The Community Preservation Corp. (CPC) announced that it has secured $250 million in financing from Citi for the construction, rehabilitation, and preservation of affordable housing in New York.
The capital will help finance the creation or preservation of nearly 6,000 units of low- and moderate-income housing throughout the state, including the construction of approximately 3,000 affordable apartments in New York City. It will also be used to help in the Hurricane Sandy recovery.
The financing is one of Citi's largest one-time investments in affordable housing.
"We are proud of our affordable housing financing achievements, and Citi is extremely pleased to support CPC on this very important initiative," said Andrew Ditton, co-head of Citi Community Capital, in a statement. "This milestone underscores our commitment to responsible finance, and we will continue to play an active role in preserving and revitalizing the communities we serve."
CPC, a nonprofit mortgage lender for multifamily affordable housing, said $100 million will be set aside for the creation or preservation of homes in New York City. For these deals, the New York City Department of Housing Preservation and Development (HPD) will provide supplemental construction and permanent financing, and the New York City Housing Development Corp. will provide 10 percent credit enhancement.
"This initiative will provide much needed capital for affordable housing in communities across New York City and state and reflects CPC's renewed focus on our core mission of creating sound rental housing for lower-income families and rebuilding communities," said Rafael E. Cestero, CPC president and CEO.
Officials said the unique collaboration draws on the strengths of the participating institutions and brings together tools that allow for low-interest rate lending to developers of affordable housing. In keeping with NYC's Greener Greater Buildings Plan, all of the properties financed under this program will be benchmarked for energy usage and retrofit for energy savings. All buildings burning No. 6 fuel oil will be converted to comply with the city's Clean Heat initiative.
New York, where the fair market rent for a two-bedroom apartment is $1,313, continues to rank among the most expensive states to live. The National Low Income Housing Coalition reported this week that a household must earn $52,513 a year to afford this rent without paying more than 30 percent of its income on housing costs. A minimum-wage worker would have to work 139 hours per week to afford the fair market rent or a household must have 3.5 minimum-wage earners working 40 hours per week year-round to make the two-bedroom rent affordable. The cost is even more in the New York City metro area.
The renovation of 539-541 E. 147th St., an overleveraged property in the Bronx, is the first transaction to close under this new facility. The project includes two occupied 10-unit buildings owned by Workforce Housing Advisors, a for-profit affordable housing development firm that specializes in preserving distressed multifamily real estate in the New York metropolitan area. Financing for this $4 million project includes a $1.59 million construction and permanent loan from CPC and Citi with HPD providing $2.4 million in city capital funds.
A portion of the $250 million in financing will support the Storm Recovery Loan Fund, a pilot program to provide up to $40 million in low-cost loans to fund the repair of multifamily buildings damaged by Hurricane Sandy. Building owners can put the funds toward resiliency measures, like installing state-of-the-art heating and electric plants that are repositioned to withstand the next storm by being located on higher floors and/or in waterproof compartments. This focus on mitigation will decrease the cost of recovery and reduce the destructive impact of future storms. The program will also promote green improvements that will conserve energy and save money over the long term. The new fund blends a subsidy from HPD with CPC financing to provide loans that are below market rate, allowing owners to make needed repairs in the aftermath of Sandy.
Officials added that the funding will help provide financing for Mayor Bloomberg's New Housing Marketplace Plan, a multi-billion dollar initiative to finance the creation and preservation of 165,000 units of affordable housing by the close of fiscal 2014.