Wednesday, April 21, 2010

Orwellian, almost: mayor claims commitment from Ratner to build affordable housing in first tower, but it's really the other way around

I finally figured out why Crain's New York Business last month proclaimed as news that the first apartment tower in the Atlantic Yards project would consist of at least 50% subsidized, "affordable" units.

Because Mayor Mike Bloomberg said so.

And, at the time, I didn't notice how "Orwellian, almost" it was, given that the mayor claimed that he'd gotten a commitment from developer Forest City Ratner, while the real news was that the developer could only make a commitment if he was ensured scarce city subsidies.

(Forest City Ratner has long promised that the first tower would be 50% subsidized, as in this 5/5/08 press release, also embedded below.)

From the press release

On the occasion of the March 11 arena groundbreaking, the press release from the mayor's office deviated from the official press release (both embedded below), in part, by adding this:
In the first phase of development, which includes four buildings, Forest City Ratner Companies committed that at least 30 percent of the housing units would be income-targeted. Mayor Bloomberg also announced today that the City has secured an additional commitment from the developer to ensure that at least 50 percent of the units in the first residential building will be affordable to a mix of low-, moderate- and middle-income families.
(Emphases added)

An additional commitment from the developer?

Forest City Ratner won't build subsidized housing unless there are sufficient affordable housing subsidies; that's in the Development Agreement, which allows for eight renewable one-year delays in the absence of subsidies.

So the news was really that Bloomberg has implicitly made a commitment to subsidize that tower.

(Also note that the first phase of the project was supposed to include six buildings, not four, but an office tower on the arena block and another tower across the street at Site 5 have been put on hold.)

What kind of housing commitment?

The Development Agreement laid out multiple scenarios for the first tower (see graphic below); in five of six scenarios, the building could be completely subsidized, albeit with at least 60% of those units available to households at 150% or more of Area Median Income (AMI), or $115,218 for a four-person household.

While that's hardly rich by New York City standards, it certainly does not represent the constituency of ACORN, which signed the Affordable Housing Memorandum of Understanding and provided the people to cheerlead for it.


Note that in all three scenarios contemplated in the Housing Memorandum of Understanding (embedded below) ACORN and Forest City Ratner signed in 2005, 5% of the AY rental units, and thus 10% of the affordable units, would be for households with incomes between 30-40% of AMI.

Now, there would be fewer such units.

For the first building, that number has been reduced to 3% (and thus 6% of the affordable units) under Scenario 1 in the above chart, with 17% (rather than 15%) of the units in the next income band. from 40-50% of AMI.

While the switch may seem marginal, consider that the lowest-income units require the most subsidy. In a building of 350 units, as is contemplated in the first tower, that would be a reduction from 17.5 units (5%) to 10.5 units (3%), part of a total of 70 low-income units.

And none of the other scenarios contain any low-income units.

The advantage of the other scenarios

Why might it be advantageous for Forest City Ratner to build an all-affordable tower with no low-income units?

Because it's committed to building at least 30% of the units on the arena block as affordable. That means, for example, 450 out of 1500 apartments.

If 350 of those apartments are already spoken for in the first building, that would require the developer to build only 100 additional subsidized units.

More than 50% affordable?

But it's quite likely there would be many more subsidized units, given that rental buildings are contemplated under a 50% market-rate and 50% subsidized scenario and there's no reason, at least right now, for the developer to build speculative condos.

So Forest City Ratner might end up building Phase 1 with more subsidized units than it promised.

That wouldn't be a sacrifice; the scarce city subsidies guarantee profits. But it would allow the developer to claim that it had met even more than its commitment. And Bertha Lewis of ACORN would surely offer ritual praise.

However, would ACORN--scratch that, New York Communities for Change--members be served? Not many.

Mayor Mike Bloomberg Atlantic Yards Arena Groundbreaking Press Release

Barclays Center Groundbreaking Press Release

ACORN/Forest City Ratner Housing Memorandum of Understanding

Atlantic Yards: May 2008 Gehry Designs Press Release

No comments:

Post a Comment