Rising from the Ashes: Tarnished Brooklyn Complex Is Redeveloped With Help of Tax Credit
By Caitlin Jones
3 min read
Years of disregard and poor management had taken its toll on Riverdale Osborne Towers, a multifamily housing complex of four nine-story buildings in the Brownsville neighborhood of Brooklyn, N.Y.
Residents’ complaints of rising crime, uncollected garbage, leaking roofs, broken elevators, and hundreds of other city building code violations finally drew the attention of the Catholic Charities of Brooklyn and Queens, which had an ownership interest in the 1970s HUD Section 236 property.
In 2005, Catholic Charities intervened to improve conditions for residents. Its housing development arm, Catholic Charities Progress of Peoples Development Corp., called in CPC Resources, Inc. and its two private partners – developers Demetrios Moragianis and John Lankenau – to oversee the renovation and redevelopment of the complex, said Deborah Widerkehr, CPC vice president and project manager. (CPC is the for-profit development subsidiary of The Community Preservation Corporation, a nonprofit mortgage lender.)
In December 2009, the $38.9 million preservation project was completed, with the help of low-income housing tax credit equity and other funding sources.
Affordable Units
The new Riverdale Osborne Towers contains 523 one-, two-, and three-bedroom apartments, all tax credit eligible.
Of the total units, 463 are subsidized by project-based Section 8 rental assistance and occupied by households paying no more than 30% of their income for rent and utilities. These apartments are limited to households making no more than 50% of the area median income (AMI), or $38,400 for a family of four.
The remaining apartments are reserved for households earning 80% or less of AMI, or $61,440 for a family of four. Monthly rents for these units are $710, $801, and $960 for one-, two-, and three-bedrooms, respectively.
The redevelopment involved the installation of new roofs, gates, elevators, lobby entrance, and management office; electrical system rewiring; and upgraded lighting in apartments and common areas. In addition, security cameras were installed and security guards hired to patrol the grounds. The apartments received new entry doors, kitchen appliances, hot water heaters, cabinets, and painting. New playgrounds and landscaping, and parking lot and garage upgrades, were also done.
East Brooklyn Congregations, a broad-based community organization, worked with Catholic Charities and CPC to make sure that the interests of the residents were met during the renovation process.
Enterprise Community Partners, Inc., in New York provided a working capital loan to CCPOP for emergency repairs and to pay off arrears with vendors, said Abby Jo Sigal, Enterprise vice president and impact market leader.
Multiple Funding Sources
Enterprise provided $12.1 million in housing tax credit equity for the project through the syndication of 9% housing credits allocated by the New York City Department of Housing Preservation and Development (HPD).
“We were attracted to Riverdale Osborne Towers because it gave us an opportunity to turn around a large property that had a difficult history and really turn it into high-quality, affordable housing,” Sigal said.
In addition to the tax credit equity, funding sources for the project included a permanent mortgage from the New York City Employee Retirement System, a preservation participation loan from HPD, a loan from the sponsor, and a deferred developer’s fee.
Enterprise worked closely with CCPOP to line up construction financing and have CPC manage the redevelopment of the property, which is now managed by Moragianis and Lankenau.
Having a well-managed property in good shape is bringing a new vitality to the entire neighborhood, said Sigal and Widerkehr. “This is a good testament to why investment in affordable housing can have multiplier effects,” Sigal noted. “It’s a case for having public sector [financing] leverage private capital to help pay for the costs associated with turning the property around.”
– Stephen K. Cooper
