By TERRY PRISTIN November 12, 2008
At a time when projects all over New York are being canceled or postponed, a development team that plans to transform a weedy site in East Harlem into a 12-story rental apartment building had cause to celebrate last week. Despite the economic downturn, the partners were able to complete the financing for the $65 million building and schedule a groundbreaking for next Tuesday.
The building, which is to rise on a site at 124th Street and Second Avenue that is a patchwork of 10 city-owned and private lots, will be known as the Tapestry. Half of its 184 apartments will rent at the market rate, while 30 percent will be set aside for people whose household income is less than 130 percent of the New York area median income, which is currently $74,600, and 20 percent for people who earn only 50 percent of the median income.
Getting a project like this under way is usually a time-consuming exercise. The developers — Jonathan F. P. Rose and Nicholas and Gerard Lettire — had to stitch together a daunting array of tax credits, tax-exempt bonds, loans and grants.
But even these days, money is available for well-structured projects, said Mr. Rose, who has been developing affordable housing around the country for 19 years. “The developer has to have a good track record, and financial strength, and the project has to be well thought-out,” he said in an interview in his Fifth Avenue office.
He said he hoped to close the financing next month for two more income-restricted projects — one in Albuquerque and another in Harlem, on 140th Street and Riverside Drive, to be developed in partnership with the Fortune Society, a nonprofit organization that provides services to ex-convicts.
Affordable housing is said to do better than other real estate sectors in a bad economy because government subsidies are available, land and construction costs fall and demand for the apartments rises.
But because of the toll that the credit squeeze has taken on financial institutions, busy developers like Mr. Rose may be more the exception than the rule. Though the need for affordable housing is likely to grow as unemployment worsens, specialists in mixed-income rental housing say that many developers — especially outside of New York, Los Angeles, San Francisco and Chicago — are finding it difficult or even impossible to put their deals together.
“We think there is an enormous slowdown in the production of affordable housing that’s happening right now,” said Richard Paul Richman, the chairman of the Richman Group, a company based in Greenwich, Conn., that develops affordable housing nationwide. “We believe that the shortage of equity is so severe that even qualified developers won’t get funded.”
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Uh ... housing prices are falling nationwide. It would seem that makes them more affordable. Therefore I would say, housing affordability is increasing faster than builders can build new units.
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