Editor’s note: Welcome to a fresh regular feature here on The Real Estate: Building Stories. It’s about new developments.
There’s a hole in the ground in East Harlem at the base of the Robert F. Kennedy Bridge. When it’s filled, you’ll be able to see it coming over from the Bronx, sticking up amidst downtrodden piles of bricks: a shiny new apartment building, affordable and green.
While cranes have gone quiet at projects around the city, Jonathan Rose Companies’ Tapestry is rising fast after breaking ground in November. The 185-unit project is going for LEED silver certification, and the developer struck a deal with the department of Housing Preservation and Development that traded a substantial level of affordability for a goodie bag of tax incentives and low-interest loans, plus land parcels sold for a song.
The Tapestry didn’t start out on the fast track to success—four years ago, it was a patchwork of city-owned and private land in one of the more depressed corners of Manhattan. Then it became ensnarled in the debate over the 125th Street rezoning, approved in March, which touched at the heart of what development will mean for the area’s character.
Perhaps one of the only builders who could have pulled this off is Jonathan Rose, whom The Observer interviewed last year about his community-oriented approach to real estate. He’s building up a reputation in developer-shy Harlem, and knows the ins and outs of public financing better than most. As New York contemplates a future with far less private capital floating around for the taking, the Tapestry is becoming a poster child for innovative financing, and the real estate establishment might want to take notes.
NICHOLAS AND GERRARD LETTIRE, brothers who started as small contractors in East Harlem right out of college, have been banking on a new Harlem renaissance for 30 years. Having gradually bought up parcels of cheap land around the neighborhood, they owned a few old walkups on 124th and Second, purchasing the corner buildings a few years ago planning to put up a modestly sized apartment building.
But there was still the issue of vacant bits of city land in and around the construction footprint. In 2005, the Lettires turned to Mr. Rose, who found the location especially attractive because of its proximity to the planned Second Avenue subway. He helped broker the deal with the city, which sold the partnership its five lots on the site for $1.
“It’s very, very accessible. The neighborhood has been rapidly improving,” Mr. Rose said last week. “Neither the city nor we could develop without each other, so it was really an obvious location.”
With their new consolidated space, the Lettires envisioned something big: a 21-story tower with 240-odd units, towering over the hair salon to one side and the community park behind it. But HPD wasn’t having it, and the plan got knocked down to 12 stories—the price you pay for public favors.
“It was a little bit too aggressive with the city,” Nicholas Lettire said. “More apartments would have been better for us.”
Other community groups weren’t going to let Rose and Lettire off easy, either. The next part of the debate centered around the number of units that would be rented for below market-rate. In order to qualify for the state’s low-income housing tax credit, the project needed to contain 20 percent low-income units, but local government wanted more: Community Board 11 chair Robert Rodriguez reasoned that if half the land had been owned by the city, fully half the units should be affordable. With backing from the offices of Manhattan Borough President Scott Stringer and local Councilwoman Melissa Mark-Viverito, the developers climbed up to 30 percent middle-income units and 20 percent low-income. In contrast to the privately-owned, market-rate condo projects that have been going up around Harlem, this was a success.
“There are very few precedents like it in terms of the size and scope. It’s what we strive for,” said Mr. Rodriguez, noting that they’ve had less success with private, upscale residential developments “popping up in pretty much any vacant lot.”
Some community advocates will never be happy with the project’s remaining market-rate units. Nellie Hester Bailey, neighborhood gadfly and president of the Harlem Tenants Council, calls it “completely inadequate.”
“We see it as having a direct bearing on the gentrification process,” she said of the Tapestry. “It doesn’t address the severity of the problem of working-class people.”
Finally, the project ran into the 125th Street rezone, a battle royale over whether to allow higher buildings, greater residential density, and more office and retail activity in the historic corridor. HPD had the Tapestry and the 125th Street proposal go through the city’s land-use approval process together, adding another few months to the Lettires’ saga. According to HPD Deputy Commissioner Holly Leicht, the Tapestry’s involvement was a bonus for the broader initiative.
“Having an inclusionary project that is so close on the heels of a rebuilding is new and something to be excited about,” she said. “It usually takes a while for the market to expand.”
Meanwhile, Mr. Rose had taken care of the rest of the funding, cobbling together $67.5 million from the city sources plus the New York State Energy Research and Development Authority and Green Communities. The Tapestry closed in June, and broke ground Nov. 18.
WILL WE BE SEEING MORE PROJECTS like the Tapestry, with its judicious blend of public and private financing? Maybe—but like everything else, the availability of public funds is also in flux.
On the one hand, the transformation of Goldman Sachs and Morgan Stanley into conventional banks means that they are subject to the Community Reinvestment Act, which requires broad lending for affordable housing projects. On the other, a shrinking tax base squeezes off funding sources like New York’s low-income housing tax credit, which Mr. Rose estimated would be 25 percent smaller next fiscal year. “We definitely are seeing more creative financing,” Ms. Leicht said.
But, in a place like New York, not just anybody can come in and build an affordable housing complex. Building credibility in a community can take years.
“It’s incredibly important. What we’ve tried to do to deal with that is bring in folks who have a track record with,” said Mr. Rodriguez.
Mr. Rose has the track record of a champ. In January 2007, the company was part of a team to win a design contest for development rights and free land in the South Bronx, in a project called Via Verde, to be completed in 2010. Earlier this year, Mr. Rose opened David and Joyce Dinkins Gardens on West 153rd Street, the first fully affordable green housing development in Harlem. And in a lower-profile move, Rose Companies purchased a building on 135th Street that would otherwise have gone into market-rate apartments when its contract expires on Dec. 31—they plan to keep it registered as section 8 housing, allowing its residents to stay while the landlord makes green upgrades.
And every time you drive over the Manhattan-bound Kennedy Bridge, the Tapestry will be there to remind you.