Skip to main content

The income mix for AY affordable units already changed; could it change again?

The inaugural issue of City Limits Investigates, which focuses on affordable housing, points out that, with some construction costs rising 1% a month, a lack of cheap land, and limits on governmental contributions, Mayor Mike Bloomberg's New Housing Marketplace Plan may "never get to 165,000 units--or if it does, that the housing produced will not meet the most pressing needs."

Indeed, to get there, city housing officials acknowledge, the cost pressure "could change the complexion of the affordable housing they are delivering." (Or, perhaps, more funds must be sought from other sources, including borough presidents.)

Does that mean that the complexion of Atlantic Yards--the profile of the affordable units--might change? Maybe, but the important thing to realize is that it has changed already.

Original promise

The projected income mix in the Atlantic Yards affordable housing changed considerably in little more than a year.

The Housing Memorandum of Understanding, signed by ACORN and developer Forest City Ratner in May 2005, contemplated three scenarios. In each of the three, 20% of the rentals (and thus 40% of the affordable units, or 900) would be assigned to low-income households, defined as earning up to 50% of Area Median Income, or AMI.

However, there was much wiggle room for the other 1350 units, for moderate- and middle-income households. In the first scenario (above), 450 units would go to households with 60%-80% of AMI, 450 to 81%-100% of AMI, and 450 to 101%-140% of AMI.

(Note that in the chart above, the household size goes up to six, while the one below, from the Atlantic Yards Information Session last July, only contemplates a four-person household.)

Changing gears

From April through June of last year, Forest City Ratner on its web site promoted the first, most inclusive scenario, as I wrote last July. By the time of the information session, however, the first two scenarios were jettisoned, and the affordable units at Atlantic Yards--at least the ones not low-income--would be geared to higher-earning households.

The current chart, as noted below, contemplates 450 units going to households with 60%-100% of AMI, 450 to 101%-140% of AMI, and 450 to 140%-160% of AMI.

To put it more plainly, there were once 900 units aimed at moderate-income families earning 50%-100% of the AMI; now there would be only 450. Beyond that, the top tier under the first scenario, 101%-140% of AMI, would now be the second-to-top tier, given that 450 units would go to households earning 101%-140% of AMI.A time-old tactic

CLI observes:
When rising costs begin to squeeze an affordable housing project during its planning stage, that income mix is a key component with which developers can tinker. Subsidy programs have income guidelines but there is usually room to manuever. The malleability is a handy tool when it salvages projects that otherwise might be priced out of existence. But it also means that the final affordable housing product could serve a different set of New Yorkers than originally intended--in other words, that there will be winners and losers.

It's not clear how much that might affect Atlantic Yards at this point, because there appears to be little wiggle room with the rentals. The wiggle room that remains concerns the 600 to 1000 for-sale subsidized units, onsite or offsite, which are in the MOU but not part of the General Project Plan issued by the Empire State Development Corporation. (Upon approval by the Public Authorities Control Board last December, Forest City Ratner announced that 200 such units would be onsite, but no further details emerged.)

The MOU states:
It is currently contemplated that a majority of the affordable for-sale units will be sold to families in the upper affordable income tiers.

The percentage in that majority, and the tiers associated with it, might increase. (100% of AMI or 160% of AMI? More?)

Potential change?

Even with the rentals, there may be wiggle room, if it's crucial to get the project done. CLI reports:
The RFPs to which housing developers respond often require units for certain income levels. But if it's a matter of life or death for a project, requirements can budget, developer's say. "Nobody wants to see a project fail," says [the Housing Partnership Development Corporation's Daniel] Martin. If costs become a major issue, all the players get together to crunch the numbers, sometimes upward. "For example, let's say the target was 80 percent AMI. Can we support moving up to 110% AMI? For the developer, that's a 20 percent increase in sales price on certain units, and it's enough to put him over the top."


One example in which a change helped affordability concerns the Fifth Avenue Committee's planned Atlantic Terrace development just north of Atlantic Avenue and east of the Atlantic Center Mall, across from the Atlantic Yards footprint. Sales prices on some moderate-income units went down because the market-rate units in a hot market can bring in more revenue. (In this case, the market-rate units explicitly subsidize the affordable units; the Atlantic Yards deal is more murky.)

Still, ultimately, there's a tradeoff, as CLI reports:
"The city must choose between building the most units and getting the deepest affordability," [Lucille] McEwen of [Harlem Congregations for community Improvement] says. "That's a tough call."

The most stringent requirement is that 20% of the rentals go to low-income households earning under 50% of the AMI. Perhaps the upper income bound will be adjusted to 175% of AMI, which is permitted under city subsidy programs. Even though that would seem to violate the Housing MOU, it's hard to imagine that ACORN, which hasn't criticized delays in the project and other impediments to affordable housing, would raise a stink.

Still, if we don't have an inkling for Forest City Ratner's development fees, costs, and profits, it's hard to tell whether a tweaking of the income mix is needed to get the project built or just to drive the return FCR's parent company wants for its shareholders.

Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

So, Forest City has some property subject to the future Gowanus rezoning

Writing yesterday, MAP: Who Owns All the Property Along the Gowanus Canal, DNAinfo's Leslie Albrecht lays out the positioning of various real estate players along the Gowanus Canal, a Superfund site:
As the city considers whether to rezone Gowanus and, perhaps, morph the gritty low-rise industrial area into a hot new neighborhood of residential towers (albeit at a fraction of the height of Manhattan's supertall buildings), DNAinfo reviewed property records along the canal to find out who stands to benefit most from the changes.
Investors have poured at least $440 million into buying land on the polluted waterway and more than a third of the properties have changed hands in the past decade, according to an examination of records for the nearly 130 properties along the 1.8-mile canal. While the single largest landowner is developer Property Markets Group, other landowners include Kushner Companies, Alloy Development, Two Trees, and Forest City New York.

Forest City's plans unc…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…