VOLUME 27 NUMBER 2 JANUARY-MARCH 1997 RESIDENTIAL NEW YORK CITY, NEW YORK PROJECT TYPE

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1 VOLUME 27 NUMBER 2 JANUARY-MARCH 1997 RESIDENTIAL MAPLE COURT NEW YORK CITY, NEW YORK PROJECT TYPE Maple Court is a 135-unit elevator building surrounding a landscaped courtyard in the East Harlem section of Manhattan. Developed as a publicly assisted limited-equity cooperative, it also contains 7,000 square feet of medical office space and storage and on-site parking for 83 cars. The project is the area's first for-sale, middle-income residential construction in many years; it is targeted for people with annual incomes of between $27,000 and $60,000. A second phase, Maple Plaza Cooperative, is now underway. SPECIAL FEATURES Moderate-income residential Inner-city infill development Public/private partnership DEVELOPERS Sparrow Construction 3743 White Plains Road Bronx, New York North General Hospital 1879 Madison Avenue New York, New York ARCHITECT Ehrenkrantz & Eckstut 23 East 4th Street New York, New York PROPERTY MANAGER Webb & Brooker, Inc Adam Clayton Powell Boulevard New York, New York

2 GENERAL DESCRIPTION Maple Court is a 135-unit, limited-equity cooperative constructed on a vacant block along Madison Avenue in East Harlem. North General Hospital (NGH), a community health care provider and East Harlem's largest private employer, served as the community sponsor. Sparrow Construction Company developed the project and coordinated the project's planning, construction, marketing, and sales. Other members of the development partnership included the New York City Housing Development Corporation (HDC) and the city's department of Housing Preservation and Development (HPD). New York City is primarily a city of renters, with homeowners totaling less than a third of its households. Homeownership opportunities are especially scarce for low- and moderate-income families. Because limited-equity cooperatives such as Maple Court Cooperative have affordable prices and require little money from the shareholder upfront, they are viewed as one way to make ownership of multifamily housing units possible for moderate-income households in the city. Through this arrangement, the sharehold purchaser owns shares in the cooperative corporation that actually owns the building; the shareholder can occupy a dwelling unit by entering into a proprietary lease with the cooperative association. THE SITE The project was built on a vacant city block bounded by Madison and Park Avenues between 122d and 123d Streets in the East Harlem area of New York City. It is located across from Marcus Garvey Park (formerly known as Mount Morris Park) in the Milbank Frawley Circle urban renewal area. The elevated Metro North commuter railroad runs nearby, and the project has easy access to the Lexington Avenue subway. North General Hospital recently built a new 240-bed hospital across from the Maple Court site on East 122d Street. The project is located in a federally designated empowerment zone in an area the city code defines as a "targeted area of economic distress." The surrounding area contains numerous lots that were cleared as part of the urban renewal program, some abandoned buildings, and some public and assisted multifamily housing that has been maintained in reasonably good condition. The major commercial corridor serving the area 125th Street is distressed, and efforts to revitalize it are underway. PLANNING AND PERMITTING In 1989, when NGH began construction of a new hospital to replace its old facility, hospital officials recognized that it was in their enlightened self-interest to participate actively in strengthening the fabric of the surrounding neighborhood. They constructed an office annex and outpatient building at a nearby site on Madison Avenue, and to generate development and promote economic diversity within the community, they decided to participate in building new, affordable housing in the area. NGH conducted informal surveys and focus groups with area residents through church and community meetings to determine the potential market for housing in the area. The responses indicated that many people who formerly had lived in Harlem would return if new homeownership opportunities were available and that some existing residents were eager to move from subsidized rental housing and from rental housing to homeownership. Portions of the Maple Court site had been cleared by the city under its urban renewal program. Other portions were city owned and were transferred to NGH through the city's Uniform Land Use review process. Coordination of city, state, and community efforts took seven years. After North General Hospital agreed to buy the land, it issued a request for proposals for its development. Sparrow Construction's proposal was chosen because it featured a limited-equity cooperative financed by tax-exempt bonds to make apartments affordable to buyers with limited cash and because its proposed low-rise design was compatible with the surrounding community

3 NGH and Sparrow Construction created a nonprofit subsidiary, Maple Court Housing Development Fund Company, Inc., to take ownership of the site. Actual project development and construction were uneventful. The development proceeded as-of-right under the city's zoning ordinance but required HPD architectural design review. The development of the Maple Court cooperative has had a positive effect on the neighborhood. Additional private development is underway, the streets are cleaner, and the city is assembling a number of brownstone homes in the area for renovation by private developers and eventual sale to owner/occupants. The project's second phase, to be known as Maple Plaza, is now underway on the block adjacent to Maple Court between 123d and 124h Streets. Also designed as a limited-equity cooperative, the second phase will provide 155 dwelling units targeted for similar-income households, with an allowance for higher-income households, since less subsidy is involved and 12,000 square feet of medical office space. The developers are considering a third phase two blocks from Maple Court that also would be a cooperative. DESIGN AND CONSTRUCTION The project is a U-shaped, mid-rise elevator building surrounding a secured, landscaped courtyard. The six-story front of the building faces the park. Two four-story wings, separated by the courtyard, project back along the side streets. The building includes a dramatic lobby and 24-hour concierge service. Native maple trees shade the courtyard, which includes umbrella tables and a play area for children. The building contains a total of 135 units, including one superintendent's unit. The two- and three-bedroom apartments range in size from 777 to 1,175 square feet units are larger than the hospital originally conceived and feature a variety of floor plans. On the first floor, townhouse-style apartments that are entered from the gated courtyard occupy a transverse section of the floor. To ensure privacy and safety for occupants of first-floor units, the developer raised the elevation of the building and installed privacy fencing along the street. Apartments on the upper floors are entered through the courtyard to the elevator lobby, and they are arranged along double-loaded corridors. All units include wall-to-wall carpeting, designer kitchens, and tiled bathrooms; many have a terrace or patio. Low fencing defines and protects private patios. Canvas awnings shade balconies on the top floor of the courtyard side. FINANCING Maple Court's total development cost was $18.2 million. The project received a 30-year, permanent, blanket, below-market-interest first mortgage from the New York City Housing Development Corporation (HDC), with the funds coming from the sale of tax-exempt qualified mortgage revenue bonds. (The State of New York Mortgage Agency SONYMA provided credit enhancement for the bonds by agreeing to insure the HDC permanent mortgage, and Fannie Mae purchased the bonds through a private placement, thus helping to keep transaction costs down.) The city's Department of Housing Preservation and Development (HPD) provided a zero-interest construction loan from the city's capital budget. The loan was converted to a subordinate zero-interest permanent loan. The development team purchased the land from the city, which took back a subordinate purchase money mortgage for the difference between the cash price and the appraised value of the land. The two HPD mortgages charged no interest, and the loan will be forgiven in 25 years. The HPD loans are repayable only in the form of 50 percent of any profit from appreciation in value when the units are sold. In addition, Maple Court qualified for real estate tax abatements from the city. The development worked financially in part because the 7,000 square feet of medical office space within the building ensured that a certain amount of the project would be supported by a guaranteed lease with NGH. MARKETING AND MANAGEMENT

4 The actual sharehold purchase price including the average pro-rata share of the HDC mortgage, the average pro-rata share of the HPD mortgage, the shareholder equity, and the HPD subsidies averaged $136,056 (compared with the $206,800 New York City average purchase price for a new single-family home). Downpayments averaged $3,811, within a range of $2,944 to $4,810 amounts comparable to deposits required for rental units. Buyers did not have to obtain mortgage financing because the mortgages are included in their monthly maintenance charges, which average $865 per month. And, the tenant-shareholder is entitled to a mortgage interest tax deduction. Forty percent of the units were allocated for existing neighborhood residents; in fact, more than 60 percent of residents came from within the community. Marketing was done by a private firm hired by the developer. The project was advertised through the newspaper and at community meetings arranged by the hospital. Potential purchasers were selected by lottery because the number of applicants greatly outnumbered the units available, and they had to meet income restrictions to qualify for project financing. Based on area median incomes, the target market was households with incomes of between $27,000 and $60,000. Shareholders are required to use the units as their primary residence, no subletting is allowed, and restrictions limit resale prices for shares in the cooperative to 110 percent of the New York City median purchase price for existing housing. Resale restrictions will apply for at least 30 years. Tenant-shareholders are required to pay the city a portion of any profits gained from the sale of their share in the cooperative corporation. When the development was completed and the residents were in place, a board of directors, consisting of project shareholders, was created to assume control of the project. EXPERIENCE GAINED Based on the experience at Maple Court, the second-phase building will be higher and H-shaped to create more of an entryway and to avoid a massive-looking exterior and long interior corridors. The lobby will be more efficient, more units will have balconies, and the top two floors will be designed as "penthouse" floors. Putting together a financial structure with different agencies and different sources requires considerable time, patience, and flexibility. Community involvement and support are essential. The sales structure of the limited-equity co-op concept benefited both the developers and the buyers: it made the units affordable; buyers did not need to locate their own financing; there was no waiting to get loans; it was simpler to qualify applicants; and closings were done en masse. According to HDC's Barbara Udell, an infill development such as Maple Court has a much better chance of moving forward if it involves a major sponsor, such as a hospital or university, that has a long-term stake in the community. The development proved that there is a market for moderate-income housing in the area and that a more diverse economic mix can be attracted to live and remain in inner-city areas if offered the right product at the right price.

5 PROJECT DATA LAND USE Site Area: 2 acres Number of Units: 135 Gross Density: 67.5 units per acre Medical Office and Storage: 7,020 square feet Parking Spaces: 83 RESIDENTIAL UNIT INFORMATION Unit Number Average Monthly Charges Average Square Feet 1 Bedroom 2 Bedroom 3 Bedroom 1 $ ,104 DEVELOPMENT COST INFORMATION Cost Cost/Unit Land $1,200,000 $8,889 Hard Costs 12,330,150 91,334 Soft Costs 4,701,347 34,825 Total $18,231,497 $135,048 SOURCES OF PERMANENT FINANCING Cost Cost/Unit New York City Land Lien $1,132,500 $8,389 New York City Assistance Agreement 4,725,000 35,000 Shareholders' Equity 510,370 3,780 HDC Permanent Loan 11,863,627 87,879 Total $18,231,497 $135,048 Note: 1 Includes one superintendent's unit DEVELOPMENT SCHEDULE Project Planning Started: July 1993 Construction Started: May 1994 Construction Ended: October 1995 Project Occupied: November 1995 DIRECTIONS

6 From La Guardia Airport: Take the Grand Central Parkway to the TriBorough Bridge into Manhattan. Exit from the bridge to 125th Street. Proceed west for about six blocks to Park Avenue. Take Park Avenue south to 123d Street, which runs along the back (parking lot) of the project. Driving Time: 20 minutes in non-peak traffic. The Project Reference File is intended as a resource tool for use by the subscribers in improving the quality of future projects. Data contained herein were made available by the Development team and constitute a report on, not an endorsement of, the project by ULI - The Urban Land Institute. Copyright 1997, 1997, by ULI - the Urban Land Institute 1025 Thomas Jefferson Street, N.W. Ste. 500w, Washington, D. C

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