Bisnow has learned that Tahl Propp Equities will begin construction this fall on 126 apartments, 14k SF of retail, and a parking garage on a stalled development site at 121st and Third. Expect 80/20 market-rate and affordable housing, better retail for the neighborhood,and one Tetris piece-shaped building.

Tahl Propp Equities prez Joe Tahl told us his firm bought the defaulted note on 2211 Third Ave from New York Community Bank in the summer of 2011. For $6.2M, it acquired a vacant site with as-of-right zoning for $0.35 on the dollar, compared to the $18M in debt and equity the seller had invested. By fall 2014, you'll see a 130k SF building with an attended lobby, tenant rec room, fitness center, bike rooms, outdoor space, and studios to multiple-bedroom units. The market-rate studios likely would bring in $1,700/month, and the affordable units would rent for a third of that. Financing is through FHA.

Douglas Elliman's Faith Hope Consolo, Joe Aquino, and Arthur Maglio are already marketing the retail space. Faith is excited for a ground-up development in a neighborhood where her team has already planted the IRS, Veterans Affairs, and several banks. What the area needs now, she says, is a good grocery store likeFairway or Trader Joe's (because you can't spell gentrify without k-u-m-q-u-a-t), drugstore, and gym. The neighborhood's existing Key Food, Faith says, doesn't do right by the area.

Joe (right, whom we snapped with Rodney Propp) tells us Tahl Propp--a long-term holder that owns and operates 3,500 units in Harlem, most of them affordable--is also negotiating with the NYC Department of Housing Preservation & Development to build 200 or 300 affordable units on City-owned land on Park between 107th and 108th; construction is at least two years away. And the firm is in discussions with the NYC Housing Development Corp to preserve Tahl Propp's Harlem units as affordable. Tahl Propp would get tax credits by extending the HUD contracts from a standard five years to 20 or 30.