Hometown real estate investors Aaron Siegel and Brett Fitzpatrick said Friday they expect to complete their purchase of 295 affordable housing units throughout the city next week, enabling them to start work immediately on a complete renovation over the next 15 months.
The investors are spending $42.4 million to buy and redevelop 10 buildings at 17 addresses in the Allentown and West Side neighborhoods from an out-of-town owner who has neglected the properties for years. Some of the properties had been written up by city housing inspectors. The planned purchase, which is scheduled to close Aug. 21, was previously reported by The Buffalo News.
The total project value includes the $16.6 million purchase price, plus $13.5 million on renovations. The remaining $12 million consists of so-called “soft” costs, such as legal and bond fees on the highly complex project, which has been in the works for two years, Siegel said.
“We’re almost putting in as much in this property as we paid for it, which I think is tremendous,” Siegel said during a press conference just across the street from one of the properties, the Red Jacket Building. “We’re excited about the opportunity of getting hardworking Buffalonians brand new apartments to live in.”
The properties, scattered through four ZIP codes, are in need of significant work, but will remain as affordable “workforce” housing for at least 40 years, under agreements with the U.S. Department of Housing and Urban Development.
Rents range from $750 to $1,275 per month, depending on the location and the size of the apartment, which varies from studios to four-bedroom units. All will be rented to tenants at or below 60 percent of the area median income of about $50,000.
“This is workforce housing, for people who are working, and it’s affordable housing, which is important,” said Buffalo Mayor Byron W. Brown.
The project’s design plans, developed by Stieglitz Snyder Architecture, are done, and all approvals are in place, as are the materials and equipment for the work, which Siegel said will begin almost immediately to finish by the 15-month deadline for cashing in the tax credits.
The work on each apartment will take one to two weeks at most, he said, but since the apartments are usually fully occupied, they will attempt to shift residents around temporarily while the work is being done.
The Red Jacket and a building at Grant and Ferguson streets also have 18,000 square feet of ground-floor commercial or retail space, but the developers have to redevelop that space using their own money, not government funds. Siegel said they are already talking with some interested parties about leases.
The project, in conjunction with Rockabill Advisors, will be financed through federal affordable housing tax credits and state historic tax credits, as well as tax-exempt bonds issued through the New York State Housing Finance Agency, a construction loan from Citibank and an equity investment from Richman Housing Resources, which is buying the tax credits.
Both the city and county approved payment-in-lieu-of-taxes (PILOT) agreements over 15 years to provide predictability, so rents could be maintained.
“We took a lot of risk to do this, because this was not a done deal until two days ago,” Siegel said. “This is very much a labor of love for us.”