Developers: City’s affordable housing subsidy isn’t enough in some cases

TRD New York /
Dec.December 28, 2009 09:29 AM

If successful, the city’s effort to turn failed luxury condo projects into affordable housing may help thwart long-term damage to neighborhoods dotted with stalled construction projects, but the government’s subsidy program isn’t an easy sell to developers, Marketplace reported. According to Ron Moelis, the L & M Development Partners CEO who is negotiating with a lender over converting one of the city’s stalled sites into affordable housing, taking over a city project comes with a unique set of risks. “You don’t want to take over the project and then have someone coming after you for either not doing a good job on the construction or the buildings department looking at this and saying the papers weren’t filed,” he said. Others say the subsidy offered by the city isn’t enough to lure developers. Developers will continue to sit tight as long as lenders keep cutting them slack and as long as “the market rate that they could sell the property at, even if it’s at a loss, still yields them more money than what they can make through any government program,” said Chuck Brass of real estate consulting firm Forsyth Partners.

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