Housing Partnership Serves as Marketing Agent for the First Mitchell Lama to HDFC Affordable Co-op Conversion

The Housing Partnership is serving as the Marketing Agent for the first conversion of a Mitchel Lama co-op to an HDFC affordable co-op.

The 421-unit Cadman Towers co-op board selected the Housing Partnership to handle marketing of apartment resales in compliance with HPD regulations. Cadman Towers is located at 10 Clinton Street in Brooklyn.

“This landmark achievement helps maintain the building’s affordability while strengthening the co-op’s finances, enabling it to undertake essential structural repair, maintenance and capital improvements,” said John Abramo, Housing Partnership Senior Vice President.

This innovative conversion brings an array of benefits to Cadman Towers unit owners. Under the HDFC model, the co-op receives a flip tax on unit resales. This revenue is dedicated exclusively to the co-op’s capital repair and debt reduction. The conversion also reduces real estate taxes in exchange for restrictions on ownership income and resales, which provides significant financial relief to the co-op.

Built 52 years ago, Cadman Towers faced substantial financial challenges, chiefly the costs of critical capital improvements for structural and mechanical repairs, as well as upgrades needed to meet new NYC environmental sustainability criteria under Local Law 97. High interest rates made financing these necessary repairs through loans untenable, threatening long-term affordability.

“The new Aging Affordable Housing Recovery Program, blends the best elements of the Mitchell-Lama and HDFC programs, creating a sustainable financial model. It allows apartment sales help fund repairs and pay down existing co-op debt. Essential repairs like concrete restoration, water leak mitigation, roof replacement and compliance with new environmental regulations, now have a dedicated funding source,” said Abramo.

Recognizing Cadman Towers’ pioneering efforts, the NYC Department of Housing Preservation and Development requested a 40-year extension of the co-op’s affordability. The Housing Partnership and Cadman Towers, committed to good stewardship of the co-op, extended its affordability to 99 years.

“Cadman Towers worked with HPD to blend the best elements of the Mitchell Lama program with another affordable housing program, HDFC, which will maintain long-term affordability and generate revenue from apartment sales exclusively into a reserve account that can only be used for funding repair projects or paying down existing debt,” said Toba Potosky, Cadman Towers co-op board president.

“Cadman Towers can now fund crucial major repair projects without relying solely on loans and massive maintenance increases or assessments, ensuring decades of preserving and providing affordable housing in a sound physical plant,” said Potosky. “We’ve heard from several other Mitchel Lamana co-ops considering converting to HDFCs, following our example, seeking information about our successful conversion” said Potosky.  ●