The Yonkers developments marked L+M’s first steps outside of New York City in years.
In a way, the projects were a homecoming for Cortell, who grew up in Yonkers’ home county of Westchester. Additionally, L+M’s first offices resided in Larchmont, N.Y., a Westchester village. But aside from a few small, early developments, the firm had focused on New York City and affordable housing projects.
“We hadn’t done much outside of New York,” says Moelis, who began L+M in 1984. The firm built its reputation by turning abandoned, city-owned buildings into affordable housing, and has developed more than 15,000 residential units so far.
In Yonkers, Cortell saw an opportunity to bring the expertise L+M had built working in New York’s densely developed streetscapes and complicated partnering relationships to new communities outside of the boroughs. “The lessons of New York City can be extended elsewhere,” he notes.
Clever Financing
Strong relationships recently led Cortell to bring his collaborating skills to another new market for L+M—this time, on the other side of the country. Citibank, which had partnered with Cortell on an earlier deal, suggested L+M take a look at a failed luxury condominium property in San Francisco, which the developer turned into its first affordable apartments on the West Coast.
Two developers had already failed to revive the half-finished condominiums at Candlestick Heights; when L+M first saw the property, it contained 66 completed condominiums and room to build another 98 housing units. The New York developer bought the site from Citibank and proceeded to redevelop it with tax-exempt bond financing and 4% low-income housing tax credits (LIHTCs).
It was a unique opportunity. To attract technology millionaires to the building’s not-quite-gentrified neighborhood, the original team of condominium developers had designed the living spaces in the condos with huge floor plans. (“These apartments are gigantic,” says Cortell.) With a little work, many of the units became generous, four-bedroom apartments affordable to households earning up to 50% of the area median income. They now provide large families with a kind of housing that’s very hard to find in San Francisco.
Cortell has a natural understanding of how much space it takes to raise a family, since he has three children of his own. Candlestick Heights offers extensive afterschool programs.
State officials agreed to consider the more than $60 million that earlier developers had spent to build the 66 failed condos in their ”eligible basis” calculations to generate tax credits. That brought a lot of extra capital to the project, making it possible for L+M to finance an expansive new property with the 4% LIHTCs, which provide less of a subsidy than 9% LIHTCs.
This year, L+M opened the 196 new, affordable rental apartments at Candlestick Heights, and the property is already full.
Good With Numbers
Throughout his career, Cortell has been able to find creative ways to finance new developments and layer multiple sources of local, state, and federal subsidies into a deal.
To transform the Hahne’s department store, for example, L+M is using tax credits from the New Jersey Economic Development Authority in addition to the more familiar federal New Markets Tax Credits, historic rehabilitation tax credits, and LIHTCs.
“It was the most complex project I had ever done,” says Moelis, who has decades of experience developing in New York City, including HOPE VI redevelopments of public housing.
Cortell has years of experience working with both public-sector funding and private-sector financing.
He joined L+M in 2005, before which time he served at the New York State Housing Finance Agency, from 2000 to 2005, starting as a project manager and working his way up to become director of development.
At Duvernay & Brooks, a real estate developer and financial advisory firm, Cortell was a senior project manager in 1999 and 2000, and, from 1996 to 1999, he served as a senior research associate for the New York City Independent Budget Office.
Beyond the Property Line
Cortell’s interest in design and development goes back even further than his early days on the job. He has fond memories of meeting his father for lunch as a student at Columbia University in the 1990s and talking about the neighborhoods and new developments around campus.
“We’re all interested in the eye candy that makes up our neighborhood,” Cortell says. “The context and the streetscape … every community has it.”
That simple aesthetic appreciation helps Cortell create communities that thoughtfully consider all the buildings around them and that serve multiple purposes in their neighborhoods.
The renovation of Warburton Lofts, for example, has created a long ripple effect in downtown Yonkers. L+M’s most recent project there, a new parking garage, has replaced a giant surface parking lot, which makes room for a new park around the newly uncovered Saw Mill River, which had been buried for more than a hundred years. Warburton Lofts is a landmark part of the new center Yonkers is building around the river.
“The mere fact that an affordable housing project delivers all this other stuff is the purpose,” says Cortell, a board member of the Yonkers Downtown Improvement District. “The development was the catalyst.”
