Marien-Heim Tower was originally constructed in 1975 by Marien-Heim Tower, Inc., a Brooklyn-based non-profit organization that continues to own and operate the 182-unit building. By 2014, after nearly 40 years of providing affordable housing to low-income seniors throughout the Midwood community, the property was in need of an extensive renovation but lacked the financial capability and expertise to attempt such a major project. Given MHT’s expiring Section 236 contract and limited cash flow, the property needed a robust development/financing solution to prevent further deterioration.

Hudson Valley-MDG, a development partnership between Hudson Valley Property Group and MDG Design + Construction LLC, devised an innovative solution that enabled a substantial renovation at no out-of-pocket cost to the organization, generated several million dollars in proceeds that the organization could use to further its mission, and preserved affordability for hundreds of tenants without any increase in tenant paid rents.

The extensive $16MM in-place rehab will not displace any tenants during renovations and will address the sustainability, quality of life and modernization of the property. Common area improvements include lobby and public hall beautification as well as improved resident amenities. Unit renovations include new kitchens, new bathrooms, and new paint and carpet. The project also incorporates a number of “green” improvements such as high efficiency boilers, hot water heaters, lighting and windows that will reduce the long-term operating expenses of the property.

This $53MM (total development costs) project will be funded by tax-exempt bonds issued by the New York State Housing Finance Agency (“HFA”), and will utilize as-of-right 4% Low Income Housing Tax Credits (“LIHTC”). The property participates in HUD’s Rental Assistance Demonstration (“RAD”) program in connection with the new financing and also benefits from decoupling the remaining Interest Reduction Payments (“IRP”) from the underlying mortgage so as to generate additional proceeds for the project. Hudson Valley-MDG was also the first developer in New York State to utilize an innovative “Back-to-Back” financing structure in collaboration with HFA and Citibank that decreased transactions costs and allowed the non-profit organization to not only retain management but also long-term control of the property.

All photos are post-renovation, 2016.
Photo credit: Josh Mak Photography

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