The Daily Dirt: HPD taps private lenders for renovation program

Agency turning to private sector to take on some upfront work

<p>From left: Community Preservation Corporation CEO Rafael E. Cestero, Local Initiatives Support Corporation senior executive director Valerie White and Adolfo Carrión (Getty, Community Preservation Corporation, Local Initiatives Support Corporation)</p>

From left: Community Preservation Corporation CEO Rafael E. Cestero, Local Initiatives Support Corporation senior executive director Valerie White and Adolfo Carrión (Getty, Community Preservation Corporation, Local Initiatives Support Corporation)

The Department of Housing Preservation and Development is enlisting lenders to take on some of the upfront work associated with providing loans and subsidies for landlords to renovate their buildings.

On Tuesday, the city agency announced it is launching the Capital Partnership for Affordable Renovation Loan Program, which will “empower select lending partners” to do due diligence, eligibility assessments and early screenings of prospective landlords. So far, these lenders include nonprofits Community Preservation Corporation and Local Initiatives Support Corporation.

The pilot program, much like the city’s existing Participation Loan Program, will provide low-interest loans and up to $80,000 per unit in subsidy to rent-stabilized buildings.

The idea is that by pushing some of that work to the lenders, HPD officials will be able to work with more owners and maybe close more deals.

HPD was hit hard by the pandemic, and the agency is still trying to recover from the hit to its staffing numbers. I recently spoke with Kim Darga, the agency’s deputy commissioner of development, who said the pilot was born, in part, out of discussions about how to ease workloads and dedicate resources to more complicated deals.

The pilot program will focus on moderate renovations. Darga noted that the set-up could make the process of securing funding simpler for borrowers as well, as they will be dealing with one party rather than with a lender and HPD.

“It’s a less complicated interaction, and hopefully it allows us to get money into projects faster,” she said.

The program builds on the Participation Loan Program, which actually used to function similarly in that banks would do a lot of the initial due diligence and determine what gaps city funding could fill to renovate properties.

The agency did not share an estimate of how many properties might ultimately participate in the pilot, but given the subsidy threshold and the focus on moderate rehabs, it does not appear meant to rescue rent-stabilized buildings in acute distress. As with the Participation Loan Program, buildings with three or more units are eligible.

What we’re thinking about: Douglas Elliman’s Howard Lorber, the chairman since 2003, is retiring. Why did he decide to retire now? Send a note to kathryn@therealdeal.com.

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A thing we’ve learned: Soho and Noho artists hope to leverage the City of Yes for Housing Opportunity to free them from a fee they must pay if they convert their artist lofts into regular old housing. The Soho/Noho rezoning approved in 2021 included rules for converting units reserved for certified artists — Joint Live Work Quarters for Artists — into legal residences. Owners who convert must pay more than $100 per square foot to an arts fund run by the city.

During the City Council’s second City of Yes hearing, a panel of artists called on the Council to reject the text amendment unless they are treated the same as other owners of nonresidential properties looking to convert their space.

Elsewhere in New York…

— On five days this fall, more than 4.3 million paid riders took the subway, Gothamist reports. That’s the highest number since March 2020, but is also roughly 75 percent of the 5.7 million people who rode the subway during a typical weekday in 2019.

— A Manhattan judge ruled Monday that former Mayor Rudy Giuliani must turn over his Upper East Side co-op apartment to two former election workers from Georgia, the New York Daily News reports. In December, a jury awarded the workers $148 million in damages in their defamation lawsuit accusing Giuliani of spreading lies about the 2020 election. Giuliani has seven days to hand over the Madison Avenue co-op and other assets including cash accounts and jewelry to start paying the workers, Ruby Freeman and Wandrea “Shaye” Moss.

— Mayor Eric Adams is considering launching another charter commission next year, Politico New York reports. The move could further complicate the City Council’s efforts to expand its influence over agency appointments.

Closing Time 

Residential: The priciest residential sale Tuesday was $5.8 million for two condo units at 346 Kent Avenue in South Williamsburg. Closings at One Domino Square started this month. 

Commercial: The largest commercial sale of the day was $235.4 million for the rental portion of 540 Fulton Street in Downtown Brooklyn. The Real Deal reported on the transaction from Jenel Real Estate to KKR and Dalan Management in July. The Paxton is 327 units and 262,453 square feet.

New to the Market: The highest price for a residential property hitting the market was $15.9 million for a 5,317-square-foot condominium at 100 Barclay Street in TriBeCa. Rachel Glazer of Compass has the listing. — Matthew Elo

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