$200M Public/Private Affordable Housing Initiative Launched

NEW YORK CITY-The New Ventures Incentive Program, introduced by Mayor Michael Bloomberg, is expected to accelerate the construction of new housing here. Over a five-year period, New VIP will provide up to $200 million for acquisition and pre-development costs to encourage residential development in derelict manufacturing areas, particularly brownfields, appropriate for rezoning for residential use. Citibank, Deutsche Bank, HSBC and JPMorgan Chase have committed the first $40 million for the first year of the program. The city has committed to guarantee up to $8 million of these loans in order to leverage the private bank funds.

The mayor said the program was created in response to the housing needs and is a part of an overall housing plan that aims to foster mixed-income communities, transform derelict former industrial areas and encourage the development of new housing and investment in the existing housing stock. It is anticipated that the initiative will create up to 10,000 units of affordable housing on cleaned-up brownfields throughout the city over the next five years. These sites can be difficult to develop because of potential environmental contamination or the perception of such given prior use which makes it difficult for developers to obtain private financing.

Many agree that a public/private partnership is the way to go toward making this program effective. “A partnership is absolutely what is necessary,” says Thomas Osterman, an executive vice president of Sterling Equities Inc. and one of the general partners of the Sterling American Funds. For Sterling, he has overseen the development and construction of commercial and residential properties in the New York metropolitan area. “It’s refreshing to hear someone talk about affordable housing. It’s such a critical need,” he says, adding that as much as 25% of city residents have critical housing problems–meaning 50% of their income goes toward housing.