Developers eyeing vacant buildings in the Hudson Valley”™s former industrial centers for adaptive reuse ”” a reigning buzzword in the region”™s real estate industry ”” face challenging and sometimes project-killing financial, environmental, structural and regulatory obstacles, experts in housing, banking and urban redevelopment told an audience at the recent regional housing summit of Hudson Valley Pattern for Progress. One obstacle often in their way is parking.
“Plain and simple, there are too many parking spaces required in affordable housing developments,” Joseph Czajka, executive director of the Center for Housing Solutions at Pattern for Progress, said in his opening remarks at the annual summit in New Windsor. Czajka prepared the nonprofit”™s annual housing report that focused on “urban pioneering” in those postindustrial Hudson Valley communities looking to revitalize core neighborhoods and downtown Main Streets and return vacant properties to the tax rolls with an influx of urban pioneers occupying industrial spaces converted to affordable housing and other uses.
Costs to develop and maintain “large seas of asphalt” required by municipalities for rental housing projects “are prohibitive, not to mention environmentally unsound,” Czajka said in the report. The required parking also reduces the number of affordable housing units, tenant amenities such as open space and ground-floor space for retail and professional offices.
A Pattern for Progress survey of 56 multifamily housing developments in Putnam, Dutchess, Orange, Sullivan and Ulster counties found that less than two-thirds ”” 64 percent ”” of required parking spaces are used on a daily basis. The excess parking areas amount to almost 14.75 acres of land, Pattern staff calculated, which could accommodate an additional 177 residential units to meet what the report called “the ever-increasing demand for affordable housing” in the region.
Using data from the U.S. Department of Housing and Urban Development, Pattern reported high numbers of both renters and homeowners with incomes at or below 80 percent of the household area median income in the Hudson Valley who contend with what federal officials call unaffordable or severe housing cost burdens. Spending on housing that amounts to more than 30 percent of a household”™s gross income is considered unaffordable, while households spending more than half of their gross income on housing are saddled with a severe cost burden, according to HUD.
In Rockland County, 47.5 percent of renters at those below-median income levels spend more than half their income on rent. The severe housing cost burden also affects 46.5 percent of those households in Putnam County, 45.9 percent in Orange County and 44.7 percent in Dutchess County.
In Westchester County, 41.3 percent of renters with incomes at or less than four-fifths of the area median are severely burdened by housing costs, according to the Pattern report. In the seven-county mid-Hudson Valley region, Westchester has the highest percentage, 30.7 percent, of renters below the income median whose housing costs are unaffordable at more than 30 percent of their gross income.
The Pattern for Progress report and the Sept. 29 housing summit examined three adaptive reuse projects for which developers have turned to several state and federal funding and tax credit programs and private grant sources to finance plans to turn vacant industrial buildings that are historic structures into affordable housing for artists and other residents. They are the Lace Mill in Kingston, an approximately $18.9 million project under construction this year and expected to open in mid-2015; the Poughkeepsie Underwear Factory, a projected $5 million commercial and residential redevelopment in the city”™s Middle Main neighborhood that was selected this year as a priority project for state funding by the Mid-Hudson Regional Economic Development Council, and The Mill at Middletown, an approximately $14.3 million residential development in that Orange County city.
Kevin O”™Connor, CEO of RUPCO Inc., a nonprofit housing and community development agency in Kingston, told the summit audience that RUPCO”™s Lace Mill project is an effort at “creative placemaking ”” creating a place where people want to be, where people want to linger.” Built in 1903 at a cost of $100,000, the 53,000-square-foot factory building was home to the United States Lace Curtain Mills when Kingston was a thriving textile manufacturing center.
The developer will create 55 live-work rental lofts for which artists will be given preference. Other building features such as gallery space and a sculpture garden will cater to the arts community.
In Poughkeepsie, Hudson River Housing two years ago paid about $175,000 to acquire a three-story, 140-year-old factory that for many years was home to the Poughkeepsie Underwear Co. The nonprofit developer plans to adapt one-third of the building space for commercial or light industrial tenants and build 15 affordable apartments and live-work lofts.
Hudson River Housing Executive Director Ed Murphy at the summit said the developer wants to attract Hudson Valley artists and artisans as tenants to complement the project”™s “local foods theme.” By providing affordable housing for renters with incomes at 50 percent to 60 percent of the area median income and food production businesses that offer job training and employment for city residents, Hudson River Housing expects “to re-energize the core of Poughkeepsie,” Murphy said in the Pattern for Progress report. “This is much more than a real estate development; it is about engaging the community in the revitalization of an entire neighborhood.”
“The value to the community is so far beyond the bare costs of a project like this,” Murphy told the New Windsor audience.
In Middletown, a development team of Excelsior Housing Group and Regional Economic Community Action Program Inc. (RECAP) plan to rehabilitate a three-story, 30,000-square-foot mill building for rental apartments and a RECAP community service office. The mill and a new four-story, 17,000-square-foot addition will include 42 apartments for low-income and homeless individuals and families.
“Many of these (industrial) buildings, which are located throughout the Hudson Valley, need to find a new use in life,” said Patrick Normoyle, principal of Excelsior Housing and Mill Street Partners LLC.
But adapting those historic properties to new uses can be a very costly challenge for developers.
“These projects require a huge amount of funding,” said Sean Fitzgerald, assistant commissioner and vice president of multifamily development at New York State Homes and Community Renewal in Albany. Adaptive reuse projects “have the highest costs we see, bar none.”
But those energy-efficient, “anti-sprawl” projects also serve to revitalize communities and provide affordable housing, Fitzgerald said. “Although you do have a very high-cost project, you”™re getting a lot out of it if it works right,” he said.
