By Linda Collins
Brooklyn Daily Eagle

BROOKLYN — Addressing the effects of the economic downturn, the New York State Division of Housing and Community Renewal (DHCR) reports it has preserved 15 threatened developments in the state, saving 1,132 units of affordable housing.

Two of the threatened developments are in Brooklyn:

• Rheingold Heights II in Bushwick, a new construction development on a former brownfield/brewery site by the Bluestone Organization, with 59 units.

• The Domenech Senior Housing in Brownsville, Common Ground’s first development for homeless and lower-income seniors, with 72 units.

The DHCR is said to be the first housing agency in the nation to address financing gaps and other problems caused by the economic downturn.

The economic crisis has had a dramatic impact on the construction of affordable housing, according to Deborah Van Amerongen, DHCR commissioner. Most significantly, it has caused the devaluation of Low Income Housing Tax Credits (LIHTC) — one of the most reliable sources of equity for developers of affordable housing. The developers sell the credits to investors and use the equity to finance their affordable housing projects.

However, because of the downturn, credits that were worth 92 cents to the dollar last year have dropped to as low as 71 cents in 2008, which caused funding gaps for a number of affordable housing projects already under development.

In February, when the devaluation of the credits first impacted the affordable housing community, DHCR Commissioner Deborah VanAmerongen began developing a new program that would provide eligible developers facing a funding gap with the assistance they needed to close their deals.

VanAmerongen said "Thanks to additional resources provided by the Governor and State Legislature, DHCR was able to work with developers who had done everything in their power to make up for the loss of equity, including seeking additional financing and reducing their own compensation. It is very gratifying to save these 15 projects and the 1,132 units of affordable housing they will provide to communities across the state."

DHCR also partnered with the state Housing Finance Agency (HFA) to save a number of projects that had to close by year's end or face the loss of millions of dollars in bond financing. VanAmerongen said “the close working relationship between HFA and DHCR have helped us to make great strides in addressing the state's critical shortage of affordable housing. That relationship was instrumental to our success in saving these projects.�

The Rheingold development was awarded $187,751 in additional tax credits to close the funding gap caused by a loss of equity.

The Common Ground development was awarded $109,870 in additional tax credits to address equity loss.

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