Schumer Pushed for Quick Review of New Refinancing Agreement; Without Approval, Co-op Could Have Been Enveloped With High Interest Rates That Would Take Financial Toll On Hundreds of Families
New Agreement Will Allow Penn South to Reduce Current Debt Payments & Lock In Current Interest Rates
Schumer: Agreement To Keep Penn South Affordable Is Now A Done Deal
New York – (RealEstateRama) — U.S. Senator Charles E. Schumer today announced that, after his push, the Office of Management and Budget (OMB) has signed off on a major refinancing agreement for Chelsea’s Penn South Co-Op, which will help ensure the development remains affordable for an extended period. Earlier this month, Schumer called on OMB to swiftly review and make the decisions necessary to approve the development’s efforts in refinancing its property. Prior to his push, Schumer explained that HUD, the lender, the City of New York and the Penn South co-op had negotiated an agreement to keep the property affordable and HUD had sent its terms of the agreement to OMB for approval. Schumer successfully pushed OMB to quickly review and approve the negotiations.
“Penn South tenants can breathe a sigh of relief today because the refinancing agreement to keep the development affordable has been approved by OMB and finalized by HUD. Chelsea’s Penn South—one of the last remaining middle-class havens in New York City—will remain affordable for years to come,” said Senator Schumer. “Overall, this agreement allows Penn South to reduce its current debt payments and lock in current interest rates, a win-win for Penn South residents and New York City. I’m pleased that OMB heeded my call to act quickly and I will continue to fight to make sure affordable housing remains a priority.”
As part of the refinancing agreement, the current affordability provisions would remain in place for the full 35- year term of the HUD loan, and Penn South would be able to reduce its current debt payments and lock in current interest rates. The decades-old cooperative complex in Chelsea is one of the last remaining middle-class affordable oases left in New York City.
Penn South is a cooperative (co-op) development located between eight and ninth avenue, and 23rd and 29th streets, in the Chelsea neighborhood of New York City. The ten building development was built more than fifty years ago, in 1962, and includes 2,820 units of affordable housing.
A copy of Schumer’s original letter to OMB is below:
Shaun Donovan, Director
Office of Information and Regulatory Affairs
Office of Management and Budget
725 7th Street, NW
Washington, D.C. 20503
Dear Director Donovan:
The Penn South co-op was built in 1962 in the Chelsea neighborhood of New York City and for over five decades has served as a residential haven for low- and moderate- income tenants and families. Not only have the buildings that make up Penn South offered affordable housing to thousands of New Yorkers, but the entire development continues to provide a safe and beautiful community to all of the tenants and the broader neighborhood. These are the types of housing developments that are critical to serving the affordable housing needs of dense urban communities, like those in New York City, and will continue to require our commitment and attention. It is in this vein that I write to you to ask for your attention and strong consideration of the Penn South co-op’s efforts to secure refinancing which would ensure that the development remains affordable for an additional 22 years.
The opportunity to guarantee another two decades of affordable housing in this neighborhood is one that we cannot let pass without serious and diligent consideration. We simply cannot run the risk of failing to guarantee that the 2,820 units of affordable housing in this development will continue into the future. As you are aware, the high cost of housing and low vacancy rate in New York City has burdened many families. If these units were no longer kept affordable and were to dramatically increase, families would face significant financial hardship, and the stitches that bind that community would begin to unravel.
I am grateful that HUD, the lender, the Co-Op, and the City of New York have all worked cooperatively to negotiate an agreement that would keep this property affordable. However, a sense of urgency is necessary to work out and approve the refinancing of this loan. As you know, as part of the refinancing agreement the current affordability provisions would remain in place for the full 35-year term of the HUD loan. More immediately, Penn South would be able to reduce its current debt payments and lock in current interest rates, which would eliminate the risk of rate increases over time.
In just the past few decades, New York City has lost over 250,000 affordable apartments as the demand for affordable housing only continues to grow. The Penn South community has shown how essential this development is to the fabric of New York City. The property has been well managed and well maintained for years, but the refinancing agreement should also help to ensure that current and future repairs will be able to be made going forward – allowing Penn South to maintain its character and prominence in the neighborhood well into the future.
Given all of this, I urge you and your team to work with the other parties to carefully and diligently consider the terms of this agreement and make the necessary determinations as quickly as possible. Thank you for your time and attention to this matter and your continued efforts to promote affordable housing for New Yorkers.
Charles E. Schumer