Blocking affordable housing is nothing to be proud of — especially for an affordable building getting public money.
It’s certainly not something the state should encourage. But that appears to have happened at Inwood Gardens, a Mitchell-Lama in northern Manhattan.
Shareholders of the co-op at 45 Fairview Avenue voted twice to sell a vacant lot to affordable housing developers for $7.3 million, only to back out. This came shortly after a state affordable housing agency handed the co-op a $2.5 million mortgage from its Preventative Troubled Assets Program.
Then this year, the state Assembly awarded Inwood Gardens $500,000.
“At the same time the co-op was rejecting my offer to acquire its land, it was accepting bailouts from the state,” said an exasperated Coconut Properties CEO Adam Zeidel, who partnered with the nonprofit RiseBoro Community Partnership on the proposal.
Instead of 175 new, affordable apartments for seniors, the neighborhood was left with a garbage-strewn lot. The developers’ six-year effort came to nothing. And taxpayers got stuck with the co-op’s bills.
In short, everybody lost.
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Coconut and RiseBoro still hope to build the project, which would sit alongside a similar one they just constructed next door at 37 Hillside Avenue (see photo, above). But the lenders they had lined up to finance the sister project have moved on.
Zeidel had implored the lenders to hang on as he attempted to rescue the deal with increasingly desperate emails to the state Division of Homes and Community Renewal and local elected officials.
“We are simply seeking someone to mediate and navigate towards a resolution in which we can (i) give the Co-Op a big chunk of money (capital for present/future needs) and (ii) allows us to build a new, 100% affordable housing project on vacant land that the Co-Op has no use for,” he wrote to a state official. “This result would benefit all parties.”
In one message, the developer warned the state that by giving the co-op money, it was reducing the building’s need to sell the land.
“Any time the Co-Op needs capital, HCR provides it,” Zeidel emailed the agency. “So, what is the incentive for the Co-Op to make a deal?”
The agency told The Real Deal that it has not awarded Inwood Gardens funding “recently” and that Mitchell-Lamas are privately owned and responsible for their operating expenses and maintaining their physical and financial integrity.
Mitchell-Lamas across the state have received nearly $500 million from the Hochul administration. Good fiscal practices are not required to qualify. To the contrary, dire financial circumstances appear to strengthen affordable co-ops’ arguments for state help.
The case of Inwood Gardens shows that even when these co-ops make bad financial decisions and block housing that Gov. Kathy Hochul says is desperately needed across the state, they still get public grants to patch budget holes.
Economists might call that a moral hazard: The co-ops only get public money if they can show that they need it. Had Inwood Gardens sold its unused land for $7.3 million, it would be able to repair its retaining wall without a handout from taxpayers.
The co-op’s shareholders voted overwhelmingly in 2021 to approve the deal, and its board followed suit, but never signed the sales agreement. Zeidel never got an explanation that made sense.
“Each time we got to putting pen to paper to execute the contract, the Co-Op backed out for some novel, unrelated reason,” he emailed the state in January.
David Baron, head of Inwood Gardens’ property manager at the time, Metro Management Development, told The Real Deal, “I cannot speak to the reasons the sale did not go through.”
The co-op initially squeezed Coconut and RiseBoro for more money. Two years after voting for the deal, the board asked for 40 percent more cash, plus $100,000 to repair a retaining wall. The developers agreed.
But then the board overplayed its hand, raising its price another 30 percent. Realizing the co-op would never get to yes, Coconut and RiseBoro withdrew their offer.
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