Fannie Mae Helps Finance $289 Million Rental Assistance Demonstration Transaction with New York City Housing Development Corporation

WASHINGTON, DC – Fannie Mae (FNMA/OTCQB) announced today it financed a $289 million Rental Assistance Demonstration transaction with its Delegated Underwriting and Servicing (DUS®) lender partner Wells Fargo and the New York City Housing Development Corporation. The 30-year financing, put together in cooperation with New York City Housing Authority, will enable the upgrade and renovation of 1,718 tenant-occupied public housing units in Manhattan, which will be converted to multifamily residential facilities receiving housing assistance payments, as part of Fannie Mae’s ongoing effort to preserve and improve affordable rental housing for low-income families.

The substantial renovation budget averages $158,000 per unit and includes new kitchens, bathrooms, windows, doors and flooring; common area enhancements inside and outside the buildings; and upgrades for elevators, security, mechanical, and electrical systems. All of the units are rent- and income-restricted to no more than 80% of area median income and are subsidized via project-based contracts with the U.S. Department of Housing and Urban Development (HUD). 

“This financing will transform these properties, improving the quality of housing for families in a high-cost market that offers few affordable housing options,” said Michele M. Evans, Executive Vice President and Head of Multifamily, Fannie Mae. “A key part of our mission is to encourage the preservation of housing to ensure it is safe for families and close to places of employment, healthcare, and education. We are proud to be part of this effort with Wells Fargo, the New York City Housing Development Corporation, and New York City Housing Authority.”

The purpose of the Rental Assistance Demonstration program is to leverage private capital and expertise while converting publicly owned and operated housing to a public-private partnership. For this transaction, the New York City Housing Authority brought into the ownership structure a private development team that will be responsible for the rehabilitation and ongoing operation of the 16 properties. The team comprises Monadnock Development, the New York City Housing Authority, the Community Preservation Corporation (a nonprofit affordable housing and community revitalization finance company), Community Development Trust (a mission-driven community development financial institution), Kalel Holdings, and Lemor Development.

HUD estimates the current supply of public housing is in need of $26 billion for improvements, a number projected to grow by more than $3 billion each year. In response to this backlog, Congress created the Rental Assistance Demonstration (RAD) program in 2012. Administered by HUD, RAD was created to provide a method for Public Housing Agencies, which manage existing public housing units, to preserve and improve public housing properties by partnering with private and non-profit developers.

Fannie Mae is committed to partnering with multifamily affordable housing developers, Public Housing Agencies, and our lender partners to support the revitalization of public housing across the United States.