Skip to main content

Affordable housing in Atlantic Yards project could mean just 300 units in 12 years, 120 of them low-income (or ten a year)

One element of the testimony May 29 at the state Senate oversight hearing on Atlantic Yards deserves more attention: a city official acknowledged that Phase 1 might result in only 300 affordable units.

What he didn't say was that Phase 1 could take 12 years--after the delivery of property via eminent domain--and that the 300 subsidized units would include 120 low-income units.

In other words, just ten low-income units a year over 12 years would go to the prime constituency of ACORN, the organization that signed the Housing Memorandum of Understanding (MOU) with developer Forest City Ratner.

Of the promised total 2250 affordable units, 900, or 40%, would be low-income, or up to 50% of Area Median Income. The rub is that Area Median Income, which is based not only on New York City but some wealthy suburbs, is a good deal higher than the median income in Brooklyn. (Graphic by Michael D.D. White of Noticing New York; click on graphics to enlarge.)

Subsidies for housing and beyond

Keep in mind that all the subsidized housing would rely on perhaps $1.4 billion in housing bonds (as revealed after project approval in testimony in the case challenging the AY environmental review) issued by the New York City Housing Development Corporation.

Beyond that, the city and state are contributing $305 million in direct subsidies to the project, for infrastructure and for land purchases on the arena block.

While AY would not exactly be an affordable housing project--it's primarily an arena and luxury housing--it has gained political support because of the inclusion of affordable housing. But, putting the arena aside, if the direct subsidies of $305 million were simply applied to housing, each of those 120 low-income households slated to benefit from Phase 1 could have an apartment worth at least $2.5 million.

Any development at the Vanderbilt Yard site would probably require some subsidies for infrastructure, given the challenges of building at the site. Still, we should recognize that AY does not promise to deliver significant amounts of housing affordable to the people who came to the July 2006 AY affordable housing information session.

April 2008 calculations

In March 2008, the Empire State Development Corporation quietly revealed the September 2007 State Funding Agreement, which gave Forest City Ratner six years to build the arena without penalty (after the delivery of property via eminent domain), 12 years to build Phase 1, and no timetable for Phase 2.

In April 2008, I gained, via a Freedom of Information Law (FOIL) request, the City Funding Agreement, also signed in September 2007. (Note that these agreements, which give Forest CIty Ratner a much longer leash than the ten years "anticipated" when the project was approved in December 2006, were reached well before the economic downturn.)

Notably, the City Funding Agreement includes no penalties as long as the developer builds, within 12+ years, 1.5 million square feet in Phase 1--some 44% smaller than promised less than a year earlier.

It requires that 30% of the housing units be affordable. I did a ballpark calculation of 1000 housing units, after subtracting 500,000 square feet for office space, and came up with 300 affordable units.

There's no plan now to build any office space soon, but it's not out of the project, as far as I know. Last month I did another calculation, based on the estimate that the affordable units would be smaller, and suggested there might be 360 affordable units in 12 years.

But I was apparently being too conservative.

Hearing testimony

About two hours into the Senate hearing, Assemblyman Hakeem Jeffries (right) asked New York City Economic Development Corporation President Seth Pinsky (below) several questions about affordable housing. (Photos by Adrian Kinloch)

HJ: Under what’s currently contemplated by Forest City Ratner, they’re going to build the arena simultaneous to exactly how many units of affordable housing?

SP: It’s not clear that they’ll be building simulatanously, the buildings and the arena. There’s a time period within which they have to have built the arena and, I believe it’s four of the towers that surround the arena. So they may go up at the same time, they may go up sequentially, but they have to be done within a certain time period.

Actually, the requirement of 1.5 million square feet could be met by three towers, and maybe even two. The unmentioned "certain time period" is 12 years.

HJ: You’re saying that the overall number of affordable units, of that basket of buildings, is what--three, four hundred affordable units?

SP: A minimum of 300 units, or 30 percent of whatever the total number of units that are built if that number is greater.

Some more context

I don't remember seeing 300 as a minimum number, but I'll take Pinsky's word for it. That was the first time such a minimum was mentioned in public, as far as I know. 

(I should add that the Modified General Project Plan approved in 2006--before the City and State Funding Agreements--refers to a minimum of 1005 residential units, which would mean just over 300 affordable units.)

As noted above, nobody did the math to point out that 1) the buildout could take 12 years and 2) the subsidized units vary considerably in affordability.

While 40% of the subsidized units would go to low-income families, perhaps another 10%--meaning a total of 50% of the subsidized units--would be "real housing for the real Brooklyn," the Daily News's term for those eligible for public housing or Section 8 vouchers.

ACORN's silence

When ACORN signed the Housing MOU, the project was to include 2250 affordable units over a decade. Of those subsidized units, 900 would be targeted to ACORN's prime constituency.

Since then, but before the economic downturn, Forest City got much more generous terms. ACORN has not complained. Not only is the organization contractually obligated to support the project, it is the beneficiary of a $1.5 million grant/loan bailout from Forest City Ratner.


Popular posts from this blog

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…

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…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…