This story was originally published in Affordable Housing Finance.
After converting to market-rate housing in recent years, a set of New York City apartments will return to serving as affordable housing.
Camber Property Group, Belveron Partners, and the New York City Department of Housing Preservation and Development (HPD) announced closing on a $75 million acquisition of an 11-building, 343-unit portfolio in the Bronx.
Through the new partnership, Camber Property Group is returning 100 “lost” apartments to regulation as well as the remainder of the portfolio for 40 years, says Rick Gropper, principal of the firm.
All of the portfolio’s units will be rented to households at different affordability bands between 65% and 90% of the area median income.
The prior owner of the former project-based Sec. 8 buildings chose to dissolve the housing company that assured the affordability of the properties and forego a new affordability structure when the previous restrictions expired in 2010. The ownership instead began to convert the units into free-market housing and subsequently sold the buildings to a second owner who continued to convert apartments once tenants vacated. This resulted in 100 market-rate units throughout the 343-unit portfolio.
“The rest of the portfolio was at a significant risk of being converted entirely to market,” says Gropper. “Over the next two years, the units could have automatically converted to free market and could have become deregulated.”
The new deal is unique because there’s rarely an opportunity to recapture units once the affordability is lost, he says.
As part of the partnership with HPD and councilmember Rafael Salamanca Jr., the new owners purchased the buildings and simultaneously entered into an agreement with the city that enabled them to obtain a key tax abatement. In return, Camber commits the buildings to a long-term affordability program.
The team was able to work out a deal without using the traditional tools of housing tax credits, tax-exempt bonds, and other subsidies, Gropper says.
Instead the team utilized conventional debt from New York Community Bank and equity from Belveron Partners, which has collaborated with Camber on a majority of the development firm’s deals.
The new owners plan to embark on a $4 million capital improvement program to upgrade the buildings’ mechanical systems, roofs, common areas, and security and access control systems.
The portfolio comprises two clusters of mid-rise buildings in the Bronx’s West Farms neighborhood, with five buildings located along Belmont Avenue between East Tremont Avenue and East 176th Street and six buildings located along East 180th Street between Crotona Parkway and Honeywell Avenue.
This story was originally published in Affordable Housing Finance.
