Phase one of the big Essex Crossing project has been picking up momentum in recent weeks. There’s another milestone ahead on Monday when a public hearing will be held on the sale of 175 Delancey St., otherwise known as Site 6, to the development team. A notice regarding the hearing was posted in the City Record last month:
Under (the Department of Housing Preservation & Development’s) Extremely Low and Low Income Affordability Program, sponsors purchase City-owned land or vacant buildings and construct or rehabilitate multifamily buildings in order to create affordable rental housing. Construction and permanent financing is provided through loans from private institutional lenders and from public sources including HPD, the New York City Housing Development Corporation, the State of New York and/or the federal government. Additional funding may also be provided from the syndication of low-income housing tax credits. The newly constructed or rehabilitated buildings provide rental housing to low-income families. Subject to project underwriting, up to 30% of the units may be rented to formerly homeless families. HPD has designated Site 6 DSA Owner LLC (“Sponsor”) as qualified and eligible to purchase and redevelop the Disposition Area under the Extremely Low and Low Income Affordability Program. HPD proposes to sell the Disposition Area to Sponsor for the nominal price of one dollar ($1.00) per tax lot. Sponsor will also deliver an enforcement note and mortgage for the remainder of the appraised value (“Land Debt”). Sponsor will then construct one building with approximately 99 rental dwelling units for low income seniors, plus one superintendent unit, a community facility space of approximately 74,539 gross square feet, and approximately 6,068 gross square feet of commercial space. After a minimum of sixty (60) years following completion of construction, any remaining balance of the Land Debt may be forgiven.
We recently heard from a TLD reader who asked whether the city is really selling the site to the Essex Crossing developers for a dollar. The short answer is “no they’re not.” Here’s a more detailed explanation.
Years ago, the city in collaboration with Community Board 3 decided it would sell the former Seward Park urban renewal parcels at a discount in exchange for a variety of community amenities. These included: the construction of 500 affordable apartments, a new Essex Street Market and a publicly accessible park on Broome Street.
The winning bid came from a consortium called Delancey Street Associates, made up of Taconic Investment Partners, L+M Development Partners and BFC Partners. They paid around $500 million for the nine sites near the Williamsburg Bridge and committed to spending a half billion more to build the project. The first phase of construction includes four sites. The city holds onto ownership of each parcel until they are “shovel ready” as a way of ensuring that the developers live up to agreed-upon commitments.
Each site is financed separately and – even though the developers paid a purchase price for the entire project – a value is assigned to the individual parcels. For example, Site 5 on Clinton Street was assigned a value of about $7 million. Wells Fargo provided more than $100 million to finance that part of the development and also purchased the low-income tax credits for Site 5.
As indicated in the public notice, Site 6 will include 99 apartments for low-income seniors. It’s the only Essex Crossing parcel that will have no market rate housing. The 15-story building will also likely house a medical center from New York University and it’s where Grand Street Settlement is building a community center. Financing is not yet in place for Site 6 but will be soon. Crain’s has reported that Wells Fargo “has bid and is in the process of closing a deal to finance construction and buy the Low-Income Housing Tax Credits for Site 6.”
When asked about the public notice and the $1 purchase price earlier this week, a spokesman said, “Delancey Street Associates purchased the overall Essex Crossing site at market-rate from the city. Attempting to draw conclusions about the value assigned one of the project’s nine sites is misleading.”
The public hearing will take place Monday in the second floor conference room at 22 Reade St., at 10 a.m.