Tuesday, March 13, 2012

Stalled New Domino project said to be for sale. As with Atlantic Yards, there's a documentary. And the city stonewalled on affordable housing.

Um, remember the New Domino plan, the second-biggest project in Brooklyn, a special rezoning for the Williamsburg waterfront that allowed more density for the developer in exchange for--of course--affordable housing?

The project that relied on a celebrity architect and churches that could organize their members to press for the project? 2200 apartments, with 660 of them subsidized? The carrot of new waterfront open space? A historic structure preserved and transformed?

Well, in a not-completely surprising echo of Atlantic Yards, the project is A) stalled for 18 months after approval, though not without promise, and B) inspiring a documentary. (I wrote in July 2007 about the initial echoes.)

But now, according to the Commercial Observer, the site's for sale:
“We are pursuing various options that will achieve our goals: to realize value for ourselves and our partners, and to insure that development is consistent with all project entitlements,” a statement from a company spokesman read in response to The Commercial Observer.
Note that the project, when built, may be worth $2 billion, but the sales tag surely isn't that number.

The Domino Effect

The Domino Effect, by Daniel Phelps, Megan Sperry, and Brian Paul, is in its finishing stages, but the trailer tells a story that is not unfamiliar.

What's especially sobering--and I don't know how much is in the film--how activists in Williamsburg tried to learn from Atlantic Yards but still got shot down. As I describe below, they could not get guarantees of the promised affordable housing or get clear answers on why the rezoning was justified.


The Domino Effect (Trailer) from The Domino Effect on Vimeo.

The promise

Below, a page from the annual report of the Community Preservation Corporation, which stated "a projected starting date" at the end of 2011:

A change at the top

In an 11/9/11 press release, the developer announced that the executive with overall responsibility for New Domino was leaving, but also staying:
After leading the company for 31 years, Michael Lappin will be retiring as President and Chief Executive Officer of the Community Preservation Corporation (CPC) to pursue other opportunities. He has agreed to stay on in his current role and work with CPC’s Board in the selection process for a successor and to assure a smooth transition. Mr. Lappin will also continue to shepherd the New Domino project forward so it can fulfill its promised benefits for the community and the city.
Who'd they get? The biggest fish possible. In a 1/10/12 article headlined Former housing commish to head big developer, Crain's New York Business reported:
Former city Department of Housing Preservation and Development Commissioner, Rafael Cestero, will lead Community Preservation Corp. and its subsidiary CPC Resources Inc., the affordable housing financier and developer announced Tuesday. The move follows a short stint at L+M Development Partners.
Mr. Cestero, 43, will assume his new role as president and CEO of CPC and its subsidiary CPC Resources on Jan. 17.
....Mr. Cestero will be taking over CPC Resources as it begins to tackle one of the city's largest projects—the redevelopment of the former Domino sugar factory site on the waterfront in Williamsburg, Brooklyn. CPC Resources will build a mixed-use property that will include affordable housing.
“My number one focus will be on growing CPC's core business of originating and servicing construction and permanent loans for affordable housing,” said Mr. Cestero, adding that like everyone else, the company has not been immune to the economic downturn. “Domino is a big signature project for CPC and the city and I look forward to figuring out how to move forward,” he said, adding that CPC is in the process of planning the Domino project.
Here's the 1/10/12 press release, which contains congratulations from Shaun Donovan, Secretary of the US Department of Housing and Urban Development, Mathew M. Wambua, Commissioner, New York City Department of Housing Preservation and Development, and Marc Jahr, President of the City’s Housing Development Corporation.

Stonewall from the city on subsidy questions

Local critics of the plan tried to ask for guarantees regarding the project, or context regarding similar projects, only to be shot down. Indeed, Chapter 28 – Response to Comments on the Draft Scope of Work and DEIS of the Final Environmental Impact Statement indicates that city project review may be no more incisive than, as with Atlantic Yards, state review.

For example, one commenter asked "how the proposed affordable housing would be subsidized and allocated and how can the community be assured of such housing actually becoming available." Another asked "how much subsidy will be provided for each affordable unit and how this compares to other projects such as Atlantic Yards and Parkchester."

An organization involved in affordable housing, the St. Nicholas Preservation Corporation, suggested that the review "consider the extent to which the proposed development’s use of government subsidy for affordable housing would affect future availability of government subsidies for affordable housing."

All worthy questions. The response?
The DEIS will describe, to the extent known, the details of the residential development, including the construction timing, allocation of affordable housing units, and their qualifying income tiers. Comparison of this project’s sources of subsidy to those of other projects is outside the scope of this EIS.
Larger units?

Council Member Steve Levin commented that "unit sizes should reflect the needs of local families with two, three, or more children."

The response suggests that the Community Preservation Corporation would deliver:
For analytical purposes, the EIS assumes that the proposed project’s residential units would have an average size of 1,000 gsf. It is the applicant’s intent that these unit sizes would accommodate families with multiple children. In its letter to the CPC dated May 20, 2010, the applicant anticipates that the first phase of the proposed project (Site E) would include a unit mix of: 40 percent two bedrooms, 20 percent three bedrooms, and 10 percent four bedrooms. 
But there's a huge loophole, one being used, apparently, in the current plan for the first Atlantic Yards building:
As required under the Inclusionary Housing program, a project must provide a mix of affordable units that is either proportional to the market rate mix or includes at least 50 percent two bedroom units. The unit mix of future phases of the proposed project will be evaluated based on the then current affordable housing needs in the community
(Emphasis added)

Can it work?

Several commenters suggest that the CPC Resources and its partner, Isaac Katan, had never disclosed their financial projections and the viability of the plan. The response:
The requested financial information and details are beyond the scope of the SEQRA, CEQR, and ULURP processes.
Hardship justified?

Community Board 1 noted:
The applicant points to the significant costs associated with the project, including affordable housing, rebuilding of the wharf, preservation of the Refinery, and other factors. The applicant is, in effect, making a hardship argument. In the judgment of the Committee, the applicant has not demonstrated a unique hardship that would justify such a massive deviation from prior rezoning. 
The response:
Comment noted. Financial hardship considerations are beyond the scope of the EIS.
Guarantees included?

CB 1 also worried whether the guarantees would stand up:
It is imperative that there be solid guarantees for all components of the final project: percentage of residential square footage as affordable; permanent affordability; unit distribution (within broad ranges); cap on the total number of residential units allowed; total square footage of open space; additional upland connector; consultation with CB1 on any design modifications and on ongoing transportation analysis for FEIS; district-wide transportation study; developer contribution to the Greenpoint-Williamsburg tenant anti-harassment fund; job training initiative; local sourcing for materials and labor; LEED certification; and limit on size of retail units either in zoning/special permit language or in deed restrictions. 
The response was partly encouraging, but hardly substantial, leaving wiggle room, for example, regarding the percentage of affordable square footage:
The CPC approvals will specify the maximum residential square feet; define the total square feet of open space; include the additional upland connection; and commit the applicant to sustainability requirements. These components are described in Chapter 1, “Project Description,” of the EIS. Additionally, as reflected in the applicant’s letter to Brooklyn Community Board 1, a number of other listed items have been accepted by the applicant, such as job training; local sourcing for materials and labor, to the extent practicable; and willingness to allocate floorplates for a variety of neighborhood-oriented retail use.
Was there any analysis?

Check out this 5/3/10 article in the Greenpoint Star (by Daniel Bush, now of the Brooklyn Paper) about a 2006 city analysis of the project. The fundamentals in the analysis were no longer valid, but the article's central point lingers:
This new information raises questions about the developer's insistence that New Domino must be so large in order to provide the promised-for level of affordable housing.
Ultimately, those questions may be more political than financial, and unless there are ironclad guarantees, loopholes loom.

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