Monday, February 25, 2013

Housing advocates call for "real affordability," warning of mismatch between subsidized apartments and local incomes; mismatch long criticized regarding Atlantic Yards

A major affordable housing advocacy group has just confirmed a citywide problem that Atlantic Yards critics have long identified: promised "affordable housing" would be unaffordable for most locals.

The organization proposes a tool to evaluate "real affordability," a measure that should raise questions about numerous promised "affordable housing" projects, including Atlantic Yards.

To recap: a major selling point for Atlantic Yards has been the promises of "affordable housing": 2,250 subsidized rental units among 6,430 overall apartments.

Or, as indicated in a promotional flyer produced by Forest City Ratner in 2006 before the project was trimmed slightly: "over 6,800 units of badly needed mixed-income housing for  Brooklyn." The headline: "Atlantic Yards" Helping Solve Brooklyn's Housing Crisis."

But it wouldn't solve much.

As I wrote in 2006, when the proposed total was 6,860 units, 84% would go to households that earn more than the neighborhood's median income. Then the Council of Brooklyn Neighborhoods prepared a chart (left), comparing the household income distribution in the Atlantic Yards plan with the distribution in the 3/4-mile area around it.

As the chart indicated, 50% of the residents in that area had an income at or below $35,450--which was then 50% of Area Median Income (AMI)--while only 13% of the Atlantic Yards households would fit in those categories.

Since 2006, those numbers have changed. The AMI, which also factors in affluent suburban counties, has continued to grow. Meanwhile, the income in the 3/4-mile area has surely gone up. (I can't evaluate whether that has decreased or increased the mismatch, but surely the mismatch remains significant.)

Real affordability

The report, Real Affordability: An Evaluation of the Bloomberg Housing Program and Recommendations to Strengthen Affordable Housing Policy, was issued by the Association of Neighborhood Housing Developers (ANHD).

The ANHD's members include non-profit organizations on both sides of the Atlantic Yards debate like Mutual Housing Association of New York (ACORN's successor) and the Fifth Avenue Committee and Pratt Area Community Council. Perhaps because of the delicate diplomacy involved, the report does not mention Atlantic Yards.

The key finding is that sheer numbers--a goal of 165,000 units created or preserved--mask a troubling reality:
Mayor Bloomberg’s New Housing Marketplace (NHMP) affordable housing development plan is an impressive achievement that took great strides towards creating affordable housing opportunities for residents....Yet despite the thousands of housing units created and the multi­billion dollar investment, many City residents and housing advocates believe that the Bloomberg housing production plan was implemented with significant flaws... not in the number of units created... While the City has committed to and developed a significant number of affordable housing units under the Bloomberg administration, about two-­thirds of New Housing Marketplace units are too expensive for the majority of local neighborhood residents.
Rhetoric about "affordable housing" deserves to be dissected, according to the report:
There is a clear need for more housing options throughout the City, across all income levels. However if these options aren’t affordable, the “affordable housing” is simply “housing.” The City should not use taxpayer subsidies to build housing unaffordable to the local community – indeed unaffordable to the majority of New Yorkers overall – and then call it “affordable housing.”
The city's response

The report was summarized in a 2/14/13 Times article headlined Some ‘Affordable’ Units Too Costly, Report Says. It contained a response from the city:
Eric Bederman, a spokesman for the Department of Housing Preservation and Development, said the report “oversimplifies the issues” by looking only at income and unit sizes to determine the city’s housing needs, while the department also considered factors like whether people were paying too much of their income to rent. For instance, he said, census data showed that nearly two-thirds of low-income households that did not qualify for public housing or other subsidies paid more than 30 percent of their income to rent.
That's a bit confusing: is the city arguing that, because it's still hard for middle-class people to find affordable housing, it's fine to focus on programs that serve the latter population, even if such programs don't necessarily serve the neighborhood?

Changes outpace policy?

It may be that the administration is faced with a city that is shifting fast.

In City Limits, Jarrett Murphy wrote A Housing Problem … Or an Income Problem?, noting that "from fiscal year 2004 through fiscal year 2011, 82.9 percent of units produced under the mayor's plan served households making less than 80% percent of [AMI]," which was more than the initial goal of 68%.

So if unaffordability outpaces policy, what's going on? Murphy cites the rising AMI and the challenge of making housing numbers work--as with the Atlantic Yards negotiations for higher-income subsidized units--but says it's ultimately it relates to jobs:
Both the flaws in AMI and the math challenge underlying all affordable housing point to an underlying issue: The housing crunch in New York is as much an income problem as it is a housing problem. In the past six years median income for a family of four in the city has increased 8.7 percent, while the inflation rate for housing has run about 16.7 percent
From the ANHD report

Below, a summary of the problems: not only are the units too expensive for most locals, they're concentrated in relatively few places, and they're not permanent.


The solutions

Not only should units be more affordable to locals and permanent, according to ANHD, they should be distributed in more neighborhoods, include a variety of sizes, and add community facilities.

AY reflections: location

Though Atlantic Yards would be too expensive for most locals, in one way it does respond to the policy prescription, by adding subsidized units in districts that lack them.

For example, the chart at left indicates that, while Community Board 2 in Brooklyn has 9.7% of the borough's subsidized units in the New Housing Marketplace Plan, CB6 has 1.2%, and CB8 has 4.9%.

So Atlantic Yards, at least if the units are delivered rapidly rather than over the 25 years allowed, could help balance the share in those three districts better.

The impact, according to the map below, would be greatest in middle-income Community District 6 (the only district in white in the central-west portion of Brooklyn in the map below), which has a small pice of the Atlantic Yards site.



The report states:
This lack of low­ income housing in our wealthiest neighborhoods illustrates a mismatch– while the City often builds housing targeting households with incomes higher than what is average for a neighborhood, the City rarely builds housing geared towards incomes below what is typical for neighborhood residents. In fact, only 2.9% of  low­ and moderate­-income housing (120% AMI and below) was built in middle­ and upper-­income neighborhoods (120% AMI and above).

AY reflections: apartment size

Atlantic Yards would fare less well, however, under another index of evaluation: unit size. Only 20% of the subsidized apartments in the first tower would be 2-bedroom units, with 80% of the subsidized units studios or 1-bedroom units. (The announced goal, according to a Memorandum of Understanding signed with ACORN, was 50% of the units, in floor area, devoted to 2- and 3-bedroom units.) This could change, of course, as Forest City lowers its costs with modular construction.

By contrast, according to the report, less than 38% of the subsidized units citywide between FY 2004 and FY 2010 were smaller units.


AY reflections: subsidy policy

The report does validate criticism of city policy by ex-ACORN officials, who pointed out that city policy, which assigns subsidy by unit rather than by number of bedrooms, advantages smaller units. (On the other hand, they knew that when Atlantic Yards was proposed.)

The report states:
This uniform subsidy regardless of unit size is an unnecessary impediment to building larger unit sizes. In the future, the City must take a more nuanced approach to constructing affordable housing, in this case taking into account that different size households have different affordability needs and different unit sizes require different subsidy levels.
Why is AMI so high?

The report cites three facts that skew HUD AMIs higher than actual median incomes for New York City, including not only wealthier suburban counties, but also a “high housing cost” adjuster that "artificially raised the AMI by 26.1% in 2010" and the policy of using a multiplier to estimate the incomes for households that are larger or smaller than the four-person statistical base.

However, while HUD suggests that a single­-person household should make 70% of the four-person household, in reality, the figure is 49%.

This leads to some anomalous results:
For example, the HUD calculated median income for a family of four in New York in 2010 was $79,200. Yet, the actual median income for a 4­-person household in New York City was only $62,799, over 20% lower.


Note that median income in Brooklyn is only 62% of overall AMI, which indicates a significant mismatch between affordability to locals and to the region. This mismatch was hardly acknowledged by ACORN, which brought mainly low-income followers to testify in favor of Atlantic Yards, with little recognition that only 900 of 2,250 units--would be at 50% of AMI or below.

Recommendations: deeper affordability

Note that the focus on deeper affordability, recommending more units below 40% of AMI. In the first Atlantic Yards tower, only 11 of 181 subsidized units would be between 30-40% of AMI.


Recommendations: make it permanent

The report recommends that any new project that uses city-owned land be affordable for 30 years. A good part of Atlantic Yards would be on formerly city- and state-owned land, while the city reimbursed Forest City Ratner for $131 million of land purchases.

However, according to the Community Benefits Agreement, the affordability would last 30 years--though that would be mitigated by rent stabilization, which caps rent increases.


Recommendation: nonprofit organization + local impacts

The report recommends using "responsible, local not-for profit developers with community based boards," because they can better reflect the neighborhood--a process obviously bypassed with Atlantic Yards. (This recommendation also appears in an ANHD policy brief.)

For-profit developers like Forest City Ratner have more capacity--but they also negotiate relentlessly to meet "required return hurdles"--profits demanded by their boards.

And while Atlantic Yards would have space for a health care facility and open space, evidence suggests the capacity would go mainly to the new residents.

Moving toward Real Affordability

As the graphic below indicates, Real Affordability factors in the local AMI, the length of term, and the impact of ancillary facilities.


No one's plugged the numbers in regarding Atlantic Yards. As my analysis above indicates, the project would get some credit for bringing some low-income units to (a tiny piece) of a middle-income neighborhood.

But the skewing of subsidizes toward middle-income units--a skewing that seems up for negotiation with each building--would decrease the credit.

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