Tuesday, June 12, 2007

The battle over Queens West: the developer, the process, and the income mix

The process behind a huge affordable housing development planned for Queens West, a 24-acre site the city plans to buy from the Port Authority, presents some interesting contrasts to Atlantic Yards, as well as some potential portents.
(Graphic from New York Times)

First, the city announced plans for the project without anointing a developer, though it has had "secret talks" (in the Times's phrase) about a sole-source process regarding a nonprofit arm of the powerful Real Estate Board of New York (REBNY).

Secondly, the city's initial plan for an all-subsidized project geared to moderate- and middle-income families was criticized for bypassing low-income families. Now the city is considering making 40 percent of the project market-rate.

It's another sign that the numbers behind an affordable housing project are constantly shifting; if costs (or pressures for profit) go up, something has to give, and it can be the amenities in the project or, most easily, the income mix, as has already occurred with Atlantic Yards.

No profit development?

In a 5/16/07 article headlined Plan for Middle-Class Homes on Queens Bank of East River Prompts Ideas and Protest, the Times broke the news:
[REBNY President] Stephen M. Ross wants some of the wealthiest developers in the city to come together to build 5,000 apartments for nurses, teachers, firefighters, construction workers and other middle-class employees on the bank of the East River — at no profit.

Later in the article, however, the Times acknowledged that, not only might it not be easy to get other developers to become nonprofit builders, It is unclear whether nonprofit means that there will be no developers’ fees.

There are all kinds of ways to build in profit, and developers' fees are the most likely.

Community criticism

Community criticism apparently staved off an announcement, predicted for May, of REBNY being awarded the Queens West project. In the Times, both Ross and Deputy Mayor Dan Doctoroff said that the partnership would go forward only if it would provide more affordable housing than another deal.

Criticism, however, pointed out, that an open bid process would produce the best result. And Queens Council Member Eric N. Gioia of Queens, according to the Times, criticized an “absolute lack of community outreach” regarding issues of education, library service, and transportation.

An emphatic letter

A 5/14/07 letter to Doctoroff from the Queens for Affordable Housing (QFAH) coalition raised several criticisms of the process:
A leading role for REBNY would be inappropriate and could jeopardize the project
We were enthusiastic when the City announced its intention to purchase the Queens West site from the Port Authority in October, 2006 with the goal of developing several thousand units of permanently affordable housing. We were also pleased to learn from staff of EDC, HPD, and City Planning that there would be a transparent and participatory planning process to inform decisions about the project. Especially in light of recent large-scale projects where these decisions were made by private developers and presented to the public only after plans had been developed, we were pleased to hear that there would be a process – on this City-owned site – that genuinely took public and community interests into account.

(Emphasis added)

That sounds like a not-so-veiled criticism of Atlantic Yards.

The coalition pointed to a different way forward:
Our preference would be for a process like the excellent one the City recently conducted for The Brig in Fort Greene, or the processes currently taking place for the Kingsbridge Armory or E. 125th Street site. The City should guide an inclusive, public planning process of community and other stakeholders to determine the appropriate zoning, design, infrastructure, affordability, and subsidy mix, and then issue requests for proposals to select developers (perhaps with a community advisory group involved in reviewing proposals). If it is necessary to have a not-forprofit entity own the land in order to use 501c3 private activity bonds, we are confident that it is possible to find one both more experienced and more neutral than REBNY.


What's wrong with REBNY?

QFAH offered several criticisms of the apparent REBNY plan. First, it would preclude the public process regarding issues of design, density, mix of uses, zoning, infrastructure, transportation, affordability, and subsidy. Second, it would bypass the city’s capable affordable housing development community.

Third, REBNY's one previous effort at such a development, Tibbetts Gardens, a Bronx project in the late 1980s, failed, as the Times reported, because of escalating costs.

The affordability mix

The Queens West project was announced as serving 5000 households with incomes of $60,000 to $145,000. By contrast, the 2250 affordable units at Atlantic Yards would go to a lower range of incomes, from $21,270 to $113,440. Affordable housing may be less profitable than market-rate housing, but it does remain profitable. And developer Forest City Ratner would gain additional revenue from the 4180 market rate units.

The QFAH coalition pointed out from the start that, given the income mix, Queens West would not be affordable to most Queens residents, as the median income in Queens if $45,000. (That may not be the goal; REBNY's Ross has called for "workforce housing," so it may be to viewed as a place for suburbanites or new New Yorkers to live closer to jobs in Manhattan. The median income in Brooklyn, by the way, is little over $35,000.)

Bait and switch?

QFAH also pointed out that the city seemed to be switching the income mix:
The City’s press release of October 19, 2006 made it appear that all of the up-to-5,000 units would be affordable to middle-income households earning between $60,000 and $145,000 per year. Now we understand that the project could be 40% market-rate, and 60% middle-income.

The city's press release did leave some wiggle room, stating:
Up to 5,000 units of housing primarily designed to be affordable to families earning from $60,000 to $145,000 for a family of four is expected to be developed on the site.
(Emphasis added)

Later, the release was less conditional:
The City plans... construction of a middle-income, mixed-use community including up to 5,000 residential units targeted to families earning between $60,000 and $145,000 for a family of four.

It all depends on what the word "primarily" means.

Doctoroff's defense

The Times reported:
Mayor Bloomberg initially indicated that all 5,000 apartments would be subsidized for middle-income families earning $60,000 to $145,000. Now, the city is considering setting aside 60 percent for middle-income families, while the remaining 40 percent would be sold at market rates.

Mr. Doctoroff argues that the city cannot solve every problem at one site. “This is a great opportunity to make a significant impact on middle-income housing problems,” he said.


Lessons

That offers at least two lessons for Atlantic Yards observers. The planned income mix may change, as it has already changed. Also, the justification for the project's size--the provision of housing--is but one of many factors that should be considered, which is why a public process helps clarify the issues.

It's not unimaginable that the Atlantic Yards plan could shrink, for several reasons, among them the scarcity of tax-exempt financing. And it's not unimaginable that the attendant decrease in the amount of affordable housing would be blamed on critics who've long been saying the project is too big. (Consider: Queens West would be 5000 apartments on 24 acres, while Atlantic Yards would be 6430 apartments on 22 acres, plus office space and an arena.)

However, the challenge to provide affordable housing, as Doctoroff has said, can't be met just at one site. The maximization of affordable housing is part of a balance of goals, including provision of subsidy and the available infrastructure.

Should more subsidies be allocated, the Queens West project could contain 100% affordable units, and be available to a broader income mix. That's a political discussion, and a political decision. At the very least, the city administration should be clear about its intentions, and the process for getting there.

REBNY and affordable housing

In March, I asked Brad Lander of the Pratt Center for Community Development, which has organized the QFAH coalition, about the Queens West plan, and he responded:

If they are seriously interested in creating and preserving affordable housing, here are a few suggestions they might consider:
--Commit that REBNY members will not remove any more units from affordable housing programs like Mitchell-Lama or Section 8, or remove more units from rent regulations.
--Commit that all REBNY members will accept Section 8 certificates in their buildings.
--Agree not to lobby to undermine the reforms to the City's 421-a property tax program in Albany (they are currently lobbying to reinstate the "negotiable certificate" program, under which their members pay 15 cents toward affordable housing instead of $1 in taxes).
--Add the creation & preservation of affordable housing to their Code of Ethics.


Those changes, of course, are unlikely.

And they parallel criticisms of Atlantic Yards developer Forest City Ratner, which last July held an Affordable Housing Information Session in cooperation with its partner ACORN, an affordable housing advocacy group. The session concerned only the Atlantic Yards project but didn't inform attendees about other reforms that might create more affordable housing.

Beyond that, a Forest City Ratner brochure argued that Atlantic Yards would help "solve Brooklyn's housing crisis" but didn't deal with any of the other issues. And the call for "Affordable Housing Now!" on posters at the 8/23/06 public hearing was limited to housing at Atlantic Yards.

In other words, when for-profit developers turn to affordable housing, there's often an ulterior motive. As Julia Vitullo-Martin of the Manhattan Institute said in January, "Affordable housing is the Trojan Horse these days on big bad projects that shouldn’t get built."