City’s $1 Offer to Developers Works

This spring, Glenwood Management announced the opening of rental offices for three new residential apartment houses in Manhattan. One tower, named Liberty Plaza, is located at 10 Liberty St. at William Street in Lower Manhattan, and a second, called The Grand Tier, is located directly across the street from Lincoln Center at 1930 Broadway and 64th Street. Their third luxury residential tower, Hampton Court is, not surprisingly, on the Upper East Side at 333 E. 102nd St. at First Avenue.Hampton Court was built and developed by Glenwood Management with participation from Levine Builders. “The rental market is very strong all over the city,” said the president of Levine Builders, Jeff Levine. “The rental market north of 96th Street is moving and we are doing very well rent ing up all of the market-rate units.”Eighty percent of the 232 residential units are available at market rates. A total of 46 units, or 20% of the apartments, have been offered to people earning no more than 40% of the adjusted New York City median income, which is $62,800. Bond financing for the project was provided by the New York State Housing Finance Agency under the 80/20 program, which provides for market-rate rentals for 80% of the units.Market-rate monthly rentals for 185 units in the eight-story U-shaped Hampton Court on East 102nd Street are significantly less expensive than the Liberty Plaza building in Lower Manhattan, which was financed by Liberty Bonds. An individual who rents a market-rate unit can save 26% on monthly rent for a one-bedroom and 54% for a two-bedroom unit in the building on the Upper East Side. One bedroom units in Hampton Court start at $1,765 compared to $2,395 at Liberty Plaza. A two-bedroom monthly rental at Hampton Court begins at $2,015 compared to $3,575 in Lower Manhattan.***Two blocks south of Glenwood’s Hampton Court, the leasing office opened last month for The Aspen, the market-rate component of a new residential housing building located at 1955 First Ave. at East 100th Street. The Aspen is a development of BFC Partners, L &M Equity Participants, and Allstate Realty Associates.A total of 46 apartments will be reserved for affordable housing under the HDC Cornerstone Program. Eight of the units will be reserved and targeted for very low-income residents, whose total annual income will range from $15,960 to $20,080.The remaining 38 units will be reserved for low-income residents whose total annual income will range from $20,360 to $31,400, depending both on the size of the apartment and the household. Rentals for the very low-income units will range from $399 to $425 a month. The low-income units will rent from $509 to $654 a month.A total of 30% of the residences, or 69 units, will be available to families in the middle-income classification with annual incomes ranging from $41,000 to $157,000. Rates will range from $1,025 to $1,775 a month.The remaining 50% of the units, or 115 units, will be rented at market-rate rents of $1,444 for a studio, $1,718 and up for one-bedrooms, and a minimum of $2,295 for two-bedroom units.The Aspen is the first such transaction under the new HDC Middle Income Housing Program that encourages the development of mixed-income housing for low-, moderate-, and middle-income families. The New York City Department of Housing Preservationand Development sold the land site to the developer for the appraised value with a $1 payment at settlement in accordance with a development agreement under the Cornerstone Program.“By providing the land abatement and subsidies within an organized vision and plan, we allowed the private sector to fully participate and provide needed affordable housing to underdeveloped neighborhoods,” said the director of the New York City Partnership Office of Fannie Mae, Naomi Bayer.Fannie Mae, the nation’s largest source of financing for home mortgages and multifamily housing, provided financing in the form of credit enhancements for $44 million of Housing Development Corporation tax-exempt bonds, and also participated in the debt financing with JP Morgan Chase Bank for the development at 1955 First Ave.***On August 5, the New York City Department of Housing Preservation and Development, the city’s Housing Development Corporation, Citibank, and the developer Strategic Development celebrated the opening of a newly constructed 183-unit mixed-income apartment building located in the Harlem Gateway at 279 West 117th St. and Frederick Douglass Boulevard. A total of 42 units are reserved for low-income tenants. The remaining 141 units are available to middle-income tenants.In June of 2003, a groundbreaking ceremony was held for Triangle III, the third and final phase of a mixed-income community on St. Nicholas Avenue between 119th and 120th streets.Triangle I was built in 1998 with financing from the city Housing Development Corporation and the Community Preservation Corporation. It was the first middle-income housing development in Central Harlem built with the use of city funds. Triangle III is being built on eight vacant city-owned lots, and will be developed into 97 affordable apartments.Of Triangle III’s 97 units, 77 are reserved for middle-income residents. A total of 16 units are available to low-income tenants, and the final four units will be for very low-income tenants.All of the buildings north of 96th Street mentioned in this column were developed through the Department of Housing Preservation and Development’s Cornerstone Program, a construction initiative to produce affordable, multifamily housing on vacant city-owned land that is financed principally through private sources. Sites are awarded to a developer through a competitive request for proposals process. Each site was provided to the developer for a price of $1.A former senior New York City real estate official told The New York Sun, “When the city put the first sites up for sale the market was not strong enough, and city had to give the sites to the developer for free. This was a way to get the first projects completed, which allowed Harlem to create a market which is self sustaining.”“The city has realized that the land they gave away for free has value today. The city wants to get paid for the land and should receive adequate payment for the property,” said Vincent Riso, the principal of The Briarwood Organization LLC, a company that has developed properties under the Cornerstone Program.In the opinion of this writer and many real estate leaders, very few, if any, of these residential buildings would have been developed if the city had not provided the land to the developers at a cost of $1. Conversely, these developments provide needed affordable housing throughout the city.The problem today is that the market for residential housing is very strong, and private land sellers who own property north of 96th Street believe that the value of their land is much greater than it really is. Due to the high cost of land, the only thing a developer can afford to construct on a private site today is a condominium. This may provide housing that is not affordable and needed in the city.“Most of the vacant land north of 96th owned by the city is under development, the next stop for developers is the Bronx,” said Ms. Bayer of Fannie Mae.

City’s $1 Offer to Developers Works

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