Co-op City, a 15,000-unit affordable housing community in the Bronx, has secured a massive refinancing which will allow it to continue to remain affordable for many years to come.
The community’s mortgage has been refinanced by Wells Fargo for $621 million, the U.S. Housing and Urban Development agency said. The loan is the largest ever insured by HUD and the only loan it has insured on a co-op property. The complex is home to more than 57,000 residents.
The loan, which has a 35-year term, will be used to prepay the development’s current mortgage and complete capital projects currently underway, according to a release from Governor Andrew Cuomo’s office. It will also provide additional new reserves for future capital needs. The interest rate on the loan is 2.4 percent plus 55 basis points in mortgage insurance, The Real Deal has learned.
“Our refinancing of its current debt will save Co-op City and its residents more than $150 million over the 14-year remaining term of the current loan and eliminate refinancing risk should interest rates rise,” said Alan Wiener, managing director of Wells Fargo Multifamily Capital, in a release.
The deal marks a departure for HUD, said Ken Jacobs, partner at the law firm of Smith, Buss & Jacobs, who represented the borrower in the deal.
“Philosophically, HUD’s goal is to protect affordable housing,” he said. “In New York, most co-ops are not affordable. HUD’s orientation has been towards rentals. [The agency] was really breaking new ground here. They had to make a number of modifications in their policies in order to recognize the equity interest of shareholders. That required a massive rethinking at the highest federal levels.”
Co-op City first opened to the public in 1968 and is the largest Mitchell-Lama co-op in New York. It sits on 330 acres along the Hutchinson River.
“If it were an actual incorporated city, Co-op City would be the twelfth largest in our state — and so it is hard to exaggerate the critical role it has played for over 40 years in keeping housing in New York State and New York City affordable,” Governor Cuomo said. –Katherine Clarke