Friday, March 05, 2010

The iffy requirements for Block 1129 affordable housing and even iffier gap regarding construction over the railyard

At a press conference Tuesday, BrooklynSpeaks reminded us of requirements, first reported by AYR, that Forest City Ratner has to build only 300 units of affordable housing on the arena block within 12 years.

But the developer is supposed to build more, in the part of the project--Phase 2--beyond the arena block.

As it turns out, the Development Agreement, as excerpted below, requires 500 additional affordable housing units, to be built on Block 1129, the southeast block destined for interim surface parking.

How long do they have? 25 years.

What about the railyard?

What's curious is that, while the agreement ostensibly requires that all 2250 affordable housing units be built, it does not require specific targets for other portions of the site, such as the central and eastern blocks of the Vanderbilt Yard.

Big loopholes

The agreement also requires construction of the first residential building--though not necessarily one with affordable housing--on Block 1129 to begin within a decade after the Effective Date, when the Empire State Development Corporation delivers vacant possession of the Phase 1 Properties to the developer.

Except there's a huge loophole: "Market Financing Unavailability."

As the affordable housing comes with its own loopholes, such as the lack of subsidies.What's in Phase 2

According to section 8.7, concerning Phase 2 Construction, the developer is supposed to build a minimum of 2.97 million square feet of improvements within 25 years, "subject to Unavoidable Delays." (That would mean a project of less than 5.2 million square feet, a far cry from the 8 million square feet approved.)

Those delays include an "Affordable Housing Subsidy Unavailability" and delays caused by the requirement that not more than 50% of the residential units be completed without the completion of 50% of the Project Site Affordable Housing Units--meaning 1125 subsidized units. That strikes me as an extension of the "Affordable Housing Subsidy Unavailability."

Block 1129 construction

The southeast block is key because it is the only full block in Phase 2 that doesn't require decking over the railyards.

(Also not requiring a deck is a small piece of Block 1128, bounded by Dean and Pacific streets and extending 100 feet east from Sixth Avenue.)

As the document states:
8.7(c) Subject to Section 8.8 below, Interim Developer shall Commence Construction (or cause the Commencement of Construction) on Block 1129 of at least one residential building constituting a portion of the Phase II Improvements within ten (10) years of the Project Effective Date, subject to Unavoidable Delays. Once commenced, Interim Developer shall, or shall cause the applicable Tenant to, diligently prosecute construction of such building until Substantial Completion. For purposes of this Section 8.7(c) only, the term "Unavoidable Delays" shall include Market Financing Unavailability.
(Emphases added)

A Market Financing Unavailability is exactly what it sounds like: inability to obtain debt financing "on then market customary terms and conditions."

Affordable housing on Block 1129

The document also contains some complicated language regarding affordable housing in Phase 2. It states:
8.8(f) Until the date that each of the following are satisfied: (i) AYDC or its Affiliates shall have delivered to the MTA, LIRR or their respective designees the completion guaranty required by the Yard Relocation and Construction Agreement, (ii) such completion guaranty is effective and unconditional, and (iii) no Event of Default (as defined in the Yard Relocation and Construction Agreement) shall have occurred and be continuing, Interim Developer agrees that (i) at least eight hundred (800) Affordable Housing Units shall be Substantially Completed on Block 1129 prior to the Outside Phase II Substantial Completion Date; provided that such number shall be reduced by a unit for unit basis for each Phase I Affordable Housing Unit completed on the Arena Block, and (ii) for purposes of determining compliance with Section 8.8(a)(iii) above, not more than fifty percent (50%) of the number of residential units to be constructed on Block 1129 shall be completed without the completion of fifty percent (50%) of the Project Site Affordable Housing Units to be constructed on Block 1129 (it being agreed that for purposes of calculating the number of Project Site Affordable Housing Units to be constructed on Block 1129 only, such amount shall not exceed five hundred (500)).
(Emphases added)

Doing the math

Let me see if I can get this straight.

They're agreeing to build 800 affordable housing units.

Except they can reduce the number if they build affordable housing units--as required--in Phase 1.

Remember, they have to build at least 300 affordable housing units in Phase 1. So they only have to build 500 affordable housing units on Block 1129.

And that requirement is repeated in the last lines of the section: the number of Project Site Affordable Housing Units to be constructed on Block 1129 shall not exceed 500.

OK, they have to build 500 affordable housing units on Block 1129.

So why not say so in the first place, instead of using the number 800? Am I missing something?

Looking at the nomenclature

There's apparently a distinction between Affordable Housing Units and Project Site Affordable Housing Units

Affordable Housing Units, according to Appendix A attached to Section 17, are residential rental units subject to restricts set by city and state affordable housing programs, with rents no more than 30% of 160% of Area Median Income (or, if higher, 30% of the highest percentage of AMI used at the applicable time).

Project Site Affordable Housing Units concerns no fewer than 2250 Affordable Housing Units constructed on the project site.

We'll see.
Atlantic Yards Development Agreement Section 8
Atlantic Yards Development Agreement 17.2

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