high rise residential

La Central developers secure $335 million financing deal

Massive project rising in the Bronx moves forward despite federal tax reform taking big bite out of budget

BY JOE ANUTA

Developers of the nearly 1,000-unit La Central project in the South Bronx announced Thursday they have secured $335 million in financing for two buildings in the affordable-housing project—despite federal tax reform punching a $20 million hole in the budget.

The $600 million La Central project, which was approved in the fall of 2016, is one of the biggest residential developments underway in the city. When finished it will comprise five buildings, a skate park, retail and a new branch of the YMCA.

A partnership between Hudson Cos., BRP Cos., ELH Management, Kretchmer Cos., Breaking Ground and Comunilife scored the financing from public and private sources for two buildings slated for completion in 2020. But it wasn’t easy.

Since fall 2016, talk of federal tax reform had been depressing the value of tax credits—which are purchased by corporations to offset their tax liability and sold by the city and state to fund affordable-housing projects like La Central.

By January, when the Trump administration took office promising corporate tax cuts, companies were paying around $1 for each tax credit, compared with $1.20 before the election. That meant that affordable-housing projects were often left with huge gaps in financing. And when dealing with a complex on the scale of La Central, each cent counted.

“Every penny we lost [on the value of tax credits] was almost a million bucks,” said Aaron Koffman, a principal at Hudson Cos. “All of a sudden we had a $20 million hole because of the election.”

The development team reworked the layout of the project to cut construction costs without altering the number of units or the quality of the project, Koffman said.The team was also able to find financing from a state program to further narrow the funding gap and supplement the $100 million in tax credits purchased by Wells Fargo. The project, which contains both affordable- and supportive-housing units, will also include a rooftop garden and a large array of rooftop solar panels that will cut the buildings’ electric bill in half.


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