Skip to main content

Orwellian, almost: that first Atlantic Yards tower most likely would have most "affordable" units at market rate

Remember, the Empire State Development Corporation (ESDC) asserts that "Whatever the pace may be for the delivery of the many public benefits of the [Atlantic Yards] Project, the nature of those benefits remains the same."

I wrote yesterday that such a claim was poppycock--of course affordable housing and tax revenues arriving at a vastly slower schedule would make a difference.

Here's another reason why: the nature of those benefits, at least when it comes to the first subsidized housing units, would in fact change.

Remember, the Atlantic Yards affordable housing was sold to the public and supported by ACORN as a way to help the poor. Forest City Ratner attorney Jeffrey Braun swore in a 1/25/08 affidavit (p. 5) in a case challenging the Atlantic Yards environmental review:
“Furthermore, pursuant to an innovative Community Benefits Agreement, the FCRC affiliates that sponsor the project are contractually bound to provide a wide array of far-reaching benefits to the historically most disadvantaged segments of Brooklyn’s communities…”
(Emphasis added)

Not only is that claim contradicted by the fact that a majority of the subsidized units would be unaffordable to ACORN's constituency, it's quite likely that the first building would be even less affordable to that constituency.

In five of the six scenarios contemplated for the first housing tower, the monthly rent for most of the affordable apartments would range from $2287 to $3790, depending on household size. Those are the kind of unaffordable rents that ACORN members have cited in arguing for the project.

From initial claims to new plan

Before I explain the potential configuration of that first tower, let's look back at the housing promises.

According to the official plan, for each of the 50% affordable rental buildings, there would be 450 units in each of the top three categories, or bands, aimed at moderate- and middle-income households. Beyond those 1350 units, there would be 225 units in the first low-income band and 675 units in the second.

Rent is based on Area Median Income (AMI), which is regional--it includes Long Island, Putnam, Rockland, and Westchester counties. Thus it significantly exceeds both New York and Brooklyn median income.

Let's look at 2006. According to the chart below, with an AMI of $70,900, a four-person household would have to pay the following:
  • Band 1 (30-40% AMI): $620
  • Band 2 (41-50% AMI): $797
  • Band 3 (60-100% AMI): $1418
  • Band 4 (101-140% AMI): $2127
  • Band 5 (141-160% AMI): $2658
One other adjustment is needed. Given that the rent was based on the midpoint annual income of each band, or category, the rent for a four-person household at 100% of AMI would not be $1418 but actually $1772.50. (The rent for a four-person household at the highest AMI, 160%, would be $2836.)

Atlantic Yards Rents July 06

Updating to 2010

When the MOU was signed 5/17/05, the AMI was $62,800 for a family of four.

When Forest City Ratner and ACORN held an affordable housing information meeting in 2006, the AMI was $70,900, as indicated on chart above.

The AMI kept rising. It was $76,812 in 2008, and $77,400 in 2009.

Now it's $79,200 for a family of four.

What does that mean? With an AMI of $79,200, a four-person household would have to pay the following (at the top of each band from the MOU):
  • Band 1: $792
  • Band 2: $990
  • Band 3: $1980
  • Band 4: $2772
  • Band 5: $3168
The first building

But the first building would not have the configuration in the MOU. Even in the best case, it would be slightly off. In five other cases, it would be vastly different.

Take a look at the graphic below--right click it to open it in a new window--which surfaced in January as part of the master closing documents.

As I wrote in January, it offers six scenarios regarding affordable housing.

In Scenario 1, half the units would be market rate, 10% at 150% of AMI, 10% at 120% of AMI, and 10% at 80% of AMI--essentially the midpoints of the top three bands in the MOU.

However, rather than divide the bottom two bands as per the MOU on a 3-to-1 basis--15% at 50% of AMI and 5% at 40% of AMI--the scenario contemplates only 3% at 40% of AMI and 17% at 50% of AMI.

That's a small but not insignificant change, disadvantaging the most disadvantaged.

And this is the most affordable scenario.

Rents going up

The other five of the six scenarios contemplate buildings that would be all subsidized housing, but the configuration would not look anything like the range contemplated in the MOU.

In other words, developer Forest City Ratner would get credit for affordable housing toward the promised 2250 units, even though a majority of the subsidized housing (60% to 80%) would be at 165% of AMI, a figure not even contemplated in the MOU.

(Remember, when first announced, the highest income was 140% of AMI. That quickly rose to 160%.)

At 165% of AMI, here's what different households would pay:
  • 1-person: $2287
  • 2-person: $2614
  • 3-person: $2940
  • 4-person: $3267
  • 5-person: $3528
  • 6-person: $3790
That $2287, for example, is well above the price of a studio in Downtown Brooklyn--in the $1550 range at the Brooklyner. Even a one-bedroom at Forest City Ratner's 80 DeKalb Avenue goes for about $2500, which is less than a two-person household at 165% of AMI would pay in that first AY tower.

The other units

Here's what a 4-person household would pay, using the current AMI and the top of the band:
  • 150%: $2970
  • 130%: $2574
  • 120%: $2376
  • 100%: $1980
  • 80%: $1584
  • 60%: $1188
  • 50%: $990
  • 40%: $792
When the building would start

At a public meeting on February 24, Forest City Ratner executive Jane Marshall said, "As we've stated publicly, we intend to begin design of the first residential building in such a way that it can break ground in the fourth quarter of this year."

However, as I reported in March, that's when the design phase will begin.

Bloomberg's Orwellian promise

The March 11 arena groundbreaking press release from Mayor Mike Bloomberg's office stated:
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.
That sounded like a city victory.

At a City Council hearing in March, Seth Pinsky, President of the New York City Economic Development Corporation, declared, "The developer has promised, thanks to our efforts, that the first building will be an affordable housing building with at least 50% affordable units."

That's Orwellian, almost. There's likely little market for a speculative building without subsidies, so the crucial commitment is not from the developer but rather from the city and its housing agencies to provide sufficient subsidies.

And so Forest City Ratner would gain both subsidies and essentially market rents.

The bottom line

Would "the nature" of Atlantic Yards benefits remain the same?


Would these units offer "far-reaching benefits to the historically most disadvantaged segments of Brooklyn’s communities"?



  1. Surprise, surprise. An old tale in NYC. Squeeze, squeeze, squeeze. As a native New Yorker I have never stopped feeling like someday I will be forced to leave permanently. Only those who feel secure about their housing situation ever feel that new development and rates set are affordable. All business as usual. Keep reporting. Maybe someday, somewhere someone will care.


Post a Comment

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…