10% of the affordable housing units
developed through the Mitchell-Lama
NEW YORK CITY-In the largest loan ever insured under the Federal Housing Administration’s 223(f) program, Wells Fargo is refinancing the existing debt on Co-op City, the 35-building cooperative complex that’s home to more than 55,000 residents of the Bronx. The $621.5-million refi will keep Co-op City, which opened in 1968 under New York State’s Mitchell-Lama program, as affordable housing for the next 35 years.
“If it were an actual incorporated city, Co-op City would be the 12th largest in our state—and so it is hard to exaggerate the critical role it has played for over 40 years in keeping housing in New York State and New York City affordable,” Gov. Andrew Cuomo says in a statement. Since it’s backed by the FHA’s General Insurance and Special Risk Insurance Fund, the loan can be financed through the sale of Ginnie Mae mortgage-backed securities.
The State of New York Mortgage Agency will provide mortgage insurance, while the New York City Housing Development Corp. will provide a guaranty for the first $70 million, or 11.25% of the loan, for $55 million and $15 million coverage of the loan, respectively. This arrangement reduces FHA’s risk and makes mortgage financing even more affordable for the cooperative’s owner, according to a release from the US Department of Housing and Urban Development.
The FHA’s 223(f) program protects lenders against loss on mortgage defaults at multifamily properties. The Co-Op City refi, which will prepay the complex’s current mortgage and also finance capital projects now under way, marks the first time the program has been applied to a cooperative development.
“Because of today’s historically low interest rates, our refinancing of its current debt will save Co-op City and its residents more than $150 million over the 14-year remaining term of the current loan and eliminate refinancing risk should interest rates rise,” says Alan Wiener, managing director of Wells Fargo Multifamily Capital, in a release. In all, HUD says, the refi will save Co-op City’s cooperative ownership, Riverbay Corp., about $400 million in interest payments over the life of the mortgage.
Located in the Bronx’s Baychester section, Co-op City is situated on 330 acres on the west bank of the Hutchinson River. In addition to 15,372 apartments, the complex includes three shopping centers, a 25-acre educational park, eight parking garages, three elementary schools, two middle schools, a high school, a weather station, 14 gymnasiums, two swimming pools, 15 churches, six nursery schools and day care centers, four basketball courts, five baseball diamonds, numerous restaurants, a power plant and a 14-screen AMC movie theater. It also has its own private police force, in addition to the coverage provided by the New York City Police Department’s 45th Precinct.
Co-op City by itself represents more than 10% of the 105,000 affordable housing units that were developed through the Mitchell-Lama program, first proposed by New York State Sen. MacNeil Mitchell and Assemblyman Afred Lama and signed into law by then-Gov. W. Averill Harriman in 1955. The program led to the creation of 269 housing developments.