A $621.5 million loan to the Co-op City development in the Bronx has closed, Governor Andrew M. Cuomo, Mayor Michael R. Bloomberg and U.S. Housing and Urban Development Secretary Shaun Donovan have announced.
The federal, state and city governments’ respective agencies have collaborated to jointly insure the mortgage loan made by Wells Fargo Bank, which will refinance Co-op City’s existing debt at historically low interest rates. Under the terms of the loan, Co-op City, which opened to the public in 1968 and is the largest Mitchell-Lama co-op, will remain affordable to residents for 35 more years.
“If it were an actual incorporated city, Co-op City would be the 12th largest in our state—and so it is hard to exaggerate the critical role it has played for over 40 years in keeping housing in New York State and New York City affordable,” Governor Cuomo said in a statement. “I am proud and grateful that all levels of government were able to work effectively together to secure athat protects the middle and low-income New Yorkers who call Co-op City home.”
“Keeping Co-op City affordable and viable is greatnot just for current tenants but for thousands of Bronx residents who need inexpensive housing options,” Mayor Michael R. Bloomberg said in a statement. “We have a longstanding commitment to preserving affordable housing for this generation and for the generations to come—that’s why we’ve set an ambitious goal to finance the creation and preservation of 165,000 affordable housing units by the end of 2014 under the New Housing Marketplace Plan. Thanks to Governor Cuomo and HUD Secretary Donovan for their partnership on this important project.”
“This is about preserving affordable housing for the next generation of families living and working in one of the nation’s highest cost rental markets,” said HUD Secretary Donovan. “Working closely with the State of New York and New York City, we’re making certain that working families have a decent and affordable place to call home while saving private owners of affordable housing significant money that they can reinvest back into their properties.”
The Wells Fargo loan to RiverBay Corporation, which controls Co-op City, is the largest ever insured under HUD’s 223(f) program, which protects lenders against loss on mortgage defaults at multifamily rental properties. It is also the first time the program has been applied to a co-operative development. The Mortgage Insurance Fund of the State of New York Mortgage Agency within New York State Homes and Community Renewal (HCR) and New York City’s Housing Development Corporation (HDC) will provide credit support with $55 million and $15 million coverage of the loan, respectively.
Loan proceeds will be used to prepay Co-op City’s current mortgage and complete capital projects currently underway, and for the first time provides for additional new reserves to address future capital needs, as well as to fund ongoing maintenance.
“Wells Fargo is a proud partner in financing, protecting and keeping Co-op City affordable for decades to come,” Alan Wiener, managing director of Wells Fargo Multifamily Capital, said in a statement. “Structuring such a deal was not easy, but like most of the valuable community-based development that Wells Fargo does, the results are incredibly rewarding. Because of today’s historically low interest rates, our refinancing of its current debt will save Co-op City and its residents more than $150 million over the 14-year remaining term of the current loan and eliminate refinancing risk should interest rates rise.”
Located in the Baychester section of the Bronx, Co-op City is situated on 330 acres along the west bank of the Hutchinson River. In addition to 35 residential structures, the site includes three shopping centers, a 25-acre educational park, eight parking garages, three elementary schools, two middle schools, a high school, a weather station, 14 gymnasiums, two swimming pools, 12 churches, six nursery schools and day care centers, four basketball courts, five baseball diamonds, numerous restaurants and a power plant.
New York State’s Mitchell-Lama Housing Program was first proposed by State Senator MacNeil Mitchell and Assemblyman Alfred Lama and was signed into law in 1955 by Governor William Averell Harriman. Under the state’s Private Housing Finance Law, the program provided for the creation of affordable housing, both rental and co-operatively owned, for middle-income residents. Developers received tax abatements and low-interest mortgages, subsidized by the federal, state, or New York City government. In total, 269 housing developments with 105,000 units were developed with State aid under the Mitchell-Lama Program.
Since 2003, when Mayor Bloomberg’s New Housing Marketplace Plan was launched, the HDC has raised more than $6.7 billion in financing and contributed in excess of $1 billion in subsidy from corporate reserves for the creation or preservation of more than 60,000 affordable units in privately owned and managed multifamily affordable housing developments.