Long Island’s affordable housing complexes are getting a boost from investors who are increasingly eager to fund construction and renovation projects, thanks to tax credit programs.
The additional money kicked in by investors is helping developers take on construction projects that previously would not have made financial sense, builders say.
In North Amityville, the 51-unit complex now known as the Plaza at Amityville — formerly Andpress Plaza — is getting new kitchens, bathrooms, roofing, landscaping and a new entrance. The work is nearing completion.
The complex was purchased in December by a group that includes MDG Design + Construction, Hudson Valley Property Group and Ken Oppenheimer, whose father helped build the 33-year-old complex. The $11.7 million purchase and renovation was financed by Ohio-based Red Stone Equity Partners.
The new owners “did a great job in the kitchen,” said Carolyn Hartley, 58, who lives in the complex with her 97-year-old mother, Charity. “It’s such a delight because it’s so bright.”
The Amityville community is not the only affordable housing complex getting a face-lift.
In Smithtown, a new owner, California-based GHC Housing Partners, is spending $9.2 million to renovate the 298 apartments at the Siena Village complex for senior citizens and add new amenities such as a business center and a movie screen.
And in Copiague, Coram and Riverhead, the Community Development Corp. of Long Island (CDC) is building more than 300 new subsidized apartments. The rents for many of the apartments will range from $929 to $1,850.
All those projects received support from a funding source that has grown more valuable in recent years: low-income-housing tax credits.
The programs work like this: Developers compete to qualify for federal and state tax credits. The developers then sell the credits to investors, and use the proceeds to fund affordable housing projects. The investors get an equity stake in the projects, as well as breaks on their federal and, in some cases, state taxes. Banks often buy the credits to show they are meeting their obligations under federal law to serve all their customers, including those in low-income areas.
If developers couldn’t raise money through the sale of tax credits, they would need to borrow that money and pay interest on the loans. That would drive up costs, making it extremely difficult to build housing that low- and moderate-income renters could afford.
The tax credit money “is not debt that has to be repaid, so you have a lower operating cost,” said Marianne Garvin, chief executive of the CDC, a Centereach-based nonprofit.
Plus, projects “are privately built and financed; that’s the thing that’s different from the old public housing,” Garvin said. “Because there is private investment, the design is usually very beautiful . . . because people understand that’s really what drives [communities’] acceptance.”
With returns uneven on other investments such as stocks, bonds and commodities, investors have been competing to purchase the credits. The competition has become so intense that instead of paying 90 cents or so for each dollar in tax breaks, investors now pay as much as $1.10 or more, developers said.
Those higher prices, said R.J. Miller, GHC’s vice president for acquisitions and development, are “making a lot of projects feasible that might not be otherwise . . . Every little penny literally counts on affordable-housing projects, because they’re hard to get done.”
And given Long Island’s high housing costs, state officials are “so interested in bringing affordable housing to Long Island they jump on any Long Island project,” said Michael T. Rooney, founding principal of MDG Design + Construction, based in Huntington Station.
Most residents of the North Amityville complex receive federal subsidies that limit their rent to 30 percent of their income, Rooney said. To qualify for those subsidies, a family of four can earn no more than $63,720. That includes many teachers and retail employees, Rooney said.
“It’s for people that are making money,” Rooney said, “but not enough to live in an apartment in Melville for $3,500.”