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HDC Press Releases
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Doors Open in Chelsea at
First Project Financed Through
New HDC Taxable 80/20 Program
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356-Unit Chelsea Centro Leads the Way for Unique Program That Expands Access to Affordable Housing Beyond the Limits of Traditional Federal Housing Programs
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New York, NY, August 1, 2001
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MANHATTAN - Chelsea Centro, the first development financed through the Taxable 80/20 Program of the New York City Housing Development Corporation (HDC), began renting in April and opened its doors to tenants last month. Through the sale of taxable bonds, HDC provided $74 million in financing for Chelsea Centro, which contains a total of 355 rental units. Seventy-one apartments, twenty percent of the total development, have been set aside for low- and moderate-income New Yorkers, who can earn up to eighty percent of the New York City area median income, slightly more than tenants of traditional 80/20 housing that is financed through the sale of tax-exempt bonds. The remaining eighty percent of the units will be rented at market rates.
Under the Taxable 80/20 Program, HDC offers construction and permanent financing through the sale of taxable bonds for projects in which up to eighty percent of the units are rented at market levels and twenty percent of the units are rented to low- and moderate-income tenants. Created by HDC in response to the limited availability of yearly tax-exempt bond allocations, the Taxable 80/20 Program encourages developers of market-rate housing to include affordable housing units in their projects. To balance the higher cost of financing due to the use of taxable, as opposed to tax-exempt, bonds, HDC offers a subsidy in the form of a $20,000 per low-income unit second mortgage at one percent for twenty years. For Chelsea Centro, HDC provided a subordinate loan of $1,420,000.
Unlike in the longstanding Tax-Exempt 80/20 Program, the interest on the bonds utilized to finance Taxable 80/20 projects will not be exempt from Federal income tax; the interest, however, will be exempt from State and Local income tax. Taxable 80/20 developments also benefit from an enhanced real estate tax abatement from the City of New York.
"With Chelsea Centro, the first-ever Taxable 80/20, HDC is expanding its role in innovative affordable housing finance," said HDC President Russell A. Harding. "The Taxable 80/20 Program will create more affordable housing because it has redrawn the existing boundaries of bond financing. Equally important, it also makes housing affordable to a group forgotten by the federal government's programs, those families making between fifty percent and eighty percent of median income."
While the Tax-Exempt 80/20 Program caps the maximum income for low-income tenants at fifty percent of the Area Median Income (AMI), the Taxable 80/20 Program allows renters of low-income units to earn up to eighty percent of the AMI as adjusted for family size at initial occupancy. This means that, for the first time ever, moderate-income New Yorkers are now eligible for apartments financed through the 80/20 Program. The maximum incomes for tenants who will occupy the 71 low- and moderate-income units at Chelsea Centro range from $33,100 for a one-person household to $47,250 for a family of four. Maximum initial monthly rents for the units currently range from $747 for a studio to $961 for the two-bedroom apartments. Low- and moderate-income units will become part of the New York City Rent Stabilization system.
"Chelsea Centro is a terrific example of HDC's creativity in combining bond market opportunities with other available resources to stimulate the production and rehabilitation of affordable rental housing in the City of New York" said David Falk, Managing Director at Bear, Stearns & Co. Inc., the underwriter for the Chelsea Centro bonds.
Located at the intersection of West 26th Street and Seventh Avenue, Chelsea Centro (200 & 220 West 26th Street) consists of two newly constructed, adjoining residential buildings. 200 West 26th Street is a 17-storey structure with a total of 231 residential units consisting of 23 studio, 162 one-bedroom, and 46 two-bedroom apartments. 220 West 26th Street is an 11-storey building with 125 residential units. It contains 12 studio, 93 one-bedroom, and 20 two-bedroom apartments. 35 units in 200 West 26th Street and 36 units in 220 West 26th Street will be set aside for low- and moderate- income households.
In addition to the residential space, Chelsea Centro contains approximately 30,000 square feet of ground floor retail and community space. The development also features 14,000 square feet of underground parking for approximately 85 cars.
Rockrose Development Corporation is the developer for Chelsea Centro. The principals of Rockrose are Henry Kamran and Frederick Elghanayan, who have been owners, developers and managers of real estate in New York City for more than 25 years. Through affiliated entities of Rockrose, they have developed nearly 5,000 residential units in approximately 30 buildings in Manhattan. HDC previously financed one Tax-Exempt 80/20 project developed by Rockrose; 100 Jane Street, which opened in 1995, contains 148 apartments, 30 of which were set aside for low-income New Yorkers.
"Speed to market was a key factor in making the decision to finance this project under HDC's Taxable 80/20 Program," said Richard A. Brancato, Senior Vice President of Rockrose Development Corp. "Under this program we did not have to wait for the tax-exempt bond allocation, which could have taken over a year."
Through HDC, the City provides access to below market rate financing for the development of low- and middle-income housing. HDC financing gives developers the opportunity to create new affordable housing units throughout New York City's five boroughs.
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