HARLem, n.y.Land and construction costs have been increasing to record levels here, but Manhattan-based Artimus Construction has found a way to make mixed-income developments easier to build in the city.
Under an innovative partnership with National Equity Fund, Inc. (NEF), Artimus used New York City’s 80/20 tax-exempt bond financing program to complete the $22 million, 97-unit Triangle Court III, the third and final phase of Triangle Court, a housing complex helping to revitalize central Harlem.
“Most projects end up being 100% low-income housing tax credit (LIHTC) or 100% moderate and market-rate because of the operational costs involved and the impact on ownership interests under LIHTC regulations,” said Yoav Haron, chief financial officer for Artimus. “We were able to work around both those problems.”
The 80/20 bond program required Triangle to offer 20% of its units as affordable LIHTC housing, targeting residents earning no more than 60% of the area median income (AMI). Artimus also ensured that most of the other units are affordable to moderate-income residents.
Typically, the sale of tax credits requires that 99.9% of the ownership interest in the project go to the project’s investor for the 15-year life of the tax credit. However, NEF, the tax credit syndicator, helped create a unique financing structure where the tax credit units were condominiumized as separate units.
As such, the NEF tax credit fund that invested in the project only assumed ownership of the three tax credit condos, with Artimus retaining full ownership of the remaining 78 units in the other three condo buildings. This way, the developer could realize proceeds from the sale of tax credits without surrendering any ownership of the moderate and market-rate units, according to NEF, which provided $1.5 million in tax credit equity.
“This ends up being more complex than your standard tax credit deal, and there is more risk involved,” said Tony Lyons, NEF vice president. But he was confident the firm could work with a strong, experienced developer in a booming rental market.
That proved to be the case, as all of Triangle’s units are fully occupied at press time.
Other financing included bonds and subsidies from the city Housing and Development Corp., a construction loan from The Community Preservation Corp. and equity from the developer, said Haron.
The city Department of Housing Preservation & Development sold the land to Artimus.
Rents at Triangle range from just over $400 for an affordable studio to $2,400 for a three-bedroom market-rate unit. The largest tax credit unit is a two-bedroom at $655.
Units have stainless steel appliances, and the building offers doorman service. The ground floor has a store. n
The final phase, Triangle Court III, has transformed eight vacant, city-owned lots into 98 affordable apartments for a total of 187 new and rehabbed units in the three-phase development.