Jeffrey Levine, the president of Douglaston Development and an influential real-estate developer, is resisting the cap that the state financing agency has placed on tax-exempt bonds for mixed-income apartment buildings.
Mr. Levine is one of two developers who received permission to use tax-exempt financing in the waning days of the Pataki administration. (The other one was Larry Silverstein.) Shortly after Governor Spitzer took over in January, the state Housing Finance Agency froze those projects and nine others that had not gotten so far because it did not have authority to issue that much tax-exempt financing.
This week, as The Observer reported, HFA President and Chief Executive Priscilla Almodovar sent a letter to all applicants–including Mr. Levine and Mr. Silverstein–asking them to revise their applications for tax-exempt financing by March 16, limiting their requests to $1.5 million per affordable unit that they build.
“I don’t think we are resubmitting an application,” Mr. Levine told The Real Estate on Friday afternoon. “I believe we are having discussions with the state on this.”
Mr. Levine had applied for $2.59 million per affordable unit for a project at 316 11th Avenue (PDF), according to state filings. Limiting tax-exempt financing will drive up developers’ costs and cut into their profits significantly.
Ms. Almodovar believes she has the authority to freeze the Douglaston and Silverstein deals even though they were approved by the Public Authorities Control Board in December. Together, the projects amount to $847.5 million worth of financing–which is far more than the $590 million in tax-exempt bond-granting authority HFA believes it will have available for 2007. Mr. Levine applied for, and was allocated, $191.5 million in tax-exempt bonds; Mr. Silverstein received $656 million (PDF).
While the Real Estate Board of New York has said that the bond cap would make projects difficult or impossible, Mr. Levine’s comments are the strongest signs of resistance to date.
The Real Estate is waiting for calls back from HFA.
– Matthew Schuerman</em
UPDATE: Ms. Almodovar told The Real Estate Monday that H.F.A. had the authority to ask developers to resubmit applications because it had not issued a letter of commitment for any of the projects in question. “Mr. Levine is free to choose whether to participate in the program or not.”