2003-2013 - HDC's Role in Financing Affordable Housing

Over the last 10 years, the nation experienced an economy that went from great heights to perilous descent before showing slim signs of recovery. Despite, and in fact because of, the economic rollercoaster, the City’s New Housing Marketplace Plan (NHMP), launched in 2003 and designed to finance the creation and preservation of affordable housing, has racked up astounding successes, funding more than 144,000 units by the close of 2012. ♦ Through the periodic iterations of the Plan as envisioned by the City’s Department of Housing Preservation and Development (HPD), HDC has played an increasingly active and essential role in helping to meet the needs of the City’s housing finance marketplace, issuing over $12.4 billion in bonds and providing subsidy totaling $1.2 billion by the close of 2012 to finance nearly 69,000 homes of those created or preserved under the NHMP. ♦ Over the course of the Plan, thanks largely to HDC’s ability to leverage capital, for every dollar spent by the City, via HPD, $3.42 has been raised through other resources for a total of $21 billion. And this was all by design. As Jerilyn Perine, Commissioner of the City’s Department of Housing Preservation and Development (HPD) under Mayors Rudolph Giuliani and Michael Bloomberg, and original architect of the NHMP, recalls: “It was always intended to be a dynamic, renewing document that should be reviewed and adjusted at regular intervals, which is why it was called the ‘new housing marketplace plan’.” Next Page →






2003-2013 - Building was a Monumental Effort

2003–2007  The First Five Years

Jerilyn Perine – HPD Commissioner, Sept. 2000–March 2004
Shaun Donovan – HPD Commissioner, 2004–2007
Emily A. Youssouf – HDC President, 2003–2007

The world that ushered in Mayor Michael R. Bloomberg’s NHMP was a world still overshadowed by the tragic events of 9/11. “Those events had a traumatizing effect on everyone in the City. They left scars that are still part of our skin,” said Marc Jahr, HDC President since January 2, 2008. The Plan, created to pioneer tools and incentives to do more to boost the stock of affordable housing, officially kicked off in July 2003 as a commitment to invest $3 billion in City funds to build or preserve 65,000 units of affordable housing throughout the City’s five boroughs by 2008. HDC was a big part of that, committing $548 million from its corporate reserves to finance 17,000 of those apartments.

“The Plan’s title is not rhetorical,” said Marc Jahr. “What it specifically states is that we have a plan that’s very much embedded in the real estate market of NYC. We will be responsive to the market. We will support both rentals and homeownership and will encourage preservation of existing properties.”

This fact was borne out over the years that followed as the Plan was recast to follow the surges and ebbs of the market—in 2005, then HPD Commissioner Shaun Donovan and Mayor Bloomberg announced a “doubling down”—that the Plan would extend an additional five years with a new goal to preserve or create 165,000 units of affordable housing. The City’s financial commitment grew to $8.5 billion, and HDC’s role expanded exponentially.

It was clear from the outset that the Plan’s goals could not be realized without strong partnerships, commitment and cooperation: the financial sector; the not-for-profit sector; the for-profit development community; advocates; elected officials; from local, state and federal governments; citizens; and public interest groups all have a stake in the NHMP’s successes.

Through all the years of working to meet its expanding commitments to Mayor Bloomberg’s NHMP, HDC has relied heavily on these partners and none more so than the New York State Association For Affordable Housing (NYSAFAH). NYSAFAH has 300 members statewide who are active in the financing, development, and management of affordable housing. “NYSAFAH collaborates with HDC to ensure efficient use of limited public resources to maximize affordable housing development in NYC,” explained Alison Badgett, NYSAFAH Executive Director. “HDC’s innovative spirit has enabled New York to lead the nation in affordable housing production. The future of affordable housing in New York depends on HDC’s continued advocacy in partnership with NYSAFAH and other stakeholders in the private and public sector.”

From 2003-2007, a strong market allowed HDC to work in partnership with major banks to finance mixed-income projects in neighborhoods around the City where such developments would not have been possible previously. In 2003, to meet its obligation under the Mayor’s Plan, HDC enhanced its Low-Income Affordable Marketplace Program (LAMP), creating the first use of its corporate reserves to provide subordinate loans. It also enhanced its New Housing Opportunities Program (New HOP), maximizing the use of HDC corporate reserves to make 1% second mortgage loans to finance moderate- and middle-income housing.

In 2004, HDC created the Mitchell-Lama Repair Program (later expanded in scope and rechristened the Mitchell-Lama Preservation Program), to preserve and finance the repair of that housing stock, created under State legislation in 1955, and to address the issue of “opting out” and going to market rate once all public debt was pre-paid or paid off. New York City had a portfolio of more than 60,000 Mitchell-Lama units, whose owners would be eligible to exit the program and convert apartments to market rates, provided their mortgages were paid off. During the recent real estate boom, to the dismay of Mitchell-Lama residents and housing advocates, about 18,000 units left the program. Some 30,000 units have been preserved, leaving approximately 10,000 that remain at risk. “These projects had mortgages that were accruing from the 1970s and getting bigger and bigger,” said HDC Chief Operating Officer and General Counsel Richard M. Froehlich, the program’s financial architect. “In 2004, HDC told them their debt would be refinanced for another 30 years and would no longer accrue, meaning if they had a $10 million debt today, it would still be $10 million in 30 years. But because $10 million would be worth a lot less in 30 years, a certain amount of pressure was taken off the developments.”

This was the pivotal decision in helping to ensure that an invaluable affordable housing resource for moderate- to middle-income New Yorkers was preserved in the present and for the future. At the start of the Mitchell-Lama Preservation Program, 27,000 apartments in the portfolio were eligible to opt out of the program. By the end of 2005, through HDC’s refinancing and repair programs, more than half of these units were expected to be preserved with owners agreeing to maintain apartment affordability for a minimum of another 10 to 15 years.

Omni New York LLC, a development, construction and management firm known for taking on troubled properties, first worked with HDC in 2004 on two Section 8 preservation projects in the Bronx: Thessalonica Court and Brookhaven Apartments. “As a result of HDC’s ability to work quickly and think outside the box,” said Eugene Schneur, Managing Director, Omni New York LLC, “these two transactions were closed within four months of the date of contract. Through HDC’s hard work and determination, 286 units of project-based Section 8 housing were rehabilitated and preserved.” To date, Omni has worked on 11 other HDC-financed projects, including The Ocelot Portfolio.

2004 also saw financing developed for HDC’s first mixed-income rental apartment buildings in Downtown Brooklyn—State Renaissance Court—and in East Harlem—The Aspen. These were the first buildings to mix income-restricted units for low- and middle-income tenants with market-rate units. Emily Youssouf, HDC President at the time, noted the importance of mixed-income housing: “HDC’s Mixed-Income Program allows us to serve a wider range of economically diverse New Yorkers and allows our resources to go farther. We look forward to financing more mixed-income developments as part of the Mayor’s housing plan.” And since that time, HDC has financed 83 mixed-income developments containing more than 9,000 apartments across the City.

By the end of Fiscal Year 2004, at that time the most productive and active year so far in HDC’s 23-year history, more than 8,000 apartments under the NHMP had been financed.

In 2005, HDC created a Section 202 Refinancing Program, using financing arranged through HUD (the Federal Department of Housing and Urban Development) for housing reserved for the City’s low-income senior citizens. Under this program, HDC pays off existing HUD mortgages and issues new mortgages at lower rates, allowing for the financing of major rehabilitation work and for increased investment in on-site social services. Wien House, run by the YM & YWHA of Washington Heights and Inwood; Phelps House, operated by Goddard Riverside Community Center on Manhattan’s Upper West Side; and nearly 1,000 apartments in Brooklyn and Queens, in conjunction with Catholic Charities, were among the developments refinanced through this Section 202 program.

Emily Youssouf called the Catholic Charities refinancing (done in conjunction with Citi Community Capital): “One of the most complex but exhilarating deals,” referring to the fact that in a single transaction, HDC refinancing allowed “the rehabilitation of 10 separate 202 senior housing properties into one pool for the Progress of Peoples portfolio.”

In April 2005, HPD, HDC and the New York City Housing Authority (NYCHA) launched a collaborative effort to develop underused and/or vacant land owned by NYCHA into affordable housing for low-income New Yorkers. With 2,698 buildings under its management housing about 420,000 people in 179,397 apartments, NYCHA is the largest public housing provider in North America.

By tapping underused sites in the portfolios of other landholding public agencies, the City expected to create significant additional affordable rental and ownership opportunities. Former HPD Commissioner Shaun Donovan said: "To address New York City's housing shortage, we are looking at all available land and buildings in both our own portfolio and the holdings of other public sector partners like the NYC Housing Authority. Transforming this inventory of currently dilapidated buildings and empty lots into much needed affordable housing will help us realize the Mayor’s ambitious housing plan."

The first project under the initiative was a $27 million development in the University Heights neighborhood of the Bronx, where a combination of rehabilitation and new construction financed through HDC’s LAMP program created 210 rental apartments. "At a time when public money is limited, collaborations like this one that leverage additional resources are crucial," said HDC President Emily Youssouf. "HDC continues to be a leader in developing innovative programs to finance affordable housing and we are pleased to be working with HPD and NYCHA on this historic transaction."

Developer Peter Magistro, President of Bronx Pro Real Estate Management, Inc., said at the time: "This development is a winner for the tenants and the neighborhood. It enhances investments our organization has already made in University Heights through other HPD programs, and our property management expertise will ensure safe, quality apartments for generations to come of University-Macombs tenants."

Since the NYCHA Partnership launched in 2005, the collaboration has already produced more than 2,000 units with another 2,000 under construction and in pre-development for a total of approximately 4,000 affordable units. These include newer developments such as Randolph Houses and Prospect Plaza, for which developers were named in early 2013.

On October 25, 2005, the opening of 90 West Street—termed the “Miracle Building” for having withstood fires that raged within it for days following the 9/11 attacks—heralded the return of life to Lower Manhattan. Tax-exempt bonds issued by HDC through the Liberty Bond Program provided the financing to convert this 23-story historic commercial building into a 410-unit residential high-rise. HDC received the J. Timothy Anderson Award for Excellence in Housing Preservation for financing the renovation of this landmarked building.

Although no residential buildings were destroyed as a result of the 9/11 attacks, small businesses were devastated, residents were displaced and employees forced to relocate. When things resumed a semblance of normalcy, people had to be encouraged to return and resume life again below Canal Street. Liberty Bonds, totaling $8 billion, were introduced to foster this encouragement. New York City’s Mayor and New York’s Governor were authorized to designate up to $4 billion each of the aggregate bond authority, and HDC became a designated issuer of Federal Liberty Bonds to revitalize Lower Manhattan.

“Liberty Bonds were used to create thousands of units of housing Downtown and helped create jobs and a sense of renewal in an area severely damaged by the terrorist attack,” writes Richard Froehlich (Building Community Resilience Post-Disaster: A Guide for Affordable Housing & Community Economic Development Practitioners, Journal of Affordable Housing, vol. 21, no. 3 & 4). “The units financed by HDC did not have any affordability requirements, the fees charged on Liberty Zone financings were used as subsidy loans on more than 700 units of affordable housing in other parts of New York City, mostly in the Bronx and Brooklyn.”

The last Liberty Bond was issued in December 2009 to finance the construction of the magnificent Frank Gehry-designed residential tower at 8 Spruce Street in Lower Manhattan. Not only had the Liberty Bond Program helped bring the City’s financial district back after 9/11 from a place that scared people away to a vibrant area serving New Yorkers 24 hours a day, it had also generated approximately $35 million in fees — $12 million of that from 8 Spruce Street alone — that were used to finance low-income housing in other areas of the City.

By October 31, 2005, HDC had financed the creation or preservation of 17,500 units of affordable housing in New York City—500 more than its production commitment to the original NHMP by 2008. That year, the Mayor and HPD Commissioner Donovan revamped the Plan, extending it to the end of 2013 and increasing the number of units pledged from 65,000 to 165,000. HDC committed to creating or preserving an additional 25,000 multi-family affordable apartments, bringing its pledged total to 42,000 by 2013.

For three consecutive years—2004, 2005, and 2006—HDC was the number one issuer of multi-family affordable housing bonds in the nation. In 2006, the agency issued $1.8 billion worth of bonds to finance the construction and preservation of more than 9,000 apartments serving multiple income levels in New York City—the largest volume of financing and the greatest number of apartments built or preserved in a single year since HDC’s inception 35 years previously.

John Murphy, Executive Director of the trade group NALHFA (National Association of Local Housing Finance Agencies), remarked: “HDC has greatly expanded rental housing opportunities for lower income New Yorkers in implementing Mayor Bloomberg’s New Housing Marketplace Plan. Its affordable rental housing production and preservation programs have been showcased as national models at NALHFA Educational Conferences.”

Next Page →






2008-2010 The Nation Faces Financial Crisis

2008–2010  The Nation Faces Financial Crisis

Rafael E. Cestero – HPD Commissioner, Sept. 2009–2011
Mathew M. Wambua – HPD Commissioner, 2011–present
Marc Jahr – HDC President, 2008–present

In 2008, the housing bubble burst and the nation entered a period of financial crisis. “Yet this time of economic turmoil saw robust growth for HDC,” said HDC President Jahr (referring to, among other things, the opportunity that the downturn created to invest in financially troubled assets that speculators had over-valued during the hot real estate market).

HDC and HPD took advantage of the built-in flexibility that is the hallmark of the NHMP, took advantage of the troubled markets and despite the downturn, by the close of 2008, HDC held on to its status as the number one issuer of multi-family housing bonds in the United States. By September of that year, HDC had contributed nearly 50% of the 82,000 housing units produced under the Mayor’s Plan.

In August 2009, HDC purchased certain mortgage loans that HUD held in its multi-family mortgage loan portfolio. This innovative program, begun when the current HUD Secretary Shaun Donovan was HPD Commissioner, was important for the NHMP as it prioritized the preservation of government-assisted affordable housing.

West Farms Square, part of that HUD portfolio, consists of eight multi-family elevator buildings totaling 526 units, 80% of which are assisted through project-based Section 8 contracts. HDC acquired the senior debt on the property, and then, working with the nonprofit owner, Fordham-Bedford Housing Corporation, made emergency repair loans to modernize the building’s 11 elevators. In the following year, HDC consolidated and refinanced the project with $44.9 million in tax-exempt bonds under the New Issue Bond Program (NIBP), $5.6 million of HPD subsidy, a $2.3 million Revolving Repair Fund loan, and equity from 4% Low Income Housing Tax Credits. Proceeds from the financing were used to acquire the property, refinance the existing indebtedness, and fund $41.9 million in capital repairs to upgrade or replace windows, boilers, flooring, façade, common areas, kitchens, and bathrooms. The existing HAP contracts were extended for 20 years and the property has been secured as safe and affordable housing for at least an additional 30 years.

“[While I was Commissioner,] market conditions—shrinking credit markets and a mortgage foreclosure crisis—made it necessary for us to retool NHMP. In doing so, we focused on strengthening neighborhoods by protecting the distressed multi-family housing stock,” explained Rafael Cestero. “The single greatest innovation of the NHMP is its strategic use of HDC to finance large volumes of affordable housing through construction and permanent lending. The Plan also enables HDC to use its corporate balance sheet to make affordable housing happen across NYC.”

By the end of 2009, HDC doubled the worth of the assets in its portfolio from $5 billion to $10 billion and in the process, transformed the Bronx. “During the downturn, when nobody was building in Manhattan, we were financing construction in the neighborhoods,” Jahr continued. “So in the South Bronx, you saw cranes. Cranes that were absent from the Manhattan skyline were up in the Bronx because of our financing. And at a time when people were being laid off or couldn’t find employment in other parts of the City, these cranes represented not only more affordable housing, but jobs. Both HDC and HPD were very quickly able to adjust to the new economic circumstances and devise new initiatives or use old ones to help stabilize the housing market.”

In 2010, former Commissioner Cestero’s focus on preservation resulted in the creation of HPD’s Proactive Preservation Initiative: a move that allowed HDC to use its financial muscle to encourage the new owner of the Milbank Portfolio, a severely overleveraged and deteriorating portfolio of ten buildings, to act responsibly. As a result, more than 500 units of affordable housing are seeing new life, and the tenants have new hope for a better future.

The Balton and Douglass Park buildings on West 127th and West 128th Streets in Harlem were among the first in the country to begin construction in 2009 using federal TCAP funds (the HPD/HCD/NYCHA developments nearby in Harlem, The Ciena and the Hobbs, were actually the nation’s first). When completed in 2011, the Balton and Douglas Park brought a total of 226 mixed-income units to Central Harlem and created more than a thousand construction-related jobs.

Both The Balton and Douglass Park projects, developed on formerly City-owned land, were part of the NHMP. The Balton was named in honor of Charles “Ibo” Balton, a gifted urban planner, committed public servant, and proud Harlem resident. As Director of HPD’s Manhattan Planning Office, Balton oversaw the rehabilitation and new construction of thousands of units of affordable housing in Harlem. His vision, passion, and tenacious advocacy helped bring new life to the neighborhood he loved.

“Ibo Balton understood that creating new opportunity in places long dismissed as unwanted and irredeemable is essential to the true revitalization of a community,” said HPD Commissioner Mathew M. Wambua at the buildings’ grand opening.

Another initiative, pioneered by HDC and devised to help stabilize the housing market during this period, was the issuance of “recycled” tax-exempt bonds. Made possible under the Housing and Economic Recovery Act (HERA) of 2008, the new authority allowed for the reuse of tax-exempt bonds to finance additional multi-family projects. NALFAH’s John Murphy remarked: “Under the Housing and Economic Recovery Act of 2008, NALHFA joined with HDC in successfully advocating for the inclusion of a provision to permit Housing Finance Agencies to recycle bond proceeds to provide capital to finance additional affordable rental housing.”

“Prior to HERA, this was a resource that was lost, as tax credit projects paid down their short-term bonds to supportable levels; HERA allowed for the “recycling” of that tax-exempt authority into new projects,” said HDC’s EVP for Real Estate, Joan Tally.

This innovation has paid off in a big way, making the development of even more housing possible, particularly moderate income “workforce” housing. Since bond recycling was approved, HDC has led the nation in putting this instrument to work. In 2009, HDC closed the transaction financing St. Ann’s Terrace, a 600-unit mixed-income, mixed-use development in the Melrose section of the South Bronx. St. Ann’s was the first in the nation to be financed with the use of recycled multi-family bonds. Throughout 2009 and 2010, HDC issued $90 million in recycled bonds to finance seven newly constructed developments with nearly 800 units of housing for families earning between 60% and 100% of Area Median Income. HDC’s leadership in using recycled bonds was recognized by the National Council of State Housing Finance Agencies when it won the 2011 Award for Program Excellence.

By the end of April 2010, HDC and HPD had financed the 100,000th unit under the Mayor’s NHMP. That achievement was celebrated with a day-long tour of NYC’s five boroughs with ground-breakings in Manhattan and the Bronx and ribbon-cuttings on new and preserved projects in Queens, Brooklyn, and Staten Island. As Via Verde development partner, President and CEO, of Phipps Houses Adam Weinstein said of the City’s housing agencies’ involvement in his organization’s efforts: “(Phipps) were able to start nearly 3,000 units of new affordable housing in the past five years, leveraging an investment in New York City neighborhoods exceeding $1 billion. All this through a deep financial and real estate crisis!”

Next Page →






The Momentum Continues

2011–2012  Building A Truly Sustainable Future

Mathew M. Wambua – HPD Commissioner, 2011–present
Marc Jahr – HDC President, 2008–present

In January, HPD and HDC made a strategic decision to emphasize environmentally and health conscious construction practices. All new construction projects and substantial rehabilitation projects receiving funding from HDC and HPD were from that point forward required to achieve Enterprise Green Communities certification.

But some of the developers with whom the City works are invariably ahead of the curve with regard to green construction and features. Les Bluestone and his partner, Avery Seavey, of Blue Sea Development, are two such developers. “We were able to finance projects that other lenders would never do, and at terms that turned borderline deals into feasible and successful deals, said Bluestone. “Where unusual issues required unusual solutions, HDC was there.”

The first three projects that HDC and HPD completed with Blue Sea give ample evidence that green is not only a mindset but a way of doing business for these firms that sends a powerful message and achieves a remarkable result. The Eltona, a 63-unit, 100% LIHTC building in the South Bronx, was the first affordable LEED (Leadership in Energy and Environmental Design) Platinum building in New York State. Its units are reserved for families of four earning less than 80% AMI (or $61,450); less than 110% AMI (or $84,480 for families of four); and 20% for formerly homeless individuals.

The General Colin Powell Apartments in the Bronx, built in partnership with Habitat for Humanity, is a 50-unit co-op building with a glorious rooftop garden. Seventy-five percent of its units are reserved for people earning 110% AMI ($84,480 for a family of four) and 25% for those earning 80% AMI ($61,440 for a family of four). The Melody, also built by Blue Sea in partnership with Habitat, is a 63-unit co-op in the Longwood section of the South Bronx, with 75% of the units also reserved for those earning 110% AMI and 25% for those earning 80% AMI. Its distinctive interior and exterior artwork designed by internationally famous artist Beatrice Coron pays tribute to the rich musical heritage of the Bronx. The Colin Powell Apartments and The Melody were the second and third LEED Platinum buildings in New York State.

Arbor House, the most recently completed Blue Sea/HDC/HPD joint venture, is a 124-unit, 100% LIHTC rental building in the Morrisania section of the Bronx, featuring a state-of-the-art fitness center and magnificent rooftop vegetable farm. The apartments are designated for low-income households earning less than $49,800 for a family of four. In completing this transaction, nearly every tool in the NHMP kit was used: the City provided access to the land through the NYCHA partnership, along with the financing to create green, affordable housing.

The total development costs for Arbor House was approximately $37.7 million. HDC provided $3.9 million in tax-exempt bonds and $8 million in corporate subsidy. HPD contributed $7.4 million in City Capital. New York State’s investment includes: $2.5 million through HCR’s Homes for Working Families Program and $160,000 provided by the NYS Energy Research and Development Authority. Bronx Borough President Ruben Diaz, Jr. and City Council Member Helen Foster jointly contributed nearly $2 million in discretionary “Reso A” funds. Arbor House received $12.8 million in Low-Income Housing Tax Credit Equity.

The Mount Sinai School of Medicine will conduct a study at Arbor house (similar to the one it did at The Eltona) to determine the effects of living in a green building that promotes physical activity and good health.

“NYCHA was in a prominent role for this development,” said Les Bluestone, “as the land for the building was purchased from them and they were very involved in the marketing requirements.” Marc Jahr described Blue Sea’s buildings as “incredibly inventive and ultra green. Arbor House has a living green wall installation in the lobby and a hydroponic greenhouse on the roof.” The rooftop farm will provide tenants and the community with “fresh, local, chemical free, nutritious herbs, fruits, and vegetables 12 months a year,” announced Robert Fireman, President of Sky Vegetables, which operates the urban farm.

From 2009 – 2012, the not-for-profit Phipps Houses and their development partners completed several affordable housing developments under the Mayor’s NHMP. Among them were: the Dempsey Apartments in West Harlem; the Roscoe C. Brown, Jr. Apartments in the South Bronx; Via Verde, also in the South Bronx; Courtlandt Corners in the Melrose section of the Bronx; and the total rehabilitation of Phipps Plaza South at Second Avenue and 25th Street in Manhattan.

Phipps Houses is the nation’s oldest nonprofit housing organization and one of its largest developers, owners, and operators of affordable housing. Its mission is to create and sustain enduring communities through housing development, attentive property management, and residentially and community based human services.

Via Verde (Green Way), financed in conjunction with HDC, is a LEED Gold standard, green building that seamlessly integrates the beauties of nature with the realities of city living. Developed by Jonathan Rose Companies, which is known for its dedication to green development, and Phipps, the building’s graceful, stepped-up design incorporates three- and four-story townhouses, a mid-rise six- to twelve-story central structure, and a 20-foot tower at its northern end. “It involves construction types, materials, and methods not previously used in affordable housing projects,” Weinstein explained, “providing both affordable rental and co-op units on a difficult, formerly contaminated site in the Melrose neighborhood of the South Bronx.” Gary Hattem, Managing Director, Deutsche Bank Community Development Finance Group and President, Deutsche Bank Americas Foundation, noted: “While we are not a direct construction lender, HDC’s programs have allowed us to participate in cutting-edge developments like Via Verde that has won international acclaim for its architectural, environmental, and social significance.”

On July 20, 2011, New York City was three-quarters of the way toward its expanded goal of financing the creation or preservation of 165,000 units of affordable housing for 500,000 New Yorkers by the end of the 2014 fiscal year. Not only had nearly 125,000 homes been funded since 2003 across the five boroughs, but more than 120,000 jobs in construction and related industries had also been created. And all this accomplished in an era marked by desperate economic conditions that forced other cities in the country to tighten budgets and abandon or curtail housing plans.

"No other municipality is delivering affordable housing for its people at anywhere near the scale of New York City," said HDC President Jahr. "We are able to do this because we have the resolve and the skill and are able to provide the resources to achieve results.”

Between the inception of the NHMP and mid-2011, HDC had financed the construction or preservation of nearly 42,000 of the NHMP’s total of 125,000 affordable housing units, creating jobs, extending the life of aging buildings, expanding affordable options, and bringing new hope to New Yorkers. Some 2011 highlights include: the restructuring of debt and provision of substantial rehabilitation under the Mitchell-Lama Program (which has financed repairs for 29,151 units since 2003) for Kent Village, six multi-family buildings in South Williamsburg, Brooklyn; the construction of Lindenguild Hall, a low-income residence in Crotona Park in the Bronx, for formerly homeless veterans; and Riverway Apartments, a seven-story rental building in Brooklyn’s Brownsville neighborhood for low-income senior citizens.

“It is exciting and humbling to know that we are at the forefront in the nation in producing and protecting affordable housing for our citizens,” said HPD Commissioner Mathew M. Wambua. “Every collaboration, every partnership, and every deal helps to ensure that we are doing everything we can to make New York City more affordable.”

By the end of 2012, when HDC was again the number one issuer of multi-family affordable housing bonds in the country, the number of units financed by HDC’s more than $9 billion in bonds and $1.1 billion in cash from corporate reserves had risen to 69,000 units.

On July 19, 2012, Mayor Michael R. Bloomberg, Deputy Mayor for Economic Development Robert K. Steel, HPD Commissioner Mathew M. Wambua, and HDC President Marc Jahr announced that New York City—having created or preserved 141,000 units—was 85% of the way towards achieving the NHMP goal set for the end of FY 2014: 165,000 units created or preserved. In a single year, between July 1, 2011, and June 30, 2012, the end of FY 2012, the City invested or leveraged $1.9 million to finance 16,502 units of affordable housing for middle-class and low-income New Yorkers, surpassing its goal for the year by more than 2,000 units.

From January through December 2012, HDC issued $1.065 billion in multi-family affordable housing bonds and provided more than $1.8 billion in total financing raised from the sale of bonds and the provision of other corporate subsidies, chalking up another record-breaking year, ranking first on Thomson Reuters list of multi-family bond issuers and third in Affordable Housing Finance Magazine’s annual ranking of affordable housing lenders. Overall in 2012, HDC and HPD jointly financed the construction and/or preservation of 11,400 affordable apartments.

“I am proud of what we were able to achieve over the last twelve months,” said HPD Commissioner Mathew M. Wambua. “We exceeded our 2012 fiscal year target because of the tremendously talented team of affordable housing experts that we have here at HPD and HDC.”

“The housing that we finance—whether newly constructed or renovated—embodies thousands of new units brought to market or reclaimed as affordable and given new life,” said HDC President Marc Jahr. “The NHMP is an investment in the future of this City, and it is on a scale that is unequalled anywhere else in the nation.”

From the beginning of the Plan to the end of calendar year 2012, HDC had contributed to the financing of more than 69,000 units (27,000 more than it had originally pledged) of the more than 141,000 affordable housing units funded under the Mayor‘s NHMP by raising more than $9 billion from bonds issued and pledging $1.1 billion in cash from the Corporation‘s reserves. HDC now has in excess of $11 billion in assets under management.

Next Page →






Lessons of a Decade

2003–2012  Lessons of a Decade




Looking back over the past 10 years, we see that they were bracketed by recovery efforts forced by two disasters: one man-made, the other, natural. Hurricane Sandy, downgraded to a post-tropical cyclone with hurricane-force winds by the time it hit New York City on October 29, 2012, cut power in Lower Manhattan, Staten Island and parts of Brooklyn and Queens, flooding streets, tunnels and subway lines. Neighborhoods on the City’s periphery endured tragic loss of life and unprecedented physical destruction.

In New York City, damage inflicted by Sandy extended over an area containing 100,000 residential buildings and more than 400,000 units. Of these, the City estimates that a total of 60,500 residential units were damaged. Among HDC’s multi-family portfolio, 13 developments, with 43 buildings and more than 7,200 units sustained damage. “Out in Breezy Point and The Rockaways, in the lowlands of Staten Island and Coney Island and Red Hook, large swaths of homes have been severely damaged,” said Jahr. “Apartment towers, NYCHA projects, Mitchell-Lama developments have been darkened and chilled.”

As they had with 9/11, virtually every City agency came together to focus on the recovery effort. What HDC and its housing and community partners most importantly did, remarked Jahr, was to “enable people to stay in their homes. Every person able to stay in their home is a person who won’t enter a shelter, who won’t need to be temporarily housed, whose life will be infinitely more settled. At HDC, in the immediate aftermath of the storm we had our engineers out inspecting every Mitchell-Lama development in The Rockaways and Coney Island.” In addition, HDC’s Asset Managers were in constant contact with property owners and managers to help ensure that all the buildings and tenants needs were met, including providing food, water, blankets, and medicine.

“From our point of view,” said HDC Executive Vice President Joan Tally, “The paramount concern was keeping people in their homes, and to do that, we had to ensure that those buildings were safe, warm and secure. From that starting point, we could begin to focus on the future and resiliency.”

Immediately following Sandy, HPD Commissioner Wambua announced a plan to institute a 25% preference in lotteries for units in City-subsidized affordable housing developments for income-eligible New Yorkers displaced from their homes. One of the first developments subject to that plan was Coney Island Commons, currently under construction. Part of the Mayor’s NHMP, Coney Island Commons will have a total of 195 apartments, 39 set aside for the homeless. The remaining 156 apartments are for households earning up to 60% of the AMI, or $49,800 for a family of four.

Also on Coney Island is the Warbasse cooperative housing complex, a 2,585-unit built in the early 1960s under the Mitchell-Lama Program for low- and moderate-income residents. In June, 2012, the complex was subject to extensive financial restructuring, effectively preserving it as affordable for the next 20 years. With $15.2 million in financing from HDC, the first phase of substantial rehabilitation is slated to begin in the summer of 2013. The second phase, expected to occur next year, will restructure its existing first mortgage debt and provide additional funds for more renovations. The rehabilitation work will include façade repairs, boiler replacement, upgrades to all plumbing and heating systems, upgrades to circuit breakers, and upgrades and repairs to parking lots. These renovations will make Warbasse, merely a half-mile from the ocean, a more durable and resilient building in the event of another Sandy.

The damage wrought by the storm served to remind developers, residents and agencies alike that New York is a coastal city that needs to focus on developing or retrofitting multi-family buildings so that they are able to withstand extraordinary weather events and flooding. The day before the storm hit land, HDC and developer L+M were at the table, closing a $58.3 million repair loan and $72 million in permanent financing for the sale and upgrade of a 1,100 unit Mitchell-Lama called Ocean Village, a troubled 11 building mixed-use development on the Rockaway Peninsula. The day after the storm, it was clear that the development’s problems had been compounded. Pre-Sandy, the scope of work included renovation of more than 300 vacant units, roof replacement, repair/replacement of mechanical ventilation ducts and shafts, storm drainage repair, lighting, upgrading electric baseboard heating, extensive façade repair, upgrades to common areas and building systems. As Rick Gropper of L+M Development put it: “When we became involved in Ocean Village, there were 350 vacancies, an annual shortfall in excess of $1 million, and a huge amount of deferred maintenance. There aren’t many lenders with the financial prowess and foresight necessary to take on such a complex and distressed situation. HDC saw the bigger picture of preserving housing for 1,093 low- and moderate-income New Yorkers and has been an outstanding partner throughout all steps of this transaction.”

The post-Sandy assessment painted an even bleaker picture: several roof exhaust fan covers were blown away by the extreme wind gusts, the elevator pits at the high- and mid-rises were completely submerged in water, and the electrical rooms at the high- and mid-rises were also flooded, with the water level well over four feet. Switch gears and transformers were damaged and the electrical rooms in the low-rise buildings were flooded as were ground floor apartments. Still, as Gropper remembers it: “Hurricane Sandy struck the east coast and devastatingly impacted Ocean Village on the day we were scheduled to close on the property. While the closing was rescheduled, the question of whether we would close at all in the wake of the storm was never raised. L+M, HDC and HPD worked together to get the complex back up and running and allow residents to return to their homes.”

The result was that HDC, HPD and the developer worked quickly to get the complex back up and running, to keep existing tenants from being displaced. At the same time, already renovated vacant apartments were placed into service as a resource for households that had been displaced by the storm.

Looking Forward

In 2007, when Mayor Bloomberg announced PlaNYC, his plan for achieving a “greener and greater New York” and to prepare the City for one million more residents, strengthen the economy, combat climate change, and enhance the quality of life for all New Yorkers, he was setting the stage for a strong future. Indeed, the most recent census data shows continued growth in New York City’s population. As The New York Times noted on March 14, 2013, New York City’s population, according to the July 2012 census, had surged to just over 8.3 million, representing an increase of 161,564 people since 2010—nearly as many as the City gained in the entire preceding decade. The Times also noted that more people moved to the Bronx in 2012 than left it, something that had not happened since the 1940s. This remarkable resurgence of the Bronx is due in large part to HPD and HDC who worked with their partners to bring that borough back when no one else was constructing or preserving affordable housing there.

Still, as laid out in PlaNYC: we have set our goals beyond merely increasing the number of housing units. The NHMP has been rooted in the creation of sustainable, affordable neighborhoods and in the fact that making housing more affordable requires more than increasing housing supply. It necessitates employing targeted programs for a range of incomes and needs and especially, given recent events, in confronting and surmounting hurdles to creating new affordable housing units and preserving and extending the affordability of those that exist.

“The challenge of finding affordable housing is not the only challenge the City is confronted with,” said Marc Jahr. “In a post-Sandy world, we have a whole new set of challenges. We need to make buildings more resilient, more durable, more capable of withstanding the effects of climate change. One of the major innovations of the Bloomberg administration was to figure out how to leverage HDC balance sheets for the benefit of affordable housing in New York City. My hope for the future is that this commitment will be sustained and that HDC will continue to play an outsized role in meeting the City’s housing challenges.”

“Despite all the work we’ve done over the last decade and all the work that’s been done over the last three decades, New Yorkers are confronted every day with the challenge of finding affordable housing. That challenge,” cautioned Jahr, “will remain no matter what administration is in office.”

← Return to Page 1