Spurring Change: Albany Housing Authority Teams with Private Developer to Build Affordable Apartments, Revitalize Neighborhood

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In the highly distressed South End neighborhood in Albany, N.Y., on a set of sites within view of the state capitol building, the Albany Housing Authority and a private developer are creating 56 new affordable apartments that will be rented to public housing-eligible households, utilizing federal housing and historic tax credits.

The $13.2 million development reflects the authority’s twin goals to revamp its public housing portfolio and turn around the distressed residential/commercial neighborhood. The authority has a big stake in the South End, owning and operating multiple public housing properties within or adjacent to the neighborhood.

“We are creating a critical mass in the South End,” says Steve Longo, Executive Director of the Albany Housing Authority (AHA), which owns and operates 1,800 public housing units, 400 units of mixed-finance housing, and administers 2,200 federal Section 8 housing vouchers.

The new development, named simply South End Revitalization Project Phase Three, follows two completed previous phases in the same area that created 95 affordable apartments through a mix of new construction and rehabilitation of existing buildings. AHA and Albany-based Omni Housing Development, LLC, a private developer, are co-developers of Phase Three as they were on the prior phases.

“Part of the intent here is to replace an obsolete high-rise public housing projects with scattered-site infill and rehab housing in the adjacent neighborhood,” says Duncan Barrett, Chief Operating Office of Omni Housing Development. Some of the units in Phase Three will face Lincoln Square, a tired 1960s public housing development that AHA hopes to completely redevelop someday. AHA demolished one of the complex’s four towers a few years ago as part of a strategy to move public housing residents from obsolete properties into new and renovated affordable apartments, while clearing sites for new development.

Scattered-Site Development

The financing for Phase Three closed in January and construction began in February. “We expect the first units to come online early this fall and the final units before the end of the year,” says Barrett.

Phase Three will contain 25 one-bedroom, 25 two-bedroom, and six three-bedroom apartments in five new low-rise buildings and three renovated historic row houses. AHA acquired all of the sites from the county and private owners. A number of derelict old buildings on some of the sites were demolished beforehand.

All 56 apartments will be low-income housing tax credit units, with rents on all of the apartments subsidized either by federal project-based vouchers or public housing operating subsidies provided by AHA. Gross initial monthly rents will range from $688 to $988. The units will be leased to households on AHA’s federal public housing waiting list. “The housing authority has an incredibly long waiting list,” says Longo. “It takes four to five years to get an apartment.” AHA received extra points on its housing tax credit application by proposing to rent units to households on its public housing waiting list.

More than 75% of the apartments will be affordable to households making 30% or less of the area median income (AMI), and the rest affordable to households at or below 50% of AMI. Currently, 50% of AMI equals $38,850 for a family of four.

Phase Three will also include a public laundromat, located in the corner of one of the new apartment buildings.

Federal and state historic tax credits will be generated by the rehabilitation of the three two- and three-story row houses, which date to the 1880s and are in a designated historic district.

The new buildings have been designed to fit in and be compatible with the existing row houses and similar buildings in the neighborhood, with brick facades, flat roofs, and cornices. Local firm 3tarchitects provided architectural, design, and engineering services for the project.

Funding Sources

The bulk of the funding for Phase Three is nearly $10.5 million in equity provided by PNC Real Estate, which syndicated the federal housing and historic tax credits. There were no takers for the state historic tax credits.

The New York State Division of Housing & Community Renewal, a unit of New York State Homes & Community Renewal, awarded roughly $1.1 million in 9% housing credits for the project.

Other sources included a $6.1 million soft loan from the state housing trust fund (deferred payment, 1% interest-only) and $205,000 from the Albany Housing Authority. The authority’s dollars came from deferral of part of its developer’s fee for Phase Three, plus earned developer fees from previous projects. M&T Bank is providing nearly $6.4 million in construction financing.

The housing authority obtained a PILOT agreement for the development that will reduce its annual property taxes.

Neighborhood Turnaround Effort

Phase Three is the latest effort by AHA and Omni to both improve and expand the authority’s housing stock while trying to revitalize the South End, which is about a half mile from downtown Albany.

Barrett said the South End is a very distressed neighborhood that had been in steady decline since the end of World War II.

In 2002, though, AHA built itself a new headquarters building in the South End. It followed up by developing the first two phases of the tax credit apartments, after an unsuccessful effort in the mid-2000s to land a federal HOPE VI public housing revitalization grant.

In addition to Phase Three, the authority is building a 17,000-square-foot adult education center on the footprint of the demolished former tower at Lincoln Square. Funded by a federal grant, several local community colleges and institutions will use the center to run educational training programs open to city residents, including those from the South End.

AHA will manage the Phase Three apartments, as it already does the earlier phases, out of a neighborhood rental office whose sign says Capital Properties, not the Albany Housing Authority. “The intent is to take away the stigma of public housing and the identification of this as a project,” says Barrett. “It’s just high-quality housing in this neighborhood.”

Longo said AHA and Omni are trying to transform the South End into a neighborhood where its residents want to live and hope that their developments will spur other, private investment, including homeowners fixing up their houses and a stream of follow-on market-rate amenities such as stores and banks. “Already we’ve been able to get the state credit union to come in,” says Longo, “and the housing authority is going to be putting in a public laundromat. We’re trying to transition the community.”