The firms specialize in community development and mixed-income projects. "Opportunities to preserve affordable housing in New York City are very few and far between. Market pressures have been causing a lot of owners or developers to opt their projects out of the affordable housing programs," explains Matt Schwartz, principal of the Domain Cos. Spring Creek was attractive, he says, because it was "in an area where we saw a lot of long-term potential given the amount of development taking place and investment going into the area."

When Domain and Arker bought the nearly 20-year-old community in late 2006, the affordable programs used to develop the property had reached the end of their regulatory period. The asset was also in need of significant upgrades due to deferred maintenance issues. "We saw this as an opportunity to take this complex and present it to the state and city agencies that provide funding for affordable housing and try to come up with a plan to preserve the complex while addressing all of the serious issues it faced," says Schwartz.

The JV was able to put together a creative mix of financing from eight sources and several local and state agencies to help it in its endeavor. Through its Low-Income Affordable Marketplace Program, the New York City Housing Development Corp. issued $24 million in tax-exempt bonds for the redevelopment. Those bonds allowed the project to receive $18 million in federal low-income housing tax credits through the New York City Department of Housing Preservation and Development. Further, Centerline Capital Group shelled out $17.9 million in tax credit equity and arranged for permanent credit enhancement for the bonds from Freddie Mac, which also credit-enhanced a swap contract that fixed the rate of the permanent debt on the asset. Citibank provided the credit enhancement for the bonds during reconstruction. The community also qualified for 420c Tax Exemption through HPD, making its residential portion exempt from property tax for 30 years.