The Mount Vernon Industrial Development Agency has given preliminary approval for $8.8 million in tax subsidies for a Section 8 housing fixer-upper.
Oakwood Gardens Preservation LLC got the go-ahead on Sept. 7 for Oakwood Gardens Apartments, an 88-year-old midrise apartment building at 630 E. Lincoln Ave.
A public hearing on the proposal must be held before the IDA grants final tax relief.
The applicant is owned 50-50 by Francine Kellman and Brian Raddock, principals in the parent company K&R Preservation in Manhattan. Kellman and Raddock founded K&R in 2010 to focus on low-income housing that can be fixed up.
They look for at-risk Section 8 housing in which the federal government subsidizes rents. By “at-risk,” they mean places that are deteriorating, about to be abandoned, close to financial default or targeted by speculators who want to convert buildings into market-rate rentals.
“Our goal is to increase the tenants’ standard of living,” Raddock said in a June interview with the Business Journal, by improving the property and keeping rents at the same level for 20 years.
Oakwood Gardens tenants pay from $1,061 for a studio to $1,728 for three bedrooms under a Section 8 housing contract.
The six-story, 99-unit, Tudor-style structure is near the Pelham border and the Hutchinson River Parkway.
K&R has budgeted $20.6 million for the project. That includes $13 million to buy the building from Mt. V LLC, managed by Aaron Seligson; $3.5 million for designs and construction; more than $3 million for unspecified “other” expenses; and more than $1 million for legal and finance charges.
Proposed renovations, repairs and upgrades include kitchens, bathrooms, windows, appliances, roof, floors, facades, elevator cabs, lighting, electrical, intercoms, drywall and landscaping.
Raddock said no one will be displaced during construction.
The project is expected to create 20 to 25 construction jobs, according to Oakwood Preservation’s application for financial assistance. It is expected to begin in December and take a year to finish.
Half of the financing, $10.3 million, will be provided by a conventional mortgage with PNC Bank. Nearly half will be financed from state and federal grants and tax credits. The rest, nearly $1 million or 5 percent, will come from the owners’ equity.
Oakwood Preservation is asking the IDA for a mortgage tax exemption of $172,900, sales tax exemption of $272,250 and 30-year property tax relief of $8,397,467.
The property is taxed at $276,692 now, according to the IDA application. The first yearly payment under a “payment in lieu of taxes” agreement would be $69,869.