More can be done through public/private partnerships

Real Estate Weekly, Jan 31, 1996 by Jeff Levine

The tepid recovery now underway is not sufficient to spur a building boom. For New York City, however, there is a solution: An expansion of joint public-private partnerships in the coming year.

We already have the blueprint. Under the leadership Deborah Wright, the NYC Department of Housing Preservation and Development is effectively harnessing the entrepreneurial effectiveness of the private sector through the Vacant Building Program and the Participation Loan Program. Both programs use necessary subsidies to create target rents, placing the burden of performance on the private sector.

Another model is the NYC Housing Partnership, headed by Kathy Wilde, which expanded the distribution of subsidy through the private sector to create a mechanism for the development of affordable housing - all while putting the burden of cost control and marketing on its private partners.

The results of this type of collaboration can already be seen in communities around the city. One example is Caribe Village in Brooklyn, a $4 million affordable housing project constructed by J.E Levine through programs initiated by the NYC Housing Partnership, the NYC Department of Housing Preservation and Development, and the NYS Affordable Housing Corporation. The project - which featured the cooperation of Los Sures, a community-development organization, and financing by Chemical Bank - turned a blighted block in Brooklyn into 23 two-family homes, providing home ownership opportunities for moderate income families.

Based on successes like this one, The Housing Partnership is now in the process of structuring a new program known as Partnership Plaza which will help create retail facilities in communities where the private sector has not stepped in on its own.

Another successful example can be seen in a current project to develop retail space on Mermaid Avenue in Coney Island - an urban area that has been vacant for more than two decades. J E. Levine is working with the Mermaid Community Partnership, Astella Development Corporation (a community-based not-for profit organization), Chase Community Development Bank, and three public agencies to see this project through. These two examples show that public-private partnerships create a formula that works.

A crucial part of that formula is the involvement of not-for-profit community groups and the banking world. Not only does the profit incentive exist for banks like Chemical, Chase, and the Community Preservation Corp., but they are also rewarded with Community Reinvestment Act credits that are required by their regulators. Private-sector lenders welcome the participation of capable, responsible private-sector developers into the equation.

The future does look promising. The NYC Department of Housing Preservation and Development and the NYC Housing Partnership have pooled their efforts to spearhead the Neighborhood Entrepreneur Program. This innovative effort designates neighborhood entrepreneurs to act as developers in connection with the rehabilitation of clustered residential projects.

But in a time of fiscal conservatism, where direct grant or subsidy is out of the question, other methods such as the 421A tax abatements and low-income housing tax credits must also be utilized. For example, Mayor Rudolph Giuliani is to be commended for having had the vision, along with Gov. George Pataki, to put in place the Lower Wall St. Historic District and the incentives associated with the designation. As a result of their efforts the area is buzzing with potential, and our firm has already been awarded the contract to construct the Wall St Kitchen & Bar on Broad St. for Tony Goldman, whose previous work includes the Soho Kitchen & Bar.

Another area where I believe we have just scratched the surface is the 80/20 low-income housing tax credit program. Major developers such as Related Properties have used this device to create market-rate housing with a low-income component in some of the prime areas of Manhattan. It is critical that our city allows this program to expand so that the housing needs of the remainder of the city can be satisfied. The New York State Housing Financing Authority, led by Steve Hunt, and the NYC Housing Development Corporation, headed by Barbara Udell, are aggressively pursuing these types of development opportunities with the private sector.

Sound programs that combine the clout of public agencies with the entrepreneurial capabilities and efficiencies of the private sector clearly create synergies that benefit our city. In the year ahead, the goal must be to expand this concept to those areas where they are truly needed. If we do not develop affordable housing in the outer boroughs, the exodus of working-class people, which have always been the heart of this city, is going to kill us from within.