Real Estate Weekly
March 15, 2012
The Community Preservation Corporation (CPC) has struck a deal to extend its credit facility with its member banks that will lead to $70 million in direct lending to small and mid-size builders.
The move should allow the veteran affordable housing lender to help create of preserve some 5,000 units of low- and moderate-income housing across the state.
Rafael E. Cestero, CPC’s recently appointed president and CEO, said the financing will help fund several new projects, including 754 East 161st Street & Longfellow Avenue in the Morrisania section of the Bronx and The Pike Block in Downtown Syracuse.
“This credit facility will provide a reliable source of much needed capital and liquidity for this crucially important segment of the market,” Cestero said. “These first two projects reflect our sharp focus on advancing CPC’s core mission of creating sound rental housing for lower income families and improving communities across New York State.”
Over the next two years, the credit line will allow CPC — a not-for-profit mortgage lender founded by a consortium of banks during the 1970s financial crisis — to leverage loans worth up to $300 million.One of the first projects to benefit will be 754 East 161st Street in The Bronx where four buildings will be renovated as part of a preservation trend in the neighborhood.
CPC will provide a construction loan and a pension fund-backed permanent loan for $2,799,000. The CPC construction loan will have a two-year term, and the permanent loan will have a term of 20 years. HPD’s Article 8A Loan Program will provide a construction and permanent loan of $1,269,931.
The Morrisania Preservation Corporation (MRC) has owned this four-building, 81-unit portfolio since the early 1990’s. The buildings fell into disrepair when the owner could not meet the mounting expenses associated with basic physical maintenance.
In addition, MRC accumulated significant water and sewer service arrears. MRC will continue as owner and strengthen its management capabilities by installing Cornell Pace, an experienced manager, to handle all aspects of property operations.The properties will receive Article 8A loans from the New York City Department of Housing Preservation and Development (HPD) to fund the rehabilitation of the major systems, and funds from CPC for additional hard costs.
In addition, through CPC’s Green Initiative Program, the properties will be benchmarked to determine energy usage and an energy audit will be performed to incorporate retro fit items into the scope of work to maximize the buildings’ energy efficiency. The CPC portion of the loan will also be used to pay off accumulated water liens and vendor debt.
The South Salina Street project in Syracuse, involved the rehab of four buildings that were formerly department stores into a new, mixed-use development with 78 market rate housing units.
CPC will provide a $13,674,889 construction loan and $9,600,000 SONYMA-insured pension fund permanent mortgage to finance the acquisition, construction and conversion of this four-building project. The Pike Block project is also the recipient of federal and state historic tax credits.
Additional incentives and grants from the State of New York, City of Syracuse, Onondaga County, the Downtown Committee and National Grid were provided. The term of the construction loan is two years and the permanent loan will have a 30-year term and amortization schedule.
Cestero indicated that CPC will also be pursuing other responsible and appropriate funding sources and partnerships to supplement and reinforce its vital core initiatives.
Michael Hegarty, chairman of the Board of CPC, said he was delighted Cestero had been able to hit the ground running with the initiative. “There is clearly much to be done and CPC demonstrably has the right leadership team in place to address the challenges ahead productively and effectively,” he said.
Housing Preservation and Development Commissioner Mathew Wambua added, “In moving so quickly to secure this funding, CPC’s new president has sent a clear message: CPC remains strong and committed to our shared goal.”
And Gary Hattem, managing director at Deutsche Bank, said, “New York’s banking community recognizes the valuable role CPC plays in preserving and developing affordable housing and looks forward to a continuation of our partnership to advance the shared goal of strong and vibrant New York neighborhoods with increased housing options for working families and our most vulnerable citizens.”