When the financing for one large senior housing community failed to pencil out, The Arker Cos. and the Metropolitan Council on Jewish Poverty restructured their plans into two smaller developments.
Council Towers VII and The Woodlands are separate developments in one 11-story building in New York City. Together, they provide 180 critical units in one of the nation’s most expensive housing markets.
The developers came up with the innovative structure to maximize the number of units on the property and to assemble the needed financing.
“They will always be linked, but they are completely separate,” says Daniel Moritz, a principal at The Arker Cos.
From the outside, the developments are one large building, but they are distinctly separate on the inside, with their own entrances, elevators, and building systems.
The Bronx project was always envisioned as senior housing, which in New York City is difficult to finance without rental subsidies. The developers originally hoped to obtain project-based Sec. 8 vouchers for the entire project, but there were not enough vouchers available to cover the entire building.
Rather than downsize their project, Moritz and his team decided to restructure the transaction as two developments.
They obtained $12.9 million in Sec. 202 capital funds to help finance the $26.2 million Council Towers VII project in 2011. The team was also able to use the funds to secure a like number of tax-exempt bonds during construction. With the $12.9 million in 202 funds cash-collateralizing the bonds, the project was able to be developed without the use of a third-party credit enhancement, further saving the project in excess of $500,000 carrying costs.
With critical Sec. 202 financing secured for the 79-unit project, the developers did not need as many project-based vouchers as they originally required. As a result, they went back to the New York City Housing Authority with a smaller request and were able to receive 100 vouchers for the 101-unit The Woodlands, which cost $40.3 million to develop. Both projects also use tax-exempt bond proceeds and low-income housing tax credit equity from Wells Fargo.
Tax-exempt bonds and subordinate financing were provided by the New York City Housing Development Corp. , and subordinate financing was provided by the New York City Department of Housing Preservation and Development.
This combination of funding sources and rental assistance allows the rents to be affordable to low-income seniors earning no more than 60% of the area median income, with tenants paying no more than one-third of their income in rent.
In addition, residents have an on-site, full-time social worker provided by the Metropolitan Council. One of the goals of Council Towers and The Woodlands is to help ensure that the seniors live independently for as long as possible.
