In Bed-Stuy, stalled construction spurs rental market

While community groups wait for the city to move on stalled, recession-era construction projects, some are taking the housing crisis into their own hands.

In Bedford-Stuyvesant, a neighborhood with unusually high foreclosure rates, before the recession dried up bank and construction loans the Bridge Street Development Corporation (BSDC) had plans for an affordable housing coop development at 790 Lafayette Avenue off Throop Avenue.

Now, BSDC President Rhonda Lewis said the organization - a faith-based, non-profit group specializing in affordable housing - has decided to turn the vacant lot into a below-market rental property instead.

Lewis said BSDC has approximately 200 homeownership apartments in the planning stages that will now be turned into rentals, if they are built at all.

Securing financing, even for rental projects, is not proving easy, said Lewis. The recession “has had a major impact on BSDC and other non-profits,” she said.

The development planned for Lafayette Avenue provides a good example.

In 2008, the City Council approved financing for the 23-unit condo development under the Cornerstone Program, a Department of Housing Preservation and Development initiative, according to Lewis.

Afterwards, she said BSDC, which acquired the lot for a nominal sum from the city, completed the Uniformed Land Use Review Process (ULURP) and the council passed a zoning change for the property.

Then, fearing a homeownership development might fail in low-income Bed-Stuy, Lewis said the city pulled financing for the project.

The funding was replaced after a long struggle in April of this year; BSDC is moving forward with the project.

The fight to fund the project, however, could portend more to come, said Lewis; for city non-profits like BSDC, securing loans from banks today is harder than ever.

“The world has turned 360 degrees,” said Lewis.

Now banks are asking non-profit developers for more cash up front, and to sign guarantees that they didn’t require in the past. “Some non-profits won’t have the assets or equity [to make] these deals,” said Lewis. “I don’t know ultimately what the outcome will be.”

For now, BSDC itself is in decent shape, Lewis said. The organization was founded 13 years ago and primarily serves African-American families from Brooklyn with incomes between $55,000 and $100,000. (The neighborhood’s median income is far lower). The model has been successful, Lewis said.

Many one-family brownstones sold by BSDC for as little as $195,000 are now worth close to $1,000,000, said Lewis. Those homes will continue to build equity, she said, after the recession fades.

Until it does, and while BSDC looks to build rental units, Lewis said the group would continue encouraging first-time homeownership. She said owning one’s home drives people to become more invested and active in their communities.

“For many African-Americans, Latinos and other ethnicities sometimes [buying real estate] is the first major investment they make,” said Lewis. “It’s an important asset that they can really pass down to future generations.”