NEW YORK, NY - Mayor Bloomberg's campaign to build 165,000 units of desperately needed affordable housing appears to be running into the same economic maelstrom that brought down Wall Street. A $240 million fund that was a key element of the mayor's housing plan relies on some of the country's most troubled banks and securities firms, records show. The New York City Acquisition Fund's partners include Washington Mutual, Wachovia and Fannie Mae, strongly suggesting it may become a casualty of the still-evolving credit meltdown. That would be bad news because the city has a shortage of 100,000 to 300,000 units of affordable housing, the Pratt Center for Community Development says.
It could get worse. Economic downturns bring an increased need for affordable housing, center director Brad Lander said. "You don't have to worry, 'Is there a market for my project?'" Lander said. "The worry is, 'Is there financing for my project?'" About 25% of the city's renters pay more than half their monthly income in rent, the Pratt Center said. That's why Bloomberg made pressing for more affordable housing units a top priority.
The city's goal also is hampered by a growing city budget deficit that's squeezed housing capital spending - and the credit crunch, which could hurt the acquisition fund. Founded in 2006 to create or preserve 30,000 affordable housing units over a decade, the fund has loaned $69 million toward 1,734 affordable units so far. City housing officials insist the fund is safe because investors were locked in to provide funding through the summer of 2010.
Developers with low-interest loans to buy property are likely to have a hard time getting construction financing as the credit squeeze tightens, experts said. "There are fewer firms and the firms that remain at least right now seem to be very reluctant to undertake new financing," city Independent Budget Office Director George Sweeting said. That's exactly what Alan Bell's real estate firm, Hudson Cos., found in Brooklyn. The acquisition fund provided a $2.47million loan to close a deal last weekon land for a 137-unit project in EastNew York. "I still have to build the buildings," Bell said. "If I was going for a construction loan today, I think it would be a problem."
He was planning to close on construction financing in June for the development at 1478 Dumont Ave. and hopes things will improve by then. "This is unlike anything I've seen in my lifetime," Bell said. The nonprofit New Destiny Housing Corp. bought a lot near Yankee Stadium in the Bronx with about $2 million in acquisition fund money in June. It plans to erect an eight-story, 41-unit building at 1070 Anderson Ave. that would be set aside for families of four earning as little as $23,050.
Carol Corden, New Destiny's executive director, said the value of low-income housing tax credits that financial institutions get for investing in affordable housing has declined about 18% - and might not improve. "It is hard to predict what the situation will be," she said.
Source: nyDailyNews.com