In an article 3/16/06 headlined Are Tax Breaks for Builders Still Needed in Hot Market?, the New York Times reported on an effort by ACORN to encourage more affordable housing in new developments, especially in Brooklyn. The happy exception to a wave of gentrification, ACORN reports, is the Atlantic Yards project, but the Times failed to look carefully at that issue.
The Times reported:
In a report [link updated, also embedded at bottom] to be released today, New York Acorn, a community group, argues that the city's most popular tax-incentive program, known as 421-a, is not only not generating much moderately priced housing in places like Downtown Brooklyn but is, in effect, subsidizing a lot of expensive housing in gentrifying neighborhoods.
The group, which claims 36,000 low- and moderate-income families as members, wants the city to change the program to require that all developers receiving these tax breaks for building apartments in much of Downtown and central Brooklyn make 30 percent of all new units affordable to people of modest means.
The group's report comes less than a month after Mayor Michael A. Bloomberg appointed a task force of developers, housing advocates and others to rethink the program, which city housing officials say has fueled the construction of more than 110,000 units since 1971 but has also cost the city hundreds of millions of dollars in lost taxes a year.
The 421-a program, which provides a 10- to-15-year exemption from real estate taxes, only requires affordable housing with projects built in the "exclusion zone," mainly Manhattan between 14th Street and 96th Street. ACORN New York's Bertha Lewis previewed the issue at a forum on 2/28/06, pointing out how Forest City Ratner's project differed from others being built in Brooklyn.
Atlantic Yards context
The Times offered one paragraph referencing the Atlantic Yards issue:
New York Acorn, which successfully pressured the Forest City Ratner Companies to include mixed-income housing in its 9.1 million-square-foot Atlantic Yards project in Brooklyn, looked in its new report at 87 housing development projects in various Brooklyn neighborhoods starting at the Brooklyn and Manhattan Bridges and extending toward Prospect Park.
Missing, however, was any explanation of what the developer would get from the deal. It would receive the 421-a tax break. More importantly, FCR got grassroots support for a project that would override city zoning and allow the developer to construct larger buildings--and thus more market-rate units--than would ordinarily would be permitted at the site.
The Times reporter was likely cribbing from the report, which devoted a page (p. 9) to Atlantic Yards:
One notable exception to these trends in Downtown Brooklyn development, the Forest City Ratner Companies’ Atlantic Yards Project, will lie on a 22-acre site, bordered for the most part by Flatbush, Atlantic and Vanderbilt Avenues and Dean Street. It will include a professional sports arena, a hotel, an office complex and residential mid-and high-rises containing 4,500 units of new rental housing.
Forest City has entered into a Community Benefits Agreement (CBA) with ACORN and seven other community groups that commits the developer to making 50% of the rental units – 2,250 units – affordable....
The Times also did not mention that ACORN is contractually obligated to support the project.
The Times's response
[Update: I asked the Times about that omission, and followed up with an amplification; I pointed out, among other things, that the Atlantic Yards plan differed from a rezoning for affordable housing, because the latter would not require a community group to contractually support the project. Deputy Metro Editor Patrick LaForge responded: "It's an interesting point, but Atlantic Yards wasn't the focus of the article."
True--and I didn't request that the Times acknowledge its parent company's business relationship with Forest City Ratner. My take is that, given that ACORN highlighted Atlantic Yards as an example, any citation should've been contextualized, either with mention of ACORN's obligation, or with mention of the benefit the developer would gain. The Brooklyn Downtown Star, in an article headlined Sweetheart Transplants, offered more context. Indeed, the deck under the headline, in the hard copy version of the article, stated "Monied classes forcing others out of DoBro, warns ACORN, as justification for Yards deal."]
The city's take
The Times article did include some skepticism about ACORN's report:
City officials, who were shown the study, said it was far from comprehensive. They said the group had overlooked at least 700 to 800 low- and moderate-income units in the city's pipeline. They said that several of the neighborhoods studied included large percentages of public housing, where rents barely rose, and that in one of the community districts studied, fully 52 percent of all rental units were rent stabilized.
They and others also said the report included no proof of displacement.
Missing from the RPA's take
But the article cited the Regional Plan Association (RPA) as supporting ACORN's take that the city's tax incentives have gone too far, but missed the RPA's criticism of the Atlantic Yards project:
The Regional Plan Association, a civic group that works to improve the economy and quality of life in the New York region, also raised the issue this week, saying in an article in its newsletter that "neighborhoods like Wall Street, Harlem, Williamsburg and other communities throughout the five boroughs are hot residential markets in no need of subsidy."
The article in the RPA's 3/10/06 newsletter also contains this paragraph regarding reform of the 421-a program:
This positive step by the Bloomberg administration makes one wonder why our inferiority complex still seems to dictate negotiations with developers on big projects. In fact, almost all of the administration’s most favorite projects – the Atlantic Yards mega-development, the new Yankee Stadium, Bronx Terminal Market, and even Governors Island – allow developers tremendous leeway without demanding substantial concessions in the public interest. (Emphasis added.)
Yes, the developer made substantial concessions in negotiation with ACORN, and the city and the borough need affordable housing. Whether those substantial concessions are "in the public interest" must be evaluated in the context of the development as a whole. That would require analysis of and public deliberation about the subsidies/public costs regarding the project, as well as its scale.
The waterfront rezoning
While praising the Atlantic Yards project, ACORN's report proposes a more formalized program of guaranteeing affordable housing: rezoning. It recommends (p. 10):
1. The 421a “Exclusion Zone” should be extended to Downtown, DUMBO, Prospect Heights and other neighborhoods in Central Brooklyn, as it recently was in the rezoning of Greenpoint-Williamsburg. This would mean developers could not receive a 421a property tax exemption unless they include affordable units.
2. In exchange for 421a and J-51 tax exemptions, developers should be required to provide at least 30 percent affordable units.
3. All affordable units in all developments should be income-tiered so that the units are targeted to and affordable for all low- and moderate-income families, at 30 percent of household income.
4. Any developer who receives a tax exemption should be required to enter into a Community Benefits Agreement (CBA) with relevant community organizations, covering labor participation and training, minority contracting, etc., as well as affordable housing.
In other words, the process of rezoning, which relies on elected representatives is considered preferable to a state process that overrides city zoning. As for the recommendation of a CBA, that's worth discussion (though it may raise legal questions). It also raises questions about how to identify "relevant community organizations."