Monday, June 07, 2010

In Queens, a major affordable housing project involves multiple sites and competitive bidding

Heard about the affordable housing project, unlike Atlantic Yards, in which public land is divided into multiple sites for which competitive bids will be solicited?

From a New York Times article today headlined City Proceeds With Big Middle-Income Housing Project on Queens Waterfront:
After four years of planning and delays, the city will start soliciting bids on Monday to begin building what could become the city’s largest development for middle-income residents in 40 years.

The Bloomberg administration, which is heavily subsidizing the project, is asking developers to compete to build 1,000 apartments on a once industrial strip of Queens land known as Hunters Point South, where Newtown Creek enters the East River.

At least 60 percent of the apartments would be reserved for families earning $63,000 to $130,000 a year. Although construction is not scheduled to begin until 2012, the project would mark the first section of a waterfront community of 5,000 apartments with shops, a school and a 10-acre public park.
Some 40 percent of the units would be at market rates. Note that, with Atlantic Yards, 35 percent (2250 of 6430) would be subsidized and 65 percent market-rate, though if there are affordable condos the subsidized number would rise slightly.

In both cases, the high-end subsidized units would be at or near market rates.

With Atlantic Yards, unlike Hunters Point South, about 13% of the total units (900) would be low-income.

Of course, it's unclear whether the total for either project will get built as announced, but consider that soliciting bids for multiple parcels provides a lot more competition. With Atlantic Yards, the state partnered with Forest City Ratner, giving very gentle deadlines to complete the project.

The RFP

Here's the 305-page Request for Proposals, courtesy of the Observer's Eliot Brown, who filed this report.

Note this requirement:
Comparable Development Experience
At least one Principal of the Applicant must have comparable development experience. “Comparable Development Experience” means the successful completion, as an at-risk developer, of at least two residential projects of at least 200 units in mid- to high-rise buildings in New York City within the seven-year period preceding the deadline for the submission of Proposals in response to this RFP. The Proposal shall include a sample development pro forma from such a project. [Here's HPD's Pro Forma.]
I doubt Forest City Ratner would have qualified. Yes, it has recently built 80 DeKalb Avenue, a mostly luxury tower in Brooklyn, but seven years ago, when the project was announced, it hadn't. Parent Forest City Enterprises built the Queenswood Apartments, a subsidized project in Corona, in 1989.

A pro forma would have had to explain how much the developer expected to earn. That was notoriously missing from Forest City Ratner's bid to the Metropolitan Transportation Authority for the Vanderbilt Yard.

City contribution

According to the Times:
The city is making a substantial commitment to the project, having bought the land from the state last year for $100 million.

It has budgeted an additional $175 million for toxic cleanup, the park and a network of roads, sewers and electric lines, although only $60 million would be spent to prepare the first two parcels for construction.
Wait a sec. The city has already put in $100 million for land for Atlantic Yards, but it didn't get to keep the land. It added $105 million for infrastructure, then shifted $31 million to land, making it ever more likely future mayors will be asked to pay for infrastructure.

Yes, much of that would serve the arena, but it would serve the rest of the project, as well. (For example, land for the arena block also would be used for housing.)

Per unit subsidies

And how much would the city provide per unit? According to the Times, the city should provide about $90,000 for each of the first 600 subsidized units at Hunters Point South--much more than the $54,000 per unit once claimed.

What about AY? We've heard about housing bonds (perhaps $1.4 billion for the project) but not direct subsidies. The New York City Housing Development Corporation's New Housing Opportunities Program (New HOP), which could be used for the middle- and moderate-income housing, states:
In addition to providing the bond financing to fund the first mortgages of developments financed under the initiative, HDC would provide $55,000 to $85,000 per unit as a second mortgage at 1% for the moderate and middle-income units in the development.
The Mixed-Income Program, which also includes low-income unites, states:
The tax exempt first mortgage may be financed with a combination of “private activity” bonds, which qualify the low income units for as of right “4%” Federal Low Income Housing Tax Credits, and “recycled” bonds which provide a tax exempt rate for the middle and market rate units but do not bring tax credits.

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