NEW YORK — Today, the area of West 116th St. in Harlem resembles other New York neighborhoods. Pedestrians stop to greet neighbors while on their way to the corner grocery store or beauty salon. Sparkling street-level retail storefronts advertise a variety of items for sale. Apartment buildings are welcoming, with plants peeking out from windows. It is a dramatic contrast from just 10 years ago.
A few doors down from a renovated circa 1891 building stands a vacant apartment building with soot stains on the walls and gaping holes where there should be windows. A decade ago, this type of dilapidated building was the norm, and today it looks out of place.
The door was opened for a rebirth of Harlem and the West 116th St. area in the early 1990s, after several tax foreclosures put a large portion of abandoned buildings located in that section of upper Manhattan under ownership of the City of New York.
“The city had foreclosed on tons and tons of buildings,” recalled Bruce Dale, senior vice president and director of the Manhattan field office of New York-based Community Preservation Corp. (CPC), a mortgage bank specializing in financing affordable housing. “At the time, the city owned more than 50% of the area's real estate. Harlem was a clear example of an abandoned community.”
Rundown buildings had remained in that deteriorated state for years. “Private property owners would hold out for unrealistic sale prices while the properties continued to blight the area,” said John McCarthy, executive vice president of CPC.
Affordable housing to the rescue
The first step in the turnaround process was to obtain financing to make the renovations possible. McCarthy emphasized that these redevelopments were made possible with a deal that could be replicated and used by different development companies for renovating area buildings. The City of New York sold the rundown buildings to the developers for $1. Then CPC and the city offered joint construction and 30-year permanent loans. CPC held approximately one-third of the loans at market rates, while the city held the remaining two-thirds of the loans at a rate of 1%.
After the hurdle of private ownership was knocked down, CPC was ready to step in with financing solutions for renovating multifamily housing units located in the vicinity of West 116th St. “In 1989, we committed to redevelop every one of the buildings in that stretch,” McCarthy said. “Our intention is to continue to redevelop properties within the area.”
CPC financed a Freddie Mac structured deal involving four buildings with 82 apartments and 10,100 sq. ft. of retail space. The loans totaled nearly $6 million, including a Freddie Mac, $2.25 million loan that requires a 1.9 debt-coverage ratio, and a loan from the city for $3.7 million with a 1.7 debt-coverage ratio.
The other incentive for developers to participate was a property tax benefit. This benefit includes abatement, which enabled developers/owners to avoid paying any real estate taxes for up to 20 years of the permanent loan. The building owner is also exempt from a tax increase based on reassessment of the value of the owner's renovated property for 32 years.
It started with the renovation of one building. After that was completed, others soon followed. Then retail stores began occupying the space, and now West 116th St. features a mixture of low- to middle-income residents, according to McCarthy.
CPC participated in the financing of other buildings on West 116th St., including 240 co-op units containing 63,000 sq. ft. of retail space for $51 million and 41 three-family houses for $15 million.
New building developments are springing up on once vacant land. CPC financed its own new development project called The Renaissance, a co-op building built for middle-income professionals. “That project could have never succeeded had we not done the small buildings earlier,” Dale explained.
116th Street before and after
Of all the areas in Harlem, West 116th St., a former military district, didn't really have a claim to fame. West 125th St. had a booming marketplace and the world-famous Apollo Theater. That neighborhood also got a boost recently, when former President Bill Clinton signed a lease for 8,608 sq. ft. of office space at 215 West 125th St.
Harlem's West 135th St. was also famous, and featured popular restaurants and jazz clubs.
For Rev. Dr. Preston Washington, a lifetime resident and senior pastor of Memorial Baptist at West 116th St., the transformation has been a long time coming. Before the urban revitalization, Washington said, “There came a time when I thought it would be necessary to leave.” He cited factors such as the unsafe conditions, drugs and crime.
“Sidewalks were cracked, there were no trees and no quality-of-life opportunities,” Washington said. “We were living in a wasteland of the first magnitude. What's happening now is kids are riding their bikes outside. This is a sign of a restored community,” he said. He credits organizations like CPC and his own involvement through a development organization called Harlem Congregations for Community Improvement (HCCI).
Remaking a building
A circa 1891 building located on the corner of West 116th St. and Seventh Avenue, which was partially financed by CPC, used to be a luxury building. It stood vacant for more than 20 years. “It was a total gut renovation,” said Alvin Knoll, the developer, renovation architect and building owner. “We built a new structure within the existing walls.”
The building features a wood-paneled wall in the entryway and detailed panels on the outside underneath the windows. “These buildings came from an era where builders did very fine work,” Knoll said. “It was obvious to me that these details should have been preserved.”
Knoll prefers renovation of existing buildings to demolition. Keeping the neighborhood character intact is an important element, he explained. Also, he said the benefit is that it's less costly and quicker than rebuilding.
Washington said you can't walk down the street today without noticing the scaffolding shrouding another building under renovation. Knoll, who owns four buildings located around West 116th St., doesn't see a downside to renovating old buildings. “The seed of good housing provides for more good housing,” he said. “I think many cities should be doing this subsidy program.”