The firms specialize in community development and mixed-incomeprojects. "Opportunities to preserve affordable housing in New YorkCity are very few and far between. Market pressures have beencausing a lot of owners or developers to opt their projects out ofthe affordable housing programs," explains Matt Schwartz, principalof the Domain Cos. Spring Creek was attractive, he says, because itwas "in an area where we saw a lot of long-term potential given theamount of development taking place and investment going into thearea."

When Domain and Arker bought the nearly 20-year-old community inlate 2006, the affordable programs used to develop the property hadreached the end of their regulatory period. The asset was also inneed of significant upgrades due to deferred maintenance issues."We saw this as an opportunity to take this complex and present itto the state and city agencies that provide funding for affordablehousing and try to come up with a plan to preserve the complexwhile addressing all of the serious issues it faced," saysSchwartz.

The JV was able to put together a creative mix of financing fromeight sources and several local and state agencies to help it inits endeavor. Through its Low-Income Affordable MarketplaceProgram, the New York City Housing Development Corp. issued $24million in tax-exempt bonds for the redevelopment. Those bondsallowed the project to receive $18 million in federal low-incomehousing tax credits through the New York City Department of HousingPreservation and Development. Further, Centerline Capital Groupshelled out $17.9 million in tax credit equity and arranged forpermanent credit enhancement for the bonds from Freddie Mac, whichalso credit-enhanced a swap contract that fixed the rate of thepermanent debt on the asset. Citibank provided the creditenhancement for the bonds during reconstruction. The community alsoqualified for 420c Tax Exemption through HPD, making itsresidential portion exempt from property tax for 30 years.