Thursday, June 21, 2007

How the 421-a reform is being tailored for Forest City Ratner

The reform of the 421-a tax break about to be passed by the state legislature would require developers in the Geographic Exclusion Area to include 20 percent affordable housing onsite in exchange for the tax break. Affordable housing is defined as being geared to households earning up to 60 percent of Area Median Income, or AMI.

The special clause for developer Forest City Ratner benefits the Atlantic Yards project in two ways (updated):
1) the obligation to provide 20 percent affordable units in the same building will be lifted and instead can be met in the aggregate
2) the obligation to provide 20 percent of the units at 60 percent of AMI will be changed so that the developer must provide 20 percent of the units at an average AMI of 70 percent, so as not to disturb the current plans for Atlantic Yards.

Here's the current bill (A 4408), which has both errors that will be changed and clauses that are being updated:
13. A multi-phase project that includes at least 2,500 dwelling units and (i) is being implemented pursuant to a General Project Plan adopted by the New York State Urban Development Corporation and approved by Public Authorities Control Board or is otherwise set forth in agreements with the New York State Urban Development corporation and (ii) includes a development over a number of city blocks, shall be eligible for benefits pursuant to this section notwithstanding paragraph (e) of subdivision 7 of this section if in the aggregate twenty percent of the units in such development are affordable to and occupied or available for occupancy by individuals or families whose incomes at the time of initial occupancy do not exceed 60 percent of the area median incomes adjusted for family size and the rent for such units does not exceed thirty percent of eighty percent of the area median incomes adjusted for family size.

(Emphases are added)

Revision coming

Below is another version of the clause, as it's been circulating. I can't say this is the final version, but consider it an example of changes being tailored for a specific client. (It's possible that the revision won't be posted until the bill passes.)

(Update: Here it is, as part of A9293)

13. A multi-phase project that includes at least 2,500 dwelling units and (i) is being implemented pursuant to a General Project Plan adopted by the New York State Urban Development Corporation and approved by Public Authorities Control Board or is otherwise set forth in agreements with the New York State Urban Development corporation and (ii) includes a development over a number of city blocks, shall be eligible for benefits pursuant to this section notwithstanding paragraph (f) of subdivision 7 of this section if in the aggregate twenty percent of the units in such development are affordable to and occupied or available for occupancy by individuals or families the average of whose incomes at the time of initial occupancy do not exceed {60} SEVENTY percent of the area median incomes adjusted for family size and the rent for such units does not exceed thirty percent of eighty percent of the area median incomes adjusted for family size.

They were so sloppy they changed the word but not the numeral.

Paragraph (e) regards the length of rent-stabilization, while paragraph (f) regards the onsite requirement.

Doing the math

Atlantic Yards, as currently planned, would include 6430 units, including 1930 condos (200 of them affordable, but unlikely at a low AMI) and 4500 rentals, half of them subsidized and thus affordable to low-, moderate-, and middle-income families.

Of the total, 20 percent, or 1286, would have to be affordable--under the 421-a definition of affordability--to meet the law's requirement. The law sets affordability for projects other than Atlantic Yards at 60 percent of AMI.

For Atlantic Yards, as currently planned, there would be 225 units at 40 percent of AMI, 675 units at 50 percent of AMI and 450 units at 60-100 percent of AMI.Under the initial wording of the bill, Atlantic Yards wouldn't qualify, because only 900 units would be under 60 percent of AMI.

Under the revised wording of the bill, which adds the average and nudges the requirement up to 70 percent, Atlantic Yards would easily qualify. Even if those 450 units were rented to households at 100 percent of AMI, that would make 1350 units averaging 65 percent of AMI.

If the AMI in the Atlantic Yards carve-out were kept at 60 percent, the project could still qualify under the averaging option, as long as those 450 units at 60-100 percent of AMI were under 80 percent of AMI.

So a 70 percent average would allow those units in the middle "band" of affordability to be rented to somewhat higher-income families. And that middle "band," as I've written, has already been changed, as the Atlantic Yards income mix nudges upward.

No comments:

Post a Comment