Stalled $28M Construction Project Revived Under City Program

A Hole in the ground in Queens, once planned to sprout 117 market-rate condos, will be reborn as a mixed-income residential development, courtesy of the Housing Asset Renewal Program.

A second stalled condo project will be revived under a city program designed to convert dormant sites into affordable housing, the city announced Monday.

A stalled Long Island City, Queens, project will become a 117-unit mixed-income residential development with 108 affordable rental apartments for middle-income New Yorkers. The project, located at 23-10 41st Ave., was originally designed as a market-rate condominium. Under the Housing Asset Renewal Program, the city and Bank of America will provide Queensboro Development, the project's developer, with a low-interest construction and permanent loan for a total of $28 million. The program will provide $7.6 million, or $70,000 per unit, in subsidies for the project. For the city, one of the key points is that the subsidy per unit is far less than the $100,000 to $125,000 per unit needed to build new moderate-income rental projects.

“It was a total hole in the ground, and now more than half of the planned units will be affordable, far exceeding the requirements of Housing Asset Renewal Program,” said City Council Speaker Christine Quinn, who launched the housing renewal program in July 2009. “This project has been challenged, and now through a public-private partnership, we a turning it into a positive for middle-income families and the neighborhood.”

Queensboro Development, the third owner of the project, bought the site for $6.4 million in June 2009, at a 33% discount from its previous owner, who took it over in 2007. The site, made up of three lots, was originally assembled by a joint venture in 2005, and the initial developers spent $9.7 million on the acquisition, demolition, excavation and pre-development of the condo project. Queensboro, which applied for the housing renewal program early last year, will invest $6.3 million in equity in the project..

The new project will be made up of 17 apartments for households with incomes of $79,200 a year or less for a family of four and 91 units for households with incomes of $102,960 or less for a family of four. The rental unit mix will include 31 studios, 42 one-bedroom units and 36 three-bedroom apartments. The project will also include eight market-rate condo units for sale. It will also have roughly 16,481 square feet of retail space and 30 parking spots..

“This deal is important because we're starting to achieve a greater scale in terms of size of projects,” said Mathew Wambua, commissioner of the city's Department of Housing Preservation and Development. The first Housing Asset Renewal Program deal closed earlier this year, and it will create a 46-unit affordable rental building in Brooklyn.”.

It has taken longer than expected for the city program to get traction, said Mr. Wambua, noting that banks have been reluctant to deal with bad construction loans on their books and low interest rates have allowed banks to sit on those assets. “Banks could extend and pretend,” he said. “Now we are turning a corner, and some banks are willing to acknowledge bad assets.”.

The deadline for developers to apply to the housing renewal program was originally December 2009, but the city extended the deadline and is still currently taking applications. Mr. Wambua said the program has the capability to create another 214 affordable rental units. The Housing Asset Renewal Program can subsidize up to $75,000 per unit for a rental project and $50,000 for a condo project. So far, all projects considered for the program are rental projects because the homebuyer financing market is still very tight, Mr. Wambua said.

Construction of the Long Island City project has already begun and is slated to be completed by spring 2013.

By Amanda Fung / Crain's New York Business
July 18, 2011 10:53 a.m.