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Historic Block Grant Rescues a Rockaways Mitchell-Lama Co-op

Lisa L. Colangelo in Legal/Financial

Rockaway Beach

Rockaway Grant

A promotional ad for the Nordeck Apartments from the 1950s (courtesy of Columbia University Libraries)

When Hurricane Sandy roared through the Rockaway Peninsula in 2012, the Nordeck Apartments were in her crosshairs. Water flooded the basements and winds ripped at the rooftops of this 343-unit Mitchell-Lama co-op, causing more than $1million in damage and blowing a hole into its finances.

But members of the co-op board were determined to revitalize the six buildings in this affordable complex. “We love the area we’re in,” says Sharon Hamlin, president of the co-op board. “It is worth fighting for.”

Years of dogged determination paid off in late December when Nordeck secured $46.1 million in federal Community Development Block Grant Disaster Recovery funds from the city’s Housing Development Corporation (HDC) to pay for repairs and make the complex more resistant to future storms. HDC officials say it is the largest storm-recovery block grant they have issued to date, a program that was modified to help co-ops and condos shortly after Sandy.

“With the future of the development at risk, this deal presented an opportunity to build back the property even better than it was before,” says Paula Roy Carethers, executive vice president for real estate at HDC.

The Nordeck was built in the late 1950s as a co-op for middle-class families under the newly enacted Mitchell-Lama law. Ironically, the board was poised to start a rehabilitation project in the fall of 2012, just weeks before Sandy hit. “We had been talking with the state about refinancing to take care of much-needed repairs to the facade and the roof,” says the co-op’s attorney Karol Robinson, of Norris McLaughlin & Marcus.

In 2008, the board had worked out a 20-year, $5.6 million refinancing loan with Wachovia (later taken over by Wells Fargo) to pay off the existing mortgage and fund the renovations. Mother Nature, however, had other plans. The storm knocked out the development’s single-boiler system and its electricity. There was no heat, hot water, or elevator service. And there was water everywhere. Vacancies shot up, and then Wells Fargo came knocking.

“It took months to get back on track, even years,” says Hamlin. “We’re still not back on track.”

The board reached out to city, state and federal officials as well as local lawmakers.
They connected with HDC, the city Department of Housing Preservation and Development, and the state Department of Homes and Community Renewal.

In Sept. 2014, HDC and the co-op closed on $7.6 million in short-term bridge financing to pay off the Wells Fargo loan and fund short-term repairs. Negotiations to stabilize Nordeck’s finances continued while the board worked with engineers on a rehabilitation plan. Hamlin says one of the top priorities was getting a new, above-ground boiler system. The old system featured a single underground boiler, with pipes stretching out to all six buildings – which proved a devastating vulnerability when Sandy came knocking.

“Now each building will have a freestanding boiler system,” Hamlin says. “If one boiler goes down, it will impact that one location – not every building.”

In Oct. 2016, HPD gave the co-op a reimbursement loan for $1.15 million to pay for some of the storm damage and emergency repairs. In December, HDC and Nordeck celebrated the closing of $16.2 million to refinance the 2014 bridge loan and a $46.1 million resiliency loan to pay for large-scale renovations.

In addition to the six boilers, the funds will pay for new roofs on five of the buildings (the sixth has already been completed), plus new windows and electrical upgrades in every unit. Twenty vacant units will undergo total renovations to make them compliant with the Americans with Disabilities Act. Facades and fire-escape railings will be repaired. An additional power source for the generator will be installed in each building. In return, Nordeck must remain an affordable co-op in the Mitchell-Lama program for another 30 years.

“The people who stayed are here because we love Rockaway,” says Hamlin. “And Rockaway property values are increasing every day.”

PRINCIPAL PLAYERS: MANAGEMENT: FirstService Residential. ENGINEER: Rand Engineering & Architecture. GENERAL CONTRACTOR: Skyline Restoration. ATTORNEY: Norris McLaughlin & Marcus.

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