City’s Affordable Housing Program Faces Trouble Finding Buyers
The New York Times
By Cara Buckley
18 February 2010

For all the booms and busts he has lived through, Vincent Riso never thought it would come to this: Offering free 42-inch, flat-screen televisions to lure buyers into government-subsidized homes.

Historically, such homes have sold quickly. But not at Waters Edge at Arverne, a stretch of 130 town house condominiums Mr. Riso’s company, the Briarwood Organization, built between Far Rockaway’s boardwalk and the A train’s rust-streaked overpass in Queens.

So last spring, Briarwood, which got $12.8 million in city and state subsidies for Waters Edge, began throwing in as much as seven months’ free maintenance on some units, along with the TV. Still, as of mid-February, roughly three years after the units began arriving on the market, 22 of them had yet to sell.

The city has received accolades nationwide for its efforts to provide housing affordable to middle- and lower-income households. Mayor Michael R. Bloomberg has pledged to build, save or restore 165,000 such housing units by 2014. But while the city is still filling up low-income rentals, the housing program is struggling on the ownership front.

Sales are sluggish at some projects, particularly ones in poorer neighborhoods aimed at middle-income buyers. Few units will be built any time soon: since July 2008, the city has made only two deals with developers for new home ownership projects, down from two dozen deals in the 12 months before that.

Last summer, Mr. Bloomberg and the City Council speaker, Christine C. Quinn, unveiled the city’s Housing Asset Renewal Program, or HARP, setting aside $20 million for developers who agreed to drop the prices of unsold market-rate condos. But the program drew far fewer applications than the city had expected — just five by the Dec. 31 cutoff — so the deadline was extended.

City housing officials and developers said the reasons for the slowdown were clear. Financing for new buildings has dried up. The HARP program has yet to catch on because developers and lenders were unwilling to cut into profits they were expecting to make. Would-be homebuyers remained hesitant to make the leap, and, crucially, mortgages were harder to get.

Developers of higher-priced affordable housing were especially hurt by the housing crash, which caused price differences between their units and market-rate homes to narrow. In addition, market-rate homes do not have the resale restrictions that the affordable homes often have.

Rafael E. Cestero, the city’s housing commissioner, said that during the housing boom, when financing for many projects was lined up, higher-priced units like those at Waters Edge “were deeply affordable” compared with what was then on the market. “We had no idea what was going to happen,” he said.

Denise Scott, managing director for New York’s Local Initiatives Support Corporation, said her agency’s nonprofit partners were struggling to sell 95 refurbished houses and condos in Bedford-Stuyvesant in Brooklyn, Jamaica in Queens, and Morrisania in the Bronx, all city subsidized and costing $250,000 to $350,000. Some have been sitting on the market for 18 months, she said, even though their prices were cut from 15 percent to 30 percent.

Ms. Scott said that demand was down but that the biggest impediment was banks’ unwillingness to issue mortgages.

Samuel G. Gaccione, executive vice president for the TNS Development Group, said his group planned upgrades at the Shelton, a subsidized building under construction in Bedford-Stuyvesant — granite countertops, stainless-steel appliances, hardwood floors — to prepare for a bad market and buyer trepidation.

But the fact that some homes are standing vacant in struggling neighborhoods has caused some to question the wisdom of putting them there in the first place. Waters Edge occupies the highest strata of what the city defined as affordable: Three-bedroom units are going for up to $344,000 in a neighborhood where the median income is $45,221, according to census data.

Javier Valdés, deputy director of the community advocacy group Make the Road New York, based in Bushwick, Brooklyn, said the city should change how it calculated affordable income limits. Generally, people eligible for low-income subsidized units can earn up to 80 percent of what is known as the region’s “area median income,” which in 2009 was $76,800. Moderate-income housing is open to people earning from 80 percent to 120 percent, and middle-income housing is open to people earning 120 percent to 175 percent.

But those income figures are based on a broad region that includes Long Island and Putnam, Rockland and Westchester Counties. Mr. Valdés said affordability should be determined by neighborhood. In Bushwick, the median income is $32,328, according to census figures.

“We understand the difficulty and the balancing act the city has to play, to provide affordable housing to middle and lower income,” Mr. Valdés said. “But if condos are sitting unsold, we do want them given to people who are from the community.”

Mr. Cestero, the housing commissioner, said the city had long worked to create economically diverse neighborhoods and could not have anticipated the housing bust. He said only a few hundred homes remained unsold and noted that the foreclosure rate among city-subsidized homes was just 0.06 percent. “I don’t look back and think our strategy was wrong,” he said. “I think our strategy was exactly right.”

Units at Waters Edge, city-subsidized condominiums in Arverne, Queens, have sold much more slowly than expected. Credit Michael Nagle for The New York Times

Some projects are doing well, especially lower-priced ones. At the Solara, which Briarwood put up in the South Bronx, 151 of the 160 units are under contract, after a year and a half on the market. Prices there range from $108,815 for a one-bedroom apartment to $202,217 for a three-bedroom.

Seeing this trend, one development switched midstream. The Atlantic Terrace, an 80-unit building in Fort Greene, Brooklyn, built by the Fifth Avenue Committee, a community development group, was originally going to sell 59 units to families earning up to 165 percent of the area median income.

After the market collapsed, the group lined up an additional $2 million in subsidies to make the homes affordable to people earning far less. The lottery for the units drew 4,881 applicants.

“We read the tea leaves,” said Michelle de la Uz, the group’s executive director.

Despite the troubles, the city said that it was nearing the 100,000 mark in the number of affordable units created or preserved and that it was having little difficulty creating and filling rentals, which tend to be aimed at lower-income families and constitute two-thirds of the total.

Given the market, Mr. Cestero said, the city plans to concentrate on preservation and building mixed-income rentals.

In Arverne, Mr. Riso said he was almost certain that the last 22 condos at Waters Edge would sell by summer.

On a recent day, with an Arctic wind whipping off the Atlantic, a rare sight came into view: a new buyer. Ronald Fields, 46, his wife, Naomi, and their 4-year-old son, Taiga, dropped by to see the three-bedroom home they were expecting to close on this month.

Mr. Fields, who works at the cable channel truTV, could not quite believe he was about to become a homeowner, after saving for a down payment for many years.

“Two blocks from the beach, a new development, you can’t beat it!” Mr. Fields said.

And, he added, he was looking forward to that free TV.

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Owners of affordable Rockaway condos sue developer, architect for $210M
The Real Deal
23 September 2016

Owners of condominium units at a Rockaway apartment building are suing developer Briarwood Organization and AIA Architects for a combined $210 million over alleged construction defects.

Water’s Edge in Arverne, completed in 2009, is a city-financed condo development for low- and middle-income households. Residents allege that shoddy construction left them with water damage, leaks and $10 million in repair costs. They also claim that boilers were improperly installed, leaving some rooms cold.

“We want housing that is done with proper construction practices and meets the goals of New York City — that is what was promised to us,” condo board president Leonard Yarde told Crain’s. “But we were sold a product that is defective.”

The complex is made up of 65 two-story buildings, with a condo on each floor. Average prices range from $188,000 to $300,000. Lawyer Adam Leitman Bailey is representing the condo board.

The plaintiffs are seeking $150 million from the developer and $60 million from the architect.


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