As new and converted apartment buildings and condominiums appear throughout the area, Lower Manhattan is quickly emerging as the fastest growing residential neighborhood in New York City and becoming more and more of a true 24/7 community. The transformation began in great part because of incentive programs designed to attract both developers and new residents.
The Liberty Bond program, a federal program created
in July 2002 to provide tax-exempt financing to developers
for construction or renovation of commercial and residential
space within the Liberty Zone area, has contributed
to the rise in the number of new and planned residential
units downtown. (The Liberty Zone is defined as the
area below Canal Street between the Hudson and East
Rivers.) In July 2003, an additional $50 million in
funding was set aside by the U.S. Department of Housing
and Urban Development (HUD) specifically for the creation
of low-income housing downtown through the Liberty Bond
In addition to these types of incentive programs, developers also are drawn by the strength of the downtown real estate market. As early as the fall of 2002, the residential occupancy rate in Lower Manhattan had returned to its pre-9/11 level of 95 percent, up from just 40 percent immediately after the terrorist attack, due in great part to incentive grants administered by the Lower Manhattan Development Corporation.
“Lower Manhattan’s residential renaissance is integral to our administration’s vision for the downtown area,” Mayor Michael Bloomberg said in a July 2003 statement announcing the $50 million HUD allocation. “Affordable housing is fundamental to New York City’s long-term economic prosperity,” the mayor said, adding that he planned to create or preserve 65,000 units in the next five years. “The investments we are making today will help to create the kind of Lower Manhattan we want -- a vibrant and diverse 24/7 community for people to live, work, and play in.”
New Development Brings Greater Amenities, Reinvigorated Neighborhoods
As a result of the residential population growth in Lower Manhattan, student enrollment at area schools is projected to increase, as is the need for more amenities to serve new residents. In February 2005, Bloomberg announced an innovative public-private partnership designed to address some of these issues: the construction of a new mixed-use building adjacent to NYU Downtown Hospital that would include a school, retail shops, and apartments. Construction on the building, designed by Frank Gehry and developed by the Forest City Ratner Companies, is expected to be completed by September 2008.
The spate of residential development downtown has helped address increased demand while also serving to revitalize areas of Lower Manhattan that have been neglected for years. A project where this is particularly evident is Liberty Plaza, the first new large luxury residential building to be built in the heart of the Financial District in more than 25 years, according to developer Glenwood Management. A new 45-story residential tower now stands at 10 Liberty Street, replacing the vacant lot that existed there for decades.
Liberty Bonds and Affordable Housing
In July 2002, the federal government authorized $1.6 billion in tax-exempt financing for multifamily rental projects within the Liberty Zone area. Responsibility for issuance of the bonds was divided between the New York City Housing Development Corporation (HDC) and the New York State Housing Finance Agency (HFA), with each agency receiving $800 million to distribute for residential developments.
The housing agencies each require that developers contribute to the creation of affordable housing units as part of participation in the Liberty Bond program, though the requirements differ depending on which agency oversees the project. HDC stipulates that developers who receive Liberty Bond financing must pay a 3 percent fee, which is then applied to the development of affordable housing elsewhere in the city. HFA requires that 5 percent of a project's units be set aside for middle-income housing in order to qualify for the tax-exempt financing.
To date, the city HDC has allocated $610 million in Liberty Bond financing for five projects. Most recently, in January, HDC announced that the William, located at 15 William Street and currently under construction, will receive $131.4 million in Liberty Bonds in exchange for setting aside 15 percent of its units (58 out of a total 386) for potential residents with moderate incomes.
Other developments financed by HDC through the Liberty Bond program include 2 Gold Street, 90 Washington Street, 63 Wall Street , and 90 West Street. Collectively, these projects will create a total of 1,934 apartments. The 3 percent fee collected in these transactions generated approximately $15 million, which has been reallocated to finance the construction of 394 apartments for moderate-income, working New Yorkers. An HDC spokesperson said there is money left for one more development project in Lower Manhattan.
The state HFA has issued or authorized $786.1 million in Liberty Bond financing of the $800 million for which it was responsible. The funding was directed toward eight projects resulting in 2,189 units: three new buildings at the north end of Battery Park City; new buildings at 10 Liberty Street and 10 Barclay Street; the conversion of 100 Maiden Lane; the Historic Front Street project; and, most recently, 88 Leonard Street. An HFA representative said the state agency is currently looking at funding one other residential development project but will announce plans in coming months.
For more information about residential developments,
please visit the New
York City Housing Development Corporation’s website
or the New
York State Housing Finance Agency website.