Brownfield Site Redeveloped Into Affordable Apartments
By Caitlin Jones & A. J. Johnson
7 min read
Ground that once soaked up gasoline and diesel fuel has now been transformed into affordable housing for 100 families in the Bronx, NY neighborhood of Morris Park, thanks to federal low-income housing tax credits, state tax abatements, and a brownfield tax incentive.
The new seven-story White Plains Courtyard Apartments, developed by the The Arker Companies, Woodmere, NY, consist of 100 units of studio-, one-, two-, and three-bedroom apartments. The $25 million affordable housing complex also includes a 16,500-square-foot Staples office supplies store on its bottom level.
Sol Arker, a principal of The Arker Companies, said White Plains Courtyard has had a huge impact on the community. “We took an abandoned gas station that was placed out of service by Shell and created 100 units of affordable housing, together with a large Staples superstore that employs 15 full-time and part-time people from the community,” he said.
The project began renting in early 2008 to tenants who had won a city-run lottery for the right to live in the scarce number of affordable housing apartments available in the city. Arker said the new residents of White Plains Courtyard were not concerned by the property’s former life as a gas station, or worried that their health might be at risk if they chose to live in the development. Instead, tenants had comfort knowing the project had earned a certificate of completion from the New York State Department of Environmental Conservation and had met the strictest standards imposed by state regulations, Arker said.
The development earned the distinction of being the only affordable housing project in the Bronx that obtained the “Track 1″ cleanup rating under New York State’s Brownfield Cleanup Program. This rating qualified the site for unrestricted use because of the successful remediation efforts. (Program details: http://www.osc.state.ny.us/ reports/environmental/brownfields 08.pdf.)
Environmental Issues
“We had soil and ground water contamination as a result of the presence of petroleum and petroleum products, as well as historic contamination from heavy metal, pesticides, and things like that,” said Jon Schuyler Brooks, the co-chair of the environmental practice group at Phillips Nizer, LLP, a New York City-based law firm hired by The Arker Companies to work on the project.
According to the New York State Department of Environmental Conservation, brownfields are abandoned, idled, or under-used properties where expansion or redevelopment is complicated by real or perceived environmental contamination. In general, brownfields are former industrial or commercial properties where operations may have resulted in environmental contamination.
The New York State’s brownfield tax credit program, which offers cleanup and build out credits, provides wonderful incentives for the redevelopment of contaminated properties in the New York City, Brooks noted. “Given the location of many of these properties, development of workforce or affordable housing is a logical and often preferred use,” he stated.
Brooks said it took 18 months to complete the environmental remediation on the site. Arker estimated his firm directly paid between $1.5 million and $2 million in cleanup costs.
Brooks said the project qualified for New York State’s brownfield tax incentive, which recipients claim on their state income tax return. Under the program, if the credit exceeds the amount of the taxpayer’s tax liability, the balance is refunded to the taxpayer. (Details on brownfield tax incentive: http://www.nylovesbiz.com/ pdf/environmental_zones/TFtaxsheet011604.pdf)
Additional Challenge
In addition to the brownfield remediation, another problem cropped up with the nearby New York City subway system.
Arker explained that since the site is located adjacent and parallel to a city transit authority track, construction crews had additional issues sequencing the job and completing work.
“Because of the location and the proximity of the elevated track, and the train going by, the crane was able to operate only on a restricted basis,” Arker stated. “You couldn’t be lifting material while the train was going through.”
Bronx Borough President Adolfo Carri””n said White Plains Courtyard is a good example of the city working with an affordable housing developer to redevelop environmentally contaminated land in order to meet the needs of a growing population.
He said the development represents a sign of the borough’s revitalization after decades of despair.
“We have been encountering buried gas tanks and old boilers for years. The pressure to meet today’s housing need; however, has lead to the development of former industrial, gas station, or car repair sites,” Carri””n explained. “With the assistance of government, these sites can be remediated and restored to full community use.”
Funding Sources
White Plains Courtyard utilized $9.9 million in tax-exempt bond financing from the New York City Housing Development Corporation (HDC) under the Low-income Affordable Marketplace Program (LAMP).
Under the LAMP program, HDC provides developers with construction financing for just over 50% of the total development cost so that the project will qualify for housing tax credits without a credit allocation from the state’s credit volume cap. When the loan is converted, developers usually can’t afford the debt service payment amount that would occur on a permanent mortgage with the same high dollar amount, so they pay down the bonds to the level that can support a fully-amortizing first mortgage for the term of the loan.
In the White Plains Courtyard project, HDC used the tax-exempt bond proceeds to fund a $9.9 million construction loan to the project. When the project converts, The Arker Companies plans to pay the loan down to $4.9 million, according to HDC records.
The project also received about $6 million (10-year total) in 4% housing tax credits, which were syndicated by New York City-based Centerline Capital Group.
An additional $9 million was raised for the project from the sale of certificates received for the property under New York City’s Section 421a property relief program. Because of this, the project’s rents are pegged to 55% of area median income.
Rent, Tenant Income Levels
Affordable rental housing units financed under the LAMP program must be reserved for tenants with incomes not greater than $32,280 for an individual or $46,080 for a family of four (60% of area median income).Normally, HDC requires a set-aside of 20% of units for formerly homeless tenants, but this requirement was relaxed for White Plains Courtyards since it received 421a certificates.
Instead, 10 units are set aside for formerly homeless tenants, whose rents are covered by federal Section 8 rental assistance; 89 units are for low-income tenants; and one unit is for the building superintendent. Ninety-nine units are tax credit units.
In addition to the 10 units for formerly homeless tenants and single superintendent unit, White Plains Courtyard has: five studio apartments with a monthly rent of $638 reserved for tenants earning no more than maximum income limits ranging from $23,383 to $29,760; about 39 one-bedroom units renting for $683 for tenants subject to caps from $25,063 to $34,020; about 40 two-bedroom units renting for $823 for tenants subject to caps from $30,069 to $42,096; and about five three-bedroom units renting for $951 for tenants subject to caps from $34,761 to $48,666. – Stephen K. Cooper
