$88 Million Preservation Effort Keeps 42-Year-Old Mitchell-Lama Developments Affordable for an Additional 35 Years

May 12, 2017 | New York, NY – NYC Housing Development Corporation (HDC), NYC Department of Housing Preservation and Development (HPD), and US Department of Housing and Urban Development (HUD) officials joined the leaders of Hudson Valley Property Group, Phoenix Reality Group, and project partners at a ribbon cutting ceremony to celebrate the completion of a combined $15.3 million rehabilitation of 613 units of affordable housing across three HPD-supervised Mitchell-Lama buildings in the Belmont neighborhood of the Bronx.

Keith Plaza is a 31-story tower, including 311 units, indoor and outdoor community space and a two-level open deck parking garage with 152 accessory spaces. Kelly Towers consists of 302 units across one 17-story tower and one 18-story tower. Kelly Towers also offers indoor and outdoor community space, and a one level parking garage with 60 accessory spaces.

“Our preservation work is safeguarding the affordability of homes and neighborhoods, and ensuring the quality of our city’s critical infrastructure – housing – for generations to come,” said HPD Commissioner Maria Torres-Springer.  “Preserving the remaining stock of Mitchell-Lama housing is an important component of the housing plan, and this investment is paying off at developments like Keith Plaza and Kelly Towers.  HPD thanks HDC, Hudson Valley Property Group, and Phoenix Realty Group for bringing much-needed improvements and the security of extended affordability to more than 600 families.”

“The extensive rehabilitation and preservation of more than 600 units of housing at Keith Plaza and Kelly Towers demonstrates the successful public and private partnership needed to protect the affordability and quality of our critical Mitchell-Lama housing stock,” said HDC President Eric Enderlin.  “I would like to acknowledge and thank our many partners at HUD, HPD, Hudson Valley, Phoenix Realty Group, and Belveron Partners for all their hard work to preserve this vital affordable housing for The Bronx and New York City.”

The acquisition, preservation and renovation of Keith Plaza and Kelly Towers provided a unique and innovative financing solution to prevent the loss of 613 units of workforce and affordable housing from New York City’s valuable supply. Keith Plaza is one of the first four preservation projects in the nation utilizing the Rental Assistance Demonstration (RAD) program, which included the issuance of a new 20-year, Section 8 Project-Based Rental Assistance (PBRA) contract. The contract provides subsidy to over 80% of the units. Both projects benefit from decoupled HUD Section 236 Interest Reduction Payments (IRP) that support the new financing.

“Today Keith Plaza joins nearly 25,000 affordable units nationwide renovated through HUD’s Rental Assistance Demonstration, with nearly 10,000 of those located in New York State,” said Mirza Orriols, HUD Deputy Regional Administrator for New York and New Jersey. “RAD has served as a lifeline for multifamily properties in need of refinance and repair, preserving long-term affordability and providing residents with the stable, quality housing we know is a gateway to opportunity.”

Both properties were built in 1975 under the Mitchell Lama Housing Program restricted to 125% AMI rents.  Mitchell Lama workforce housing properties are some of the most at-risk affordable housing properties in New York City. As mortgages mature on these properties, many owners elect to make them market rate or to sell to a market rate developer. The preservation of Keith and Kelly ensures that these properties will remain quality, affordable housing in the Bronx community for decades to come.

“These important preservation projects will ensure that working class families and retired seniors who reside here have a quality, affordable place to call home for years to come. We plan to follow the City’s lead and continue to work to preserve affordable housing throughout the five boroughs,” said Jason Bordainick, Managing Partner, Hudson Valley Property Group.

Financing was provided by the City of New York, including the New York City Housing Development Corporation and the New York City Department of Housing Preservation and Development, in addition to an equity investment provided by Belveron Partners and the developers Hudson Valley Property Group (HVPG) and Phoenix Realty Group (PRG).

“PRG is proud of its longstanding commitment to affordable housing. In supply constrained markets like the New York City metro area, the preservation of existing properties is critical to meeting the city’s needs for affordable housing,” said Ron Orgel, Managing Director at PRG. “We are excited about the completion of this project and wish the residents many years of happiness in their new homes.”

HPD and HDC restructured over $15.5 million of existing debt to contribute to the preservation and long term financial viability of the two project sites. HDC provided approximately $40 million in tax-exempt recycled bonds and an additional $7.7 million secured by 236 Mortgage Decoupling Interest Reduction Payments.

“The unwavering support of the multitude of New York agencies, Hudson Valley’s brilliant structuring, and Phoenix’s flawless execution; this was a herculean effort in which Belveron is fortunate to have invested.” said Louis A. Harrison, Partner at Belveron.  “I am delighted to play a small part in improving residents’ lives.”

The HDC loan for Kelly Towers benefitted from HDC’s Program for Energy Retrofit Loans (PERL), a partnership with the New York City Energy Efficiency Corporation (NYCEEC), a non-profit financier specializing in energy efficiency and clean energy.  Using PERL, Kelly Towers was able to invest $1.7 million in energy savings measures such as thermostats, weather stripping, insulation, and efficient lighting and appliances.

“We’re pleased that our partnership with HDC continues to support the City’s sustainability and affordable housing goals,” said Susan Leeds, CEO of NYCEEC.  “Kelly Towers is a terrific example of a how investments in energy efficiency can make financial sense and improve people’s lives in practical ways.”

The total development cost surpassed $88 million and the renovation cost exceeded $14 million. Key upgrades consisted of common area and unit renovations to improve resident comfort and safety. The common area renovations included extensive repairs to the parking garage, upgrades to the exterior landscaping and recreation areas, renovation of the lobby and building entrances, new flooring and painting in all common areas, a new trash compactor and a new security system. The unit renovations included new appliances, electrical fixtures, sinks, cabinets, and countertops in the kitchens, as well as new vanities, shower bodies, lavatories, GFI outlets, and tiling in the bathrooms.  Each apartment will also receive new electrical panels and new door hardware. Significant energy efficiency enhancements were also included in the project scope such as improved heating systems and new lighting.

Full press release here.