The New York City Housing Authority is partnering with L+M Development Partners and BFC Partners to bring a much-needed funding infusion to several public housing developments. Under the terms of the agreement which has yet to be finalized, NYCHA is selling a 50-percent stake in six Section 8-subsidized developments where L+M and BFC will invest $100 million in renovations on the properties, WSJ reports. The deal nets NYCHA an initial $150 million from the developers' buy-ins, plus an additional $100 million over the next two years and $100 million in revenue over the next 15 years. The deal will see a co-ownership of the properties, with NYCHA remaining in control of the land and retaining the right to remove the developers if NYCHA officials are unhappy with the deal.
It sounds like NYCHA is getting the most out of this deal but here's the catch: when the developers upgrade the apartments, they're able to receive from the federal government the difference between market rate rents and the rents housing-authority tenants pay, which is about 30-percent of income, WSJ reports. Under the deal the developers will also be able to sell tax-exempt bonds and federal tax credits for the next 30 years, after which the apartments could theoretically be converted to market rate if NYCHA is on board.
The deal, which will affect Campos Plaza, East 4th Street Rehab, Saratoga Square Houses, Milbank-Frawley Houses, East 120th Street Houses, and Bronxchester Houses, will help NYCHA close its deficit while also seeing the developers make improvements in the apartments. The developers plan to invest about $80,000 in each of the 900-some apartments throughout the six buildings, with plans to make improvements to kitchens and bathrooms, building facades, and public spaces. City Council member Rosie Mendez told the Journal that while she positively views the agreement and the changes it will afford NYCHA in the short-term, she sees the agreement ultimately as "a road to privatization."
· New York City To Sell Public Housing Stake [WSJ]
· NYCHA Is In Really bad Shape and Needs $18 Billion For Repairs [Curbed]