The owners of two distressed luxury condo buildings — one in Harlem and another in Downtown Brooklyn — are in talks with the city to unload their unsold units at fire-sale prices as affordable housing, The Post has learned.
City officials won’t say where exactly the buildings are located while they are negotiating with banks that have foreclosed on the properties.
If the deals close, the units would be the first in a program pushed by City Council Speaker Christine Quinn to spend $20 million to put vacant apartments on the market at a steep discount in order to expand the city’s affordable-housing portfolio.
New homeowners — who would have to meet income limits and participate in a lottery — would get the bargain of a lifetime.
A $500,000 luxury condo might be marked down to $300,000, suggested Rafael Cestero, the city housing commissioner.
In return for the markdown, developers or bankers would get up to a $50,000 city subsidy for each apartment.
“They would have to take significant losses,” Cestero said.
He added that if the prices are right, the city would be prepared to buy unfinished buildings, as well as those where at least 50 percent of the units are empty.
Whether the program works depends on bankers’ hunger to get rid of their distressed properties, he said.
Because lots of new housing developments are overpriced, Cestero expects banks will be eager to unload some of them.
“Some of the sales assumptions seemed like a stretch in any kind of market,” he said. “In Downtown Brooklyn, and not on the water, they had buildings underwritten to sell for $800 to $900 a square foot.”
Boroughwide, Brooklyn housing prices average about $300 per square foot, according to the real-estate Web site Trulia.
Assuming the bank holding the mortgage is ready to absorb substantial losses, subsidized tenants could move into one luxury development by the end of the year.
Another city initiative to buy and renovate foreclosed one- and two-family homes got off to a slow start because of financing delays. But officials said seven properties have been purchased and the fix-ups should begin next month.
Taking advantage of the economic downturn, Cestero is also offering financial incentives to persuade the owners of middle-income Mitchell-Lama projects to remain in the program after their contractual deadlines.
In return for low-interest loans, Cestero said, the city would expect building owners to remain in the program, which requires them to maintain some affordable rents.
During the boom years, many Mitchell-Lama owners bailed out and sold or rented their units at market rates — options not available to many of them today.
“There is a silver lining in the economic downturn,” Cestero said.
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