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Homes and Community Renewal

HCR Commissioner RuthAnne Visnauskas Announces Kickoff of $140 Million Capital Improvement Program at Starrett City, in Central Brooklyn

Capital Improvement Plan a Key Element to this Year’s Agreement to Extend for 36 years the Affordability for 5,881 Apartments

Affordability Extended as Part of Agreement with State Allowing the Sale of Starrett City

Accord Extends Affordability at Starrett City to 2054, Caps Rent Increases

Agreement Built on the State’s Initiative to Rehabilitate and Preserve Mitchell Lama Housing for New York’s Middle Class



New York State Homes and Community Renewal Commissioner RuthAnne Visnauskas today announced the kickoff of work under a $140 million capital improvements program at Starrett City in Central Brooklyn. The first phase of work involves approximately $40 million in upgrades to the development’s power plant, which provides heat, hot water and air conditioning to Starrett City’s thousands of residents. This will be the power plant’s first comprehensive modernization in its 45-year history. The improvements are part of this May’s agreement for the sale of Starrett City, which extended affordability and Mitchell-Lama protections through 2054, capped rent increases for Starrett City’s residents, and required new ownership to make $140 million in expedited capital improvements for the central Brooklyn development.

The agreement, which was approved in May by HCR, the State’s housing agency, marked the culmination of months of work on the part of HCR, and is the most significant example of the State having used its regulatory authority without expending State funds to encourage a private Mitchell-Lama owner to spend substantial rehabilitation dollars on a State regulated project. 

Commissioner Visnauskas said, “New York State has been able to extend long term affordability for Starrett City, which is home to more than 20,000 New Yorkers, while at the same time securing an unprecedented commitment of capital dollars from a private owner to ensure that these homes remain safe, secure, and comfortable for years to come.” 

The power plant improvements, which began today, require that the plant be shut down for three weeks. In the interim, power is being provided by temporary generators and hot water is being provided by temporary boilers. The work at the power plant includes valve replacement necessary to permit the installation next year of upgraded permanent generators and is expected to be completed by the Summer of 2019, providing enhanced reliability while reducing energy costs.

The extension of affordability and upgrades to Starrett City are part of the State’s unprecedented $20 billion five-year Housing Plan. The plan increases access to affordable housing and combats homelessness by building or preserving more than 100,000 units of affordable housing across New York State and 6,000 with supportive services.  The plan is a comprehensive approach to statewide housing issues and includes multifamily and single-family housing, community development, and rent stabilization. 

Under the agreement, Starrett City was sold to a joint venture composed of Brooksville Company and Rockpoint Group. Under state and federal regulations, the sale had to be approved by HCR and the U.S. Department of Housing and Urban Development.

Importantly, HCR required that any agreement to sell the development had to achieve three key goals: extend affordability for the 5,881 apartments, invest in the infrastructure, and cap rent increases. Because all three of those goals were achieved, Starrett City is guaranteed to remain affordable well into the future. The agreement provides for:

Continued Affordability for 36 Years From the Time of Closing:

Mitchell-Lama affordability protections – further reinforced by a rent increase cap tied to the Northeast Rent Consumer Price Index (see below) - are extended through 2054, adding an additional 15 years to the previous affordability expiration date.

The development’s project-based, rent subsidy contract with HUD, covering 3,569 units, is extended through 2049 with a commitment to apply for an additional five years through 2054.

Capital Improvements

Immediate capital infusion of more than $40 million.

The buyer’s commitment to a minimum overall capital investment of $140 million over the next 10 years.

Improvements prioritized and begin with:

Upgrades to the power plant including new additional power generation.

Repair and replacement of underground piping system providing hot water, heat, and air conditioning.

Phased restoration and rehabilitation of existing parking garages.

Phased roof replacement.

Capped Rent Increases:

Tenants without federal subsidies will only be required to pay the lesser of:

The rent determined by the Mitchell-Lama budget-based procedures.

>>Or<<

An average of the New York and Northeast Rent Consumer Price Index.

New York State has made preserving and upgrading Mitchell-Lama housing as affordable to the middle class a priority. In 2013, the $1 billion House NY Initiative was launched to transform 8,600 aging state-financed Mitchell-Lama communities in critical need of repairs and upgrades into quality, safe, affordable homes by the end of 2018. Under the program to date, New York State Homes and Community Renewal provided financing to preserve 7,719 Mitchell-Lama apartments across the state, keeping this crucial stock of housing affordable for middle-income New Yorkers for another 40 years. The State’s historic $20 billion housing plan also includes $75 million to the Mitchell-Lama Rehabilitation Program, which makes low-interest loans to Mitchell-Lama developments throughout New York State

Congressman Hakeem Jeffries said, “When Starrett City was sold earlier this year, I promised Brooklynites we would never stop working to protect their affordable housing. Today’s announcement of key power plant upgrades is further evidence of that commitment and of the new owners’ commitment to their residents. Governor Cuomo and the New York State Division of Homes and Community Renewal should be thanked for their tireless efforts on behalf of Starrett City and affordable housing in New York.”

Senator Roxanne J. Persaud said, “The people of Starrett City deserve quality housing, and I am glad to see the improvements to the power and HVAC systems. This project will benefit all residents  through consistent electricity and heating needs, as well as saving energy."

Since 2011, the State’s housing initiatives have extended the affordability for 15,643 Mitchell-Lama homes, continuing their crucial role in providing safe, decent and affordable housing for low and middle income New Yorkers.

 

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