Wednesday, December 24, 2008

Details on AY housing point to 80/20 rentals, not condos, in a smaller Phase 1

As far back as May, developer Forest City Ratner was planning to convert at least one of the first three residential towers on the Atlantic Yards arena block from condos to rental housing, a recognition of the tough lending and consumer market for condos--and of the opportunities in gaining tax-exempt financing.

That's the indication from a fact sheet prepared (but not actively distributed) to accompany the release in May of new designs for the arena block, as well as from news emanating from a meeting Monday between local officials and the Empire State Development Corporation.

The fact sheet stated that the first of the three residential buildings, the 34-story, 350-unit B2 (in red), would have 50% affordable housing--and thus participate in the New York City Housing Development Corporation's (NYC HDC) 50/30/20 program, involving 50% market rate, 30% subsidized for middle- and moderate-income households, and 20% subsidized for low-income households.

The fact sheet said nothing specific about the contours of the affordable housing for the other two buildings, known as B3 and B4 (the office tower known as B1, at left, is on indefinite hold as the developer searches for an anchor tenant), but it did state:
These buildings will all include significant amounts of affordable housing and, like B2, will also require securing tax-exempt bonds from the City and State.
(Emphasis added)

The New York State Housing Finance Agency (HFA) does not support 50/30/20 programs, but rather 80/20 programs, with 20% low-income housing and 80% market-rate rentals, as at the developer's 80 DeKalb Avenue project.

So B4, which at one point was to be more than twice as big as the first two buildings combined, would be an 80/20 building, according to reports I got from the meeting Monday.

News breaks

The Daily News today broke the story, reporting that Forest City Ratner told officials that it would shift from condos to rentals, creating "approximately 900 rental units in three towers formerly planned for condominium and commercial space, said several officials who attended the meeting."

I don't think the first three towers were planned for condos and offices; rather, the fourth tower was the office tower, while the first three were to be a mix of rentals and condos.

"Going rental is consistent with what other developers are doing elsewhere," Council Member David Yassky (D-Brooklyn Heights) told the Daily News. "That's just what the market is dictating."

Whether the market and the city/state agencies can supply the tax-exempt bonds is another question.

Details on units

If the developer plans only 900 units in the first three buildings, that would be a much smaller Phase 1 than envisioned in May. According to p.r. materials prepared by the firm Geto & DeMilly, the 325,000-square-foot B2 would have 350 units, at about 928.6 square feet.

According to the fact sheet, the second residential building, known as B3, would be approximately 300,000 square feet (about 22 stories; to the right of B2). Construction would start a year later--in 2010, at least if B2 gets off the ground in 2009, which is hardly certain. That building, smaller than B2 and to its right in the rendering, would likely be a 50/30/20 program, with about 323 units.

But the big lift, at least as once planned, was to come with B4, the third and final arena block residential building (at center), containing about 700,000 square feet and rising 50 stories, commencing a year after B3, with about 754 units--most of them market-rate rentals.

Not only was B4 to be larger than both of the earlier buildings combined, it would be larger than the 650,000 square foot office tower planned for B1 (at left), once dubbed "Miss Brooklyn."

But if there would only be 900 residential units in Phase 1, then B4 would be a lot smaller, perhaps only 300,000 square feet.

Too small?

I think that number in the Daily News might be too small. If the developer builds only 900 residential units, then that would represent less than 900,000 square feet. Forest City must build 1.5 million square feet, according to the City Funding Agreement, to avoid incurring penalties.


Yassky pointed to a bait-and-switch. "I don't believe the project approved by the state is going to be going forward anytime soon," he told the Daily News. "Forest City Ratner should return the taxpayer dollars, and start talking about what actually can be built."

Then again, if the approximately 650,000 square foot Building 1 gets built within 12 years after the delivery of property via eminent domain, then Forest City could meet the goal of the funding agreement. That document, which allows the developer to build a project very different from that approved by the state, has drawn little scrutiny and criticism from public officials.

FCR seems to have backed off from plans for 1930 condos, an apartment type to which the developer is averse, as evidenced with the Beekman Tower project.

Affordable housing first?

Assemblyman Hakeem Jeffries told the Daily News he told Forest City Ratner executives to build the affordable housing before the arena, but that they didn't respond to his request.

I heard another version, that the response, not implausibly, was that, given that the buildings would wrap the arena, it would be logistically impossible to building the towers first, and, if the arena were still under construction, it would not be so comfortable for residents.

In other words, everyone supporting the affordable housing should've understood the bargain.

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