Oakwood Gardens Apartments in Mount Vernon is just the type of at-risk, Section 8 housing that K&R Preservation likes to buy.
By “at-risk,” K&R means a property that is deteriorating, about to be abandoned, close to financial default, owned by someone who wants to divest or targeted by speculators who want to flip it or convert it to market-rate rents.
“Our goal,” said Brian Raddock, who with Francine Kellman founded K&R in 2010, “is to keep these things affordable, not disrupt the community and increase the standard of living.”
The trick is to use whatever combination of tax credits, subsidies and tax abatements that can make the financing work.
To that end, K&R made a preliminary pitch for property tax abatement on June 13 to the Mount Vernon Industrial Development Agency.
Oakwood Gardens, 630 East Lincoln Ave., was built in 1930. The six-story, Tudor-style structure has 100 apartments. It is near Hutchinson River Parkway and the Pelham border, mixed in with single-family homes and midrise apartments.
“It’s a nice building in a decent area,” Raddock said.
It has a federal Section 8 housing contract whereby the federal government covers the difference between what low-income tenants pay and an agreed-upon rent roll.
Tenants pay $1,061 for a studio, $1,273 for one bedroom, $1,534 for two bedrooms and $1,728 for three bedrooms.
K&R plans to keep the rents at the same level for 20 years.
“Our goal is to increase the tenants’ standard of living,” Raddock said, “while not increasing their cost of living.”
The Manhattan firm is proposing a $20.6 million project, including $13 million to buy the building from Mt.V LLC, managed by Manhattan lawyer Aaron Seligson. Mt.V bought the property for $7.3 million in 2008, according to a county property record.
K&R’s plans include $3.5 million in hard costs and renovations, $3.4 million in soft costs and $717,000 in finance costs.
The firm has budgeted $33,000 per apartment. Renovations include new kitchens and bathrooms, windows and energy-efficient appliances. The building will get a new roof, flooring, facades, elevator cabs, energy efficient lighting, electrical upgrades, intercom system and drywall repairs. The 2.25-acre site will be landscaped.
No one will be displaced during construction. The work will create about 20 to 25 construction jobs.
Raddock expects to make a formal proposal to the IDA in July and hopes to close the deal this fall. The work is expected to take a year.
K&R will invest $993,572 in the project and plans to get a $10.3 million mortgage from PNC Bank and Freddie Mac and nearly $6.4 million in tax credits.
It has proposed a payment in lieu of taxes agreement with Mount Vernon at 5 percent of rental revenue, less utility costs. Rents at full occupancy total nearly $1.6 million. Utility costs were not disclosed.
The property is assessed at $239,320 on the 2018 tax roll.
Raddock said he has wanted to do something in the Mount Vernon area. The firm has renovated 3,500 units in the tristate region, according to its website, and Surrey Carlton Apartments in Spring Valley is part of its portfolio.
K&R looks for low-income housing that can be fixed up, particularly in urban centers where gentrification threatens to displace working-class families.
Raddock had worked as an analyst with Centerline Capital Group and as an underwriter for Pacific Housing Advisors (now the Vitus Group), an affordable housing developer.
Kellman grew up in public housing in the Bronx, according to K&R’s website. She worked for U.S. Housing and Urban Development for 14 years and the New York State Housing Finance Agency for nine years, developing expertise in preservation programs and in navigating the maze of local, state and federal housing agencies.
“Our specialty,” Raddock said, “is keeping these things affordable.”
He has visited Oakwood Gardens several times and spoken with tenants.
“Nobody is upset,” he said, “when you tell them you’re going to come in and fix their home and their rent is going to stay the same for another 20 years.”