Case Study 21

NYCHA Selects Ocean Bay to Develop a Supermarket in the Rockaways

Background

When the New York City Housing Authority issued a Request for Proposal (RFP) inviting developers to build a supermarket for NYCHA residents in the Rockaways, Pat Simon, executive director of the Ocean Bay Community Development Corporation, had already done her homework.

The community-based non-profit she directs had provided programs for residents of the authority’s Ocean Bay Apartments since 2004, and knew what retail services the community needed. Later, in 2012, when Superstorm Sandy swept over the Rockaway Peninsula, amidst its widespread destruction, Ocean Bay found opportunity. After Sandy, Simon and her staff met every two weeks with residents and leaders of NYCHA’s six Rockaway developments. Anyone familiar with the central Rockaways knows it’s a food desert, which the RFP sought to address. But Simon also learned that NYCHA residents wanted a pharmacy, a financial institution, and a neighborhood center where residents could charge their cell phones, obtain diapers and ride out a future storm.

Strategy

When the authority issued its RFP in 2014, which offered the winning developer one acre of NYCHA land, “we had visioned already,” Simon recalls.

Sandy brought other opportunities to Ocean Bay. The Local Initiatives Support Corporation (LISC), the financial intermediary, witnessed the extent of damage on the Rockaways and provided Ocean Bay with grant funds. When the RFP came out, LISC agreed to finance the development Ocean Bay would propose.

And Asian Americans for Equality, the community development organization, found it had difficulty making loans intended to help Rockaway homeowners recover from Sandy. So Ocean Bay provided AAFE with office space so it could work more closely with local residents. When Ocean Bay sought to assemble a development team in response to the RFP, Simon struck a deal with AAFE. It would serve as lead developer and give Ocean Bay an equity stake in the project and a share of the developer’s fee without requiring Ocean Bay to put up any money. What AAFE valued was Ocean Bay’s credibility in the Rockaways and its skill in organizing and mobilizing NYCHA residents. Hester Street Collaborative, a technical service provider to non-profits, rounded out the development team and provided financial and technical assistance to Ocean Bay.

In 2015 NYCHA selected the Ocean Bay team to build the supermarket and other retail space on vacant land on Beach Channel Drive surrounded by the Ocean Bay Apartments. The Ocean Bay team won because “they were really trying to better the area,” explained Nicole Ferreira, NYCHA’s vice president for real estate development. “They knew what the community wanted. “

Conclusion

Early next year, NYCHA will sell the one-acre site to a limited partnership consisting of AAFE and Ocean Bay. The partnership will pay NYCHA about $250,000 for the land, funds that AAFE will provide. In addition to a Key Food supermarket, the team plans to lease out the rest of the building’s ground floor to a pharmacy, a credit union and hardware store. Upstairs, Ocean Bay wants to relocate its office and create space for it and other organizations to offer a wide variety of programs and services to NYCHA residents.

Once the shopping center opens in 2019, Ocean Bay plans to acquire the skills to become the property manager of the retail development. When it does, AAFE will transfer its interest in the retail development and the underlying land to Ocean Bay, adding a significant asset to Ocean Bay’s balance sheet.

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