Sterling National Bank has provided a credit facility totaling $15.7 million for the construction of West Farms Apartments, an affordable housing initiative in the Crotona Park East/East Morrisania section of the Bronx, according to a release from the bank. The lender has a further 15 affordable housing projects in the pipeline, James Dittbrenner, the managing director of community development at Sterling National Bank told Commercial Observer.
West Farms’ credit facility includes a $12 million construction loan and a $3.7 million senior commercial multifamily mortgage. Construction of the 81-unit affordable apartment building will begin within two weeks, and when complete, the property will be used to transition homeless persons living with HIV and AIDS from shelters to permanent housing.
Walison Corporation is the project’s developer.
“We have a responsibility under the community reinvestment act legislation to provide lending opportunities for affordable housing developments,” Dittbrenner told CO this week. “We work with several syndication partners that help us source opportunities in the market, and we were presented with this partnership opportunity by Hudson Housing Capital six months ago.”
Sterling National began lending on affordable housing projects roughly a year ago and is currently involved in 15 deals at various stages of development, spread across New York City, Dittbrenner said.
The deals are structured similarly in that Sterling will provide the construction financing, and if there is a need for a permanent mortgage at the end of the project, the bank will also provide that loan, he explained.
“We also are providing and monetizing the low-income tax credits that come into these projects. Sterling is actually the investor and purchases those tax credits, monetizes them and provides the equity into the project as well,” he said. “So we’re investing millions in equity through the low-income tax credits.”
The project also has a HIV/AIDS Services Administration (HASA) support subsidy. HASA gives a portion of the rent for the units and provides program support to Comunilife, which will provide social services to residents to help them to remain self-sustaining and in their residences.
“Sterling has been a key partner in making this project possible and has worked with us every step of the way to understand the importance of the initiative and the uniqueness of our financial needs,” said Rafi Rajput, the chairman of Walison Corporation.
Sabah Rajput, a principal at Walison, added, “We are looking forward to seeing the benefits this project will bring to the community and to making a real difference for homeless New Yorkers with HIV and AIDS.”
Sal Rajput, also a principal at Walison said, “We value our partnership with Sterling and look forward to more projects with them in the future to benefit communities in New York and beyond.”
Sterling’s 15 other affordable projects are expected to close over the next couple of years. “All of these projects have a very slow turn,” explained Dittbrenner. “From the time they are initially developed and tax credit approvals are applied for to closure is probably an 18- to 20-month turn.”
In order to expedite the process, Dittbrenner told COF that Sterling tries to get involved early and support developers’ applications, whether they are applying for tax credits through New York City’s Department of Housing Preservation or at the state level through New York State Homes and Community Renewal. The bank provides a letter of intent that supports their application for the designation of tax credits. This helps the process in showing the agencies that the developer already has a lender (and the project can be built) as well as an investment partner.
“There aren’t enough developers or enough money to meet the need [for affordable housing] that exists,” Dittbrenner explained. “And I’m the luckiest guy in the world. I get to do something that makes me personally happy, and I know is helping other individuals.”