BRONX, NY - Integrating people with special needs with working families in a building that is exceptionally energy efficient was Dunn Development’s goal when it planned 1212 MLK Apartments here.

The 54-unit project, named for its location at 1212 Martin Luther King Jr. Blvd., was completed in June 2006. Twenty-six units are leased to working families. Seventeen units are leased to formerly homeless families referred from the city’s shelter system. Ten studio apartments are set aside for persons with developmental disabilities.

Eighty-one percent of the units are targeted to people earning up to 50 percent of the AMI. Nineteen percent are targeted to people earning up to 30 percent of the AMI. The total development cost was $10.5 million, with hard construction costs of $7.6 million. Rents are $535 for a one-bedroom and $645 for a two-bedroom.

The building is “a truly integrated setting and an innovative alternative to group homes and other buildings that are 100 percent special needs,” said Martin Dunn, president of Dunn Development.

Many higher-functioning disabled people want to live on their own but have few housing options other than group homes, Dunn explained. This property meets that need, he said.

1212 MLK Apartments is the first mid- or high-rise apartment building in the United States to earn the Energy Star label. The building was part of a national pilot program administered by the Environmental Protection Agency and implemented in New York by the New York State Energy Research and Development Authority (NYSERDA) to set higher energy-efficiency standards for multifamily buildings. To qualify for the Energy Star label, energy consumption must be reduced by at least 20 percent compared to a typical code-compliant building.

The six-story brick building respects the architectural traditions of the city by featuring an ornate front façade with pre-cast concrete bands, headers, and window surrounds, and a historic-style cornice. Amenities include a children’s play area, and a landscaped garden.

Even with the façade details, constructions costs were $150 per square foot, which is very reasonable for New York City, Dunn said.

Financing sources include tax credit equity investment of $6.46 million from Fannie Mae through Richman Housing Resources. The project also tapped a $2.54 million nonamortizing loan at 1 percent interest from the New York City Department of Housing Preservation and Development¹s (HPD) Mixed-Income Rental Program. HPD utilized capital provided by the New York City Housing Development Corp. for this loan.

The last pieces of the financial puzzle were a construction/permanent loan from the Community Preservation Corp. for $975,000 at 7 percent interest with 30-year amortization, and a $200,000 grant from NYSERDA.

The 10 studio units for disabled persons are master-leased to the Center for Family Support (CFS), a nonprofit service agency, for 15 years. Funded by the New York State Office of Mental Retardation and Developmental Disabilities, CFS provides support services and rental assistance to tenants of those units.

HPD provides Sec. 8 vouchers to the formerly homeless families. Support services are provided by Volunteers of America. The income from the differential in Sec. 8 rents over tax credit rents is used to pay for those services.

Dunn developed the project in partnership with Beulah HDFC, Inc., a local community development corporation.

Additional project information, as provided in application by the nominator.

Q. Why does the nominated project deserve to be recognized based on the award criteria of this contest?

A. 1212 MLK Apartments is the first mid- or high-rise apartment building in the U.S. to receive the ENERGY STAR rating. The project was completed under a national pilot program administered by the Environmental Protection Agency and implemented locally by New York State Energy Research and Development Authority (NYSERDA), which provided financial incentives for improving energy efficiency. The project also serves as a model for the development of additional ENERGY STAR-rated buildings in New York City, and the project’s success helped lead to the implementation of an ongoing NYSERDA financing incentive program.

Dunn Development Corp. has expertise in projects with supportive or service-enriching housing components within multifamily apartment buildings, pioneering the integration of people with special needs into mainstream settings. At 1212 MLK, 10 studio units are leased to adults with developmental disabilities who are living independently for the first time. The Center for Family Support (CFS), a nonprofit agency that works with the developmentally disabled, provides extensive onsite services to these residents. An additional 17 units are leased to formerly homeless families referred from the city’s shelter system. Volunteers of America are providing transitional services for these families, to ensure their success at independent living. The remaining 26 units were targeted to non-special needs working families, more than half of whom came from the local community, creating a truly integrated setting.

In a neighborhood wracked by disinvestment, arson, and population loss, 1212 MLK contributes important momentum to the ongoing revitalization of the Highbridge section of the South Bronx. From ridding the neighborhood of a rat-infested vacant lot, to providing safe, attractive, permanent affordable housing to local residents, this project has impacted the community in many positive ways. The project’s role in the overall revitalization of the Bronx and New York City has been confirmed repeatedly by local and state officials.

Q. How does this project represent an innovative solution to a specific development challenge?

A. Affordable housing in New York City during a time of rising land, construction, and operating costs poses many challenges. One of 1212 MLK’s more considerable challenges was to create the structure and securing the financing for maximum affordability, supportive services for two special-needs populations, and long-term sustainability. Rents were set well below fair market levels to make units affordable for households making up to 50 percent of the AMI, an underserved population. To minimize operating costs, developers included a range of energy-efficient measures, including: additional roof and wall insulation to tighten the building envelope and reduce heat loss; high-efficiency boilers for heat and hot water; custom triple-sash windows to eliminate heat loss through typical through-wall air conditioning sleeves; elevators with smaller motors, which use far less electricity than hydraulic elevators; and numerous other features.

While the capital financing model of combining LIHTC equity with a 1 percent interest-only construction/permanent loan from NYC HPD and a conventional construction/permanent loan from the Community Preservation Corporation is not unusual by itself, funding the energy-efficient elements and supportive services called for a more innovative approach. Participation in NYSERDA’s ENERGY STAR Multifamily Pilot Program gave the project access to $200,000 in design and construction funding, as well as technical assistance from Steven Winter Associates, Inc., a leading energy consulting firm. The developers used these resources to incorporate energy-saving measures, both to increase the building’s efficiency, and lower building operating expenses and tenant-paid utilities.

To fund the supportive housing services and rental subsidies, the project entered into a master lease with CFS—an established nonprofit human service agency providing support services for individuals with developmental and related disabilities—for the 10 studio apartments and first-floor office space. CFS provides their customers with rental subsidies and nearly 24-hour onsite support services with funding from the NYS Office of Mental Retardation and Developmental Disabilities.

To fund services and rental subsidies for the formerly homeless families, MIRP allowed these residents to apply for Section 8 vouchers. The voucher payments enable residents to pay no more than 30 percent of their income as rent, and provide funding support services by Volunteers of America in the onsite support services office.

By combining all of these resources, 1212 MLK Apartments has become not only the nation’s first ENERGY STAR-rated high-rise building, but a truly diverse and supportive community.