compensated?
- Like all lenders, participating lenders will charge a fee for their lending.
How many owners/buildings will this program assist this year?
- While we do not know the exact number of owners that HPD will be able to assist, the capital budget does include funding for this program.
How will HPD ensure oversight compliance with regulatory requirements if it is delegating its processes to a private entity?
- HPD will still review loan packages for compliance, conducting certain due diligence tasks and ensuring all required approvals are received for the Lender to close the loan.

FAQ For Applicants

What types of buildings can participate/qualify?
- Residential buildings with three or more units that require moderate rehabilitation and whose rents or sale prices fall below required income limits (80% AMI and 120% AMI respectively) will be eligible for the program. However, buildings with certain characteristics, like those that will require the long-term relocation of tenants, will not be eligible as the program is intended for simple, moderate rehab projects.
Which owners will this be most helpful for?
- Owners that have buildings that can support private debt with moderate rehab will find this program most useful, as it seeks to help them access HPD financing more quickly.
How much money will owners qualify for?
- The term sheet allows for up to $80,000 per dwelling unit in HPD subsidy.
What types of work will owners be able to do under this new program?
- Moderate rehabilitation projects include work that affects two or more systems (e.g., heating, plumbing, electric, roof, windows, façade). This may include replacement or refurbishment of building systems, equipment, or fixtures.
- Project scopes of work will need to meet HPD’s construction and design specifications (link here) that establish minimum design standards that aim to promote NYC’s climate goals and laws while incorporating best practices for resiliency, health, and safety.
What is the benefit of the CPAR program?
- The CPAR program aims to create a more efficient process for property owners seeking a low- or no-interest loan by partnering with private lenders so that more owners can take advantage of HPD’s services more quickly. HPD is launching this program to help more owners access HPD financing faster so that more tenants can live in safe and habitable buildings.
Is there an equity requirement?
- For profit: minimum of 5% of total development cost less existing debt, and reserves.
- Non-profit developers: No equity requirement
- Note: Owners may put in more equity to keep subsidy at $80K and first position debt is already maximized.
Can projects with existing debt qualify for CPAR? How would HPD structure existing debt?
- Legal will need to do a final review and approval on all documents.
- HPD may extend existing debt to be coterminous with the new long term first position lender.
Is there a developer fee?
- A developer fee will be applicable on all projects.
Is there MWBE support for CPAR deals?
- HPD’s M/WBE Build Up Program aims to increase contracting opportunities for certified Minority- and Women-Owned Business Enterprises (M/WBEs) in HPD/HDC-subsidized affordable housing projects. See link for more details: https://www.nyc.gov/site/hpd/services-and-information/m-wbe-build-up-program.page
Is CPC / LISC doing Perm Loan Conversion?
- Yes
Will BLDS be doing construction monitoring?
- Yes, BLDS will be doing light monitoring.
What is the timeline for these projects?
- We aim to have CPAR projects close in 9-12 months.
What if there are violations on the building(s)?
- All violations will be required to be cleared by closing. If unable to clear violations by closing, the developer will need to submit a Violation Clearance Plan detailing how violations will be cleared during construction.
What is the interest rate for a typical loan?
- Participating lenders set their own rates for their loans and will communicate the rates to applicants.
- HPD loans will be set at the long-term monthly compounding Applicable Federal Rate (AFR) with a minimum floor of 2.5% (compounding monthly)
  - The required paid rate of 1% per annum (inclusive of 0.25% servicing fee) is due during the permanent loan period.
Does a Coop have to implement maintenance increases in order to secure the loan?
- The HPD Regulatory Agreement will require that all coops have a 2% annual increase to maintenance charges.
What does rent restructuring mean as it relates to eligibility?
- Projects requiring rent restructuring are not eligible for CPAR.
Can there be work done before a loan closing?
- Any work that will need to be funded by the loans cannot be started before loan closing. HPD cannot reimburse developers or owners for work done prior to construction loan closing.
Who determines the scope? Is an IPNA required and if it is, can it be paid for from CPAR funds?
- Yes, an IPNA is required. The scope of work will be required to meet HPD’s construction and design specifications laid out in HPD’s Preservation Design Guidelines (link here).
Have you started reviewing already submitted applications?
- Yes, applications are open for submission.
If you currently have a loan with HPD will you still be eligible for the program?
- Yes, current borrowers are eligible for the CPAR program.
Besides interest rates, what would go into a building deciding if they should apply through LISC or CPC?
- It is up to the preference of the applicant to choose either LISC or CPC.
Are any tax abatements or exemptions a part of the program?
- CPAR projects may be eligible for a tax abatement or exemption via Art XI or J-51.
Are Year 15 buildings appropriate for the CPAR financing?
- No, Year 15 buildings must go through HPD’s Year 15 program.