NEW YORK, NY - Citi Community Capital ("CCC") and L+M Development Partners today announced the creation of a $100 million New York Affordable Housing Preservation Fund (NYAH Preservation Fund). The NYAH Preservation Fund's mission is to stem the loss of affordable housing in the New York metropolitan area and to expand the stock of such housing through strategic rehabilitation and investment.
Source: Citi Community Capital
The NYAH Preservation Fund will focus on properties that may be at immediate or longer term risk of becoming unaffordable to low- and moderate-income households. In order to maximize its impact, the NYAH Preservation Fund will invest with a wide range of responsible owners and operators. The NYAH Preservation Fund is envisioned as an innovative and dynamic response to one of the City's most important challenges - namely how to enhance the region's role as a center for economic diversity and opportunity through the expansion and preservation of affordable housing. The NYAH Preservation Fund could become a model for similar efforts in the region and nationally.
As part of Mayor Bloomberg's unparalleled New Housing Marketplace Plan (NHMP) initiative over the past eight years, the City has been working to finance the creation or preservation of over 165,000 affordable homes by 2014. By June 30, 2010, the City had closed on the preservation or creation of more than 108,600 units. The NYAH Preservation Fund is structured to become an important source of private capital towards this ongoing effort.
"The launch of this $100 million fund further illustrates Citi's commitment to the principles of responsible finance. We have pledged that we will do our part to fuel the economic recovery and lend a hand to those in need," said Vikram Pandit, CEO of Citi. "There is a lack of affordable rental housing available to low- to moderate-income households in New York City and we take great pride that this fund will benefit our New York neighbors."
"The creation or preservation of affordable housing is the work of many dedicated partners from the public, private and not-for-profit sectors," said NYC Housing Preservation and Development (HPD) Commissioner Rafael E. Cestero. "Our New Housing Marketplace Plan is of a scale that is unequalled anywhere else and is achieving remarkable results. Nowhere is this work more important right now than at the neighborhood level, in occupied buildings that are deteriorating and at risk of becoming unaffordable. This partnership between Citi and L+M supports and complements our NHMP goals. It's a model for how terrific private-sector partners can put their capital to work right here in our neighborhoods for the direct benefit of our residents and toward the goal of stabilizing our City's neighborhoods."
"We are honored to be partnering with Citi on this innovative fund to preserve affordable housing for families throughout New York City and in neighborhoods most in need," said Ron Moelis, CEO and Chairman of L+M Development Partners. "We look forward to working with, and investing in, experienced multifamily owners and managers to responsibly execute the Fund's investment strategy."
Over the next three years, the NYAH Preservation Fund's goal is to help finance the preservation and rehabilitation of over 2,000 affordable apartments in New York City and the surrounding communities. The NYAH Preservation Fund will make strategic equity investments with local operating partners (both private and not-for-profit). The Fund will also look to provide affordable housing expertise, regulatory guidance, and access to debt financing to ensure that responsible owners/managers can successfully compete in the metropolitan marketplace. An affiliate of L+M Development Partners will be the Fund's managing member and will be exclusively responsible for executing the Fund's investment strategy. As part of this effort, Citi will look to make debt financing available on projects in which the Fund is investing.
There are numerous studies that attest to the severe housing crisis in New York City. The NYC Center for Economic Opportunity, a poverty research center established by Mayor Bloomberg in 2006, found that access to affordable housing is a critical determinant of whether working families vulnerable to poverty can make it over the poverty line. Additionally, New York City HPD Commissioner Rafael Cestero recently noted that "U.S. Census Bureau data show that in 2008, more than 1 in 4 rental households are severely rent burdened, paying more than half of their income toward rent."
Despite a large increase in the housing stock over the past decade, affordability remains a challenge. Between 2005 and 2008, the citywide housing stock grew by 2.1%; however, the number of units affordable to the median household continued to decline during this period, as the number of higher cost units continued to increase. Demand still outstrips supply at the lowest end of the housing market. In 2008, the vacancy rate of units renting for less than $1,000 a month was 1.6%, compared to 6.5% in units renting for $2,500 or more a month. These numbers underscore the importance of preserving New York City's available housing stock for low-income residents.
The NYAH Preservation Fund represents a compelling partnership between Citi and L+M Development Partners to curtail the loss of affordable housing in New York City and invest private capital to maintain access to high-quality and safe housing in New York.
Citi Community Capital (CCC) is a premier financial partner with nationally recognized expertise in financing all types of affordable housing and community reinvestment projects. CCC's origination, structuring, asset and risk management staff across the country provides creative financing solutions designed to meet their clients' needs. CCC helps community development financial institutions, real estate developers, national intermediaries and nonprofit organizations achieve their goals through a broad, integrated platform of debt and equity offerings