Behind the Money Woes of Domino's Developer

Charles Bagli has an extensive piece in the New York Times about how the longstanding nonprofit Community Preservation Corporation has run into substantial money problems, and the article illuminates why the developer is now shopping around the Domino development site. Many of the organization’s money woes stem from its for-profit C.P.C. Resources arm, which was established in the ’90s to invest in projects that often involved elements of luxury housing. Here’s the long and short of it, in Bagli’s words: “At the time, Community Preservation defended the ventures, saying it needed to invest in condominiums and other relatively upscale developments in order to strengthen neighborhoods by creating mixed-income communities. But others pointed out that even if that had been the case, the group should not have allocated so much of its capital to such projects. At the peak of the real estate boom in 2007 and 2008, more than half of the $1.5 billion in loans originated by Community Preservation or its for-profit arm were for condos.” The article notes that C.P.C. Resources defaulted on its $125 million Domino loan last month. Meanwhile, here’s a quote from Councilman Brad Lander about how CPC needs to get back to its affordable, nonprofit roots: “C.P.C. was tempted into more speculative lending, which harmed the organization financially and left a big hole in the field of lending for multifamily housing. …Two-thirds of the city’s housing stock are rental units, and that’s why we need C.P.C. to return to its core mission.”
Seeking Real Estate Profits, Nonprofit Group Stumbled [NY Times]
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