While many market-rate developers are mulling opportunities to buy distressed condominium deals, some in the affordable housing world are also keeping their eyes open.

The New York City Housing Development Corp. (NYCHDC) is keeping a close watch on the local condo market with an eye on converting some failed condo deals to affordable housing. Though New York City’s condo market has held up well relative to many other cities, it certainly hasn’t been immune to the current downturn.

“If the downturn continues or deepens, we might find there are some projects that could be restructured in such a manner that they become affordable housing projects,” says Marc Jahr, NYCHDC’s president. “It’s something we want to be prepared for if there are some bargains out there.”

The organization is the nation’s largest issuer of bonds for multifamily affordable housing, and provides debt financing for affordable housing deals throughout the city’s five boroughs. In fact, NYCHDC is the nation’s third-largest lender to the affordable multifamily industry, according to Affordable Housing Finance’s upcoming Top Lender feature in the February 2009 issue.

But until this year, NYCHDC has never thought of creating a formal program for acquiring failed condo deals. “We haven’t had to consider it in the past, but 2009 might be a different story,” says Jahr.

Whether or not a formal condo acquisition program materializes, NYCHDC will see one significant organizational change this year: It’s chairperson, Shaun Donovan, will be stepping down to become secretary of the Department of Housing and Urban Development.