What delayed buildout means: Atlantic Yards was supposed to stem the tide of gentrification. Instead, it pretty much surfs it.

The deadline for comments on the Draft Supplemental Environmental Impact Statement is today. Also see coverage of the 2006 analysis of displacement.

The delay in delivering affordable housing may be the biggest flashpoint, and biggest headache, for Empire State Development (aka Empire State Development Corporation), the state agency overseeing/shepherding the Atlantic Yards project.

Affordable housing was the project's biggest selling point, as promoted by developer Forest City Ratner in the flier excerpted at right.

Given the choice of people pictured, the flier seems to have been pitched mainly at black Brooklynites, whose ranks in the neighborhoods near the Atlantic Yards site have been steadily decreasing and may have placed significant hope in the project.

Now, the extension of the project deadline from a long-professed ten years to a potential 25 years means that such housing slips away for two reasons.

Not only might residents lose their unregulated apartments as rents rise over time, they become less likely to qualify for subsidized units as the rise in Area Median Income (AMI), the index for affordability, outpaces their incomes.

After all, the wealthiest cohort of households in the ¾-mile study area has already more than doubled, from 16% of the population in 2000 to 34.5% of the population in 2011.

It sure sounds like a problem.

Oddly enough, in the court-ordered Draft Supplemental Environmental Impact Statement (Draft SEIS), that common-sense conclusion--that Atlantic Yards might contribute to "indirect residential displacement"--gets waved aside.

All this validates Forest City Ratner's strategy, which was to over-promise, saying it could build the project in ten years, with affordable housing and union labor. The developer faces no penalties for such promises.

Later, CEO Bruce Ratner claimed that ten years was never supposed to be the timetable. He also claimed that high-rise project with union labor and affordable housing was financially untenable.

Now, with a new joint venture partner/overseer, the Chinese government-owned Greenland Group, Forest City (echoed by ESD) says Atlantic Yards may proceed much closer to the initial timetable. But the state has imposed no new deadlines.

Surfing gentrification

How does the displacement problem get swept away? Empire State Development says a delay in public benefits does not determine significant adverse environmental impacts.

So they don't have to compare a ten-year buildout with a 25-year buildout. (The review was ordered to analyze the impacts of a 25-year buildout, which ESD failed to do when it approved the project in 2009, thus misleading the public.)

They do compare the 25-year buildout with the claimed likely scenario should Phase 2 of Atlantic Yards not be built. And, because the results would be fairly similar, they say it's no big deal.

Translation: Atlantic Yards was supposed to stem the tide of gentrification. Instead, it pretty much surfs it.

That, actually, was the claim in 2006, as well. It's even more glaring now, since the ride could take much longer.

Advocates in a bind

The new delay has put Atlantic Yards proponents like Bertha Lewis, who as leader of New York ACORN signed the affordable housing deal, in something of a bind. 

"If I could stop one iota of gentrification, I’ll do it," Lewis declared 2/28/06, explaining her decision to support a project that bypassed local review, used eminent domain, and--critics would say--was out of scale and extremely dense.

After all, supporters' reasoning went, Atlantic Yards would produce more subsidized housing than the Downtown Brooklyn rezoning and other developments in nearby neighborhoods, the product of a city government that cared more about building than about equity.

But their partnership with Forest City Ratner means they don't criticize the developer's contribution to the delay. Rather, Lewis has echoed Forest City's talking points in blaming project opponents, critics, and neighbors.

That's produced the curious, not-quite-consensus in which the latter push for the project to be built within the promised ten years, while Lewis and project supporters urge hands off the developer.

The meaningless of time

In December 2010, I called it "the meaninglessness of time." As summarized by a judge, the ESD had claimed that "Whatever the pace may be for the delivery of the many public benefits of the Project, the nature of those benefits remains the same."

Buy the pace of benefits can, in fact, change their nature: surely affordable housing, tax revenues, and blight removal mean more in a decade than if they take 25 years.

The SEIS scope: denial

In comments on the Scope for the SEIS, the ESD was asked directly about the delay. Terry Urban of the Council of Brooklyn Neighborhoods/East Pacific Street Block Association cited the belief that "the impacts of delayed benefits will be shown to be appreciably different over 25 years than the 10-year assumptions provided." (See Comment 28.)

The response: a project's socioeconomic benefits "are not the subject of a CEQR [City Environmental Quality Review] analysis of potential significant adverse impacts, and in general, the delay in the provision of public benefits announced and/or promoted by a project sponsor is not a determining factor in assessing significant adverse environmental impacts."

Huh?

Delayed benefits would be addressed only "if those benefits were mitigating factors precluding a significant adverse socioeconomic impact where one otherwise would have been disclosed."

That's a mouthful.

Apparently, as long as those benefits did not serve as mitigations to preclude a significant adverse socioeconomic impact, well, they don't count. And, at least for the purposes of the environmental review, they weren't.

But, in lay terms, the affordable housing was pitched as a mitigation: it was supposed to stem the tide of gentrification. That's exactly what Forest City Ratner and its partners pledged in the 2005 Community Benefits Agreement: affordable housing was aimed to “stem the growing trend of displacement through gentrification in Brooklyn.”

Nor does the SEIS study the impact on particular racial/ethnic groups--an issue for those who see gentrification as displacing longstanding black residents. Rather, it looks at income.

According to the Final Scope for the SEIS:

The analysis will focus on whether changes in background condition by 2035 and the introduction of the Phase II Program over an extended period of time would result in new or different significant adverse socioeconomic impacts as a result of... indirect displacement of residential population in the study area...

The answer, as described below, is no.

The decision not to compare the delayed buildout with a faster one makes that answer easy. So too does the decision--as I describe below--to ignore both the affordability of the new units and their size.

At the hearing, a warning

At the 4/30/14 public hearing to accept comments on the Draft SEIS, Michelle de la Uz, executive director of the Fifth Avenue Committee (a founding member of BrooklynSpeaks, which along with Develop Don't Destroy Brooklyn won the lawsuit that led to the court-ordered review), cited the need to create affordable housing before it's too late.

"The DSEIS specifically indicates that the impact of the delay as a result of the 25-year extended buildout scenario that FCRC proposed and ESDC approved will not be studied," she said. "As everyone knows, over 1900 of the 2250 affordable units, by far the biggest benefit in many people's eyes, is in Phase 2 of the project." (Actually, there's a minimum for Phase 1, but there could be more units.)

Though ESD and Forest City has made public statements about accelerating the housing, de la Uz said, they have not committed to a specific timetable.

"The agreement which dictates how much time they have to build the housing, including the affordable housing, continues to maintain that they have until 2035, or later, to complete Phase 2 of the project," de la Uz said. "ESDC's allowing that much needed affordable housing to be delayed more than 20 years has a dramatic impact on local residents, in particular African-American residents who otherwise would be eligible for the affordable housing lotteries... in the originally contemplated and approved timetable."

"Gentrification and displacement pressures in Community Boards 2, 3, 6, and 8 have increased to alarming rates recently, partly due to the Atlantic Yards project... and the arena being built," she continued.

de la Uz quoted the Draft SEIS about "dramatic increases" within the ¾-mile study area, and said that's having a dramatic impact on the low- and moderate-income population at risk of displacement.

(BrooklynSpeaks has long asked for the subsidized housing to be more affordable to Brooklynites. It also originally asked that two-thirds of the affordable housing be completed in ten years.)

 "Despite that statement, the ESDC refuses to study how the combination of the increases in rents and the delay in providing the affordable housing impacts specifically racial and socio-economic groups," de la Uz said. "That refusal, combined with ESDC's longstanding inability to hold the project publicly accountable, demonstrates a total disregard for the public interest."

People are facing eviction and displacement today, de la Uz said. "We cannot wait for the provision of affordable housing. We must be sure that the disparate impact that's happening, and has been happening for the last several years, is mitigated immediately."

As noted by BrooklynSpeaks before the hearing:

It’s not surprising that Atlantic Yards Draft Supplemental Environmental Impact Statement tells us that rents are increasing at a breakneck pace in areas around the project site (up 28% between 2000 and 2011), or that those neighborhoods are becoming far less diverse (the African American population decreased from 48.1% to 33.6% between 2000 and 2010)...
What is shocking is that the Empire State Development Corporation uses those numbers to justify a delay completing Atlantic Yards from 10 to 25 years. Its SEIS implies since gentrification is happening anyway, waiting another generation for the project—and its promised affordable housing—won’t hurt.
And it sounds like Forest City Ratner has forgotten its 2005 pledge in the Community Benefits Agreement to provide affordable housing at Atlantic Yards to “stem the growing trend of displacement through gentrification in Brooklyn.”

Looking more closely

Before I get to the reasoning, let's look at Chapter 4A of the Draft SEIS, Operational Socioeconomic Conditions (also at bottom), and a few graphics.

The first map shows the three-quarter mile study area, which extends east to Crown Heights and Bedford-Stuyvesant, north to Fort Greene, and west to Gowanus/Cobble Hill.

The map below describes the census tracts, in gray, with a potentially vulnerable populations. Note that none are adjacent to the Atlantic Yards site.

The third map charts recent residential developments (cross-hatched in gray) and lists numbered "No Build Projects" expected to be built no matter what. (The numbers are keyed to a list elsewhere in the SEIS, not to the number of units.)

The analysis

The document states:

Similar to the conclusions in the 2006 FEIS, this SEIS analysis finds that the Extended Build-Out Scenario would not result in significant adverse impacts due to indirect residential displacement.

It cites the 2006 FEIS conclusions (in italics below), then assesses how their validity in light of the Extended Build-Out Scenario.

1) The 2006 FEIS stated that the number of at-risk households in the study area had been decreasing and would probably continue to do so without the Project, concluding that it was probable that the number of at-risk households in the study area in 2010 and 2016 would be substantially lower.

Because this trend has continued, says ESD, it's reasonable to assume that the number of at-risk households has decreased, and will continue to decrease "in the future independent of the development of Phase II under the Extended Build-Out Scenario." 

Sure, but that answer ignores whether a faster buildout would be beneficial.

2) In 2006, similarities between the Project housing mix and the housing mix present in the 3⁄4-mile study area indicated that the Project would not substantially change the socioeconomic profile of the study area.

The answer here is both deceptive and evasive:

While background income conditions have changed since the 2006 FEIS, and would be different in 2035 as compared with 2016, the SEIS analysis indicates that the housing stock introduced by the Extended Build-Out Scenario would continue to be similar in tenure to the housing stock in the broader 3⁄4-mile study area. Phase II under the Extended Build-Out Scenario would add a higher proportion of affordable units than would be expected to be added to the study area in the Future Without Phase II (approximately 36 percent as compared with a 20 percent estimate for other development). The anticipated income distribution of households introduced by Phase II of the Project would not shift the distribution of households across income brackets such that the overall socioeconomic character of the study area would change significantly. Further, in the Future Without Phase II, no affordable units would be added to the Phase II project site.

(Emphases added)

There's been a key shift of emphasis. In 2006, the FEIS claimed:

the housing stock introduced by the proposed project would be similar in tenure, size, and affordability to the housing stock in the broader ¾-mile study area, indicating that the socioeconomic characteristics of the new population (e.g., in household income and household size) would not be markedly different from the characteristics of the population living in the broader ¾-mile study area.

Now the only claim regards tenure--i.e., the percentage of rentals.

In other words, ESD acknowledges implicitly that the Atlantic Yards housing stock would not be similar in size (there would be more smaller units) nor affordability (it would be less affordable).

But the area is large enough so the "overall socioeconomic character" wouldn't change significantly. (I'll look more closely at that below.)

As for "no affordable units" without the project, well, wouldn't it be likely that housing built as part of a government-subsidized project would include affordable units?

3) The 2006 FEIS stated that the substantial number of housing units to be added by the Project could serve to relieve market pressure in the study area by absorbing housing demand that might otherwise be expressed through increases in rents.

This is a tough one. After all, the delay in the completion of Phase II housing, the Draft SEIS is forced to acknowledge, would not, in the near term, "provide a supply of housing that could serve to relieve this market pressure."

But the delay would not have "short- or long-term significant adverse impacts on future housing market conditions in the study area," because the market is going up and there's additional housing supply that "would reduce any adverse effects of the delay in completion of Phase II housing units.

Really? Most would be market-rate, and such units don't reduce adverse impacts of fewer subsidized units, not unless there's a huge increase in supply.

Also, says ESD, the residential units in Phase 2 "could still serve to relieve upward rent pressure in the study area" and there's a required mix of 50% affordable units.

4) The 2006 FEIS stated that most identified at-risk households were more than 1⁄2 mile from the project site, and separated from the project site by intervening established residential communities with upward trends in property values and incomes and active commercial corridors.

The current analysis:

Trends indicate that intervening established neighborhood and commercial corridors cited in the 2006 FEIS have become even more established and would continue to limit the potential for the proposed residential development in Phase II of the Project to affect rental rates in tracts containing potentially vulnerable populations.

That's confusing, because more established commercial corridors would presumably attract new development and businesses, thus nudging those already marginal further away.

The SEIS does says that Inclusionary Housing Program Areas now in the study area "would protect affordable housing added or preserved under this program from market-driven rent pressures." We don't know how it's working.

A deeper look

The SEIS acknowledges ongoing gentrification, that "some of the most dramatic increases in income, home values, and rental rates have occurred in areas within the 3⁄4-mile study area that were identified in the 2006 FEIS as having low- and moderate-income population potentially at-risk of indirect displacement," including portions of Prospect Heights, Clinton Hill, Downtown Brooklyn, and Bedford-Stuyvesant.

There's been a steady, though small, increase in population in the study area, likely due the relatively small amount of new building and--I'd bet--the increase in the amount of space smaller households claim.

Demographic change

The document cites a racial reversal over ten years in the 3⁄4-mile study area, with the white population growing from 34.7% to 50%, and the black population declining from 48.1% to 33.6%:

As shown in Table 4A-2, in 2010, the largest proportion of study area residents were White (50.0 percent)1 Since 2000, the African American population declined in all subareas in the 3⁄4-mile study area, and most dramatically in Prospect Heights, Clinton Hill, and Bedford- Stuyvesant. Minority residents represented 56.4 percent of the total study area population in 2010, as compared with 71.3 percent in 2000.

Household characteristics: smaller families

The document shows that the average household size of 2.14 persons per household is lower than the average household size for Brooklyn and New York City as a whole, and has steadily decreased.

That's likely due to the increase of singles and couples in new units in neighborhoods like Downtown Brooklyn as well as the desire for more space among those better off.

Rising income

The rise in income in the study area is dramatic, significantly outpacing Brooklyn and New York City as a whole, where incomes didn't merely stagnate but declined.

The biggest boost was Downtown Brooklyn, " largely due to new high-density market rate residential construction." Neighborhoods like Park Slope, Bedford-Stuyvesant, and Fort Greene also experienced high increases in median household income, likely because of the competition for choice architecture.

According to the document, poverty has decreased, from 19.4% of the study area population to 14.7% between 2007 and 2011.

Why does Fort Greene have both a relatively high income as well as 22% of people below the poverty level? Two large public housing developments, Ingersoll and Whitman.

What about Prospect Heights?

According to the document, there have been significant changes in the neighborhood closest to Atlantic Yards, with an even more dramatic racial reversal

Between 2000 and 2010, the proportion of African American residents decreased by approximately 21 percentage points (from 61.6% to 40.4%), while the proportion of white residents rose more than 20 percentage points, from 22.7% to 43.2%.

The median household income in Prospect Heights was $70,721, a 12.7% increase over the median household income in 1999.

Changes in other neighborhoods

Other neighborhoods get similar analysis. Some tidbits:

• The minority population in Fort Greene decreased from 83.5 percent of the population in 2000 to 69.1 percent of the population in 2010. Most of this decrease was seen in the African American population, which decreased by approximately 16 percentage points. 
• median household income in Bedford-Stuyvesant increased by 18.3 percent between 1999 and 2007–2011, from $39,430 to $46,661.

Housing growth

The document notes that the "number of housing units in the 3⁄4-mile study area increased at a higher rate between 2000 and 2010 than in Brooklyn and New York City as a whole," as shown in the table below. Downtown Brooklyn gained the most housing units, Fort Greene the least.

Values rise

Things are looking up, for sellers and brokers, at least:

Based on discussions with brokers, in 2012 and 2013 the housing market in the study area experienced the most substantial increases in rents and sales prices since the 2008 downturn. Given these recent trends (discussed in detail below) current vacancy rates are lower than in 2010.
...Median home value and contract rent both increased in the 3⁄4-mile study area since the 2006 FEIS. Clinton Hill and Bedford-Stuyvesant experienced the highest increases in home values between 2000 and 2007–2011, while Downtown Brooklyn and Park Slope experienced the highest increases in median contract rent during this time.

Rents and sales

The document states:

According to a survey of 36 rental listings in the Real Estate section of the New York Times website conducted in April 2013, median monthly rental rates in Prospect Heights were $1,650 for studio, $2,525 for one-bedroom, $3,400 for two-bedroom, and $3,850 for three-bedroom units.

Note that Forest City expects--as of 2012 rates, which should rise by the time B2 opens in 2015--$3353 for a market-rate one-bedroom and up to $2740 for a subsidized unit. New building, prime location.

Another stunning number regards home prices in Bed-Stuy, which rose to $684,361 by 2011, a 145% increase over the 2000 value presented in the 2006 FEIS.

Who's vulnerable to displacement?

"According to the CEQR Technical Manual, at-risk populations are defined as renters living in units not protected by rent stabilization, rent control, or other government regulations restricting rents, whose incomes are too low to afford increases in rents," the document states.

So the 2006 FEIS estimated 2,929 unregulated rental units in 10 census tracts housing approximately 6,444 people potentially at risk of indirect residential displacement. However:

The 2006 FEIS concluded that due to real estate trends leading up to 2006, the areas within the study area identified as containing potentially at risk population had likely become more desirable places to live, and that household incomes had likely increased since 2000. Therefore, the 2006 FEIS concluded that many of the households living in unregulated units in the identified tracts would not have been actually at risk of indirect residential displacement.

In other words, they were already moving out. And that's confirmed in the new document, the Draft SEIS:

Changes in median household income and real estate trends suggest that many of the unprotected units identified in the 2006 FEIS have since turned over to a more affluent population. 

So there is a smaller vulnerable population.

What if there's no Phase 2?

The document acknowledges uncertainty:

It should be noted that—with the exception of known, planned projects—future market conditions in 2035 are more difficult to predict than the 10-year outlook that was the basis for analysis in the 2006 FEIS. Even in the 2006 FEIS analysis, the 2008 recession was not predicted. Over a period of 20 years, there are likely to be several real estate cycles, and any resulting downturns in the economy would affect local area conditions. However, prevailing market trends in the study area described in the 2006 FEIS that have continued since the 2006 FEIS would generally be expected to continue in the future with or without Phase II.

The document anticipates a loss of rent-regulated housing stock and some affordable unit in the Inclusionary Housing Program Areas.

But, given the "continuing and even accelerating" trends, as well as the mostly market-rate projects planned, "it is likely that the new population would reflect the socioeconomic profile of residents currently living in the wealthier subareas in the study area." 

That's because of limited supply, and Brooklyn neighborhoods coming both a destination for households priced out of Manhattan as well as a first-choice destination of its own.

Without Phase 2, and assuming that only 20 percent of new units would be affordable--and assuming that some 76 percent (1,443) units in Phase 1 would be market rate and 24 percent (479) would be affordable--"it is reasonable to conclude that incomes will continue to rise in the study area, leading to further rent pressures in the Future Without Phase II."

In other words, the wealthiest cohort would rise from 34.5% of the total number of households--well more than the 16% in 2000, to 40.7%.

So, just the 2006 FEIS concluded indirect residential displacement would continue to occur if Atlantic Yards were not built, now it's likely to continue if no Phase 2 is built.

What about the extended build-out?

According to the document:

The development of Phase II under the Extended Build-Out Scenario would introduce up to 4,932 residential units to the project site. Assuming an average household size of 2.14 persons per household, these housing units would introduce approximately 10,533 new residents to the study area. In total, the development introduced under the Extended Build-Out Scenario by 2035 would increase the population of the 3⁄4-mile study area by approximately 6.9 percent compared with the Future Without Phase II... Of the 4,932 housing units that would be introduced by Phase II of the Project, approximately 3,708 would be rental units. Up to 1,800 of the rental units would be affordable rental units.

The affordable units would be reserved for households earning between 30 percent and 160 percent of the Area Median Income (AMI) for the New York City metropolitan area.

A demographic shift

The document reiterates why the 2006 FEIS concluded that the Project would not result in significant adverse impacts dues to indirect residential displacement:

• An expected continuance of trends in rising incomes and rents in the study area; 
• Similarities between the socioeconomic profiles of new households introduced into the study area by the Project and the existing households in the study area; 
• The increase in the supply of housing units created by the Project serving to relieve, rather than increase market pressure in the study area; and 
• The distance and intervening established neighborhoods and commercial corridors between the Project and subareas with potentially at-risk households. 

(Emphasis added)

As I've written, the socioeconomic profiles would not be similar.

The document adds:

...In addition to introducing a similar proportion of rental units as compared with the existing housing mix, the units introduced under Phase II under the Extended Build-Out Scenario would not substantially affect the range of household incomes present in the study area or the proportion of households in various income bands. As described under “Future Without Phase II,” the 3⁄4-mile study area is expected to gain approximately 9,629 residential units by 2035 in the future with or without the development of Phase II under the Extended Build-Out Scenario, including the residential units built during Phase I. As described above, the analysis presented in Table 4A-13 assumes that 80 percent of these units exclusive of the Project’s Phase I units (6,166) would be market rate and 20 percent (1,541) would be affordable. The analysis also assumes that 1,443 of the 1,922 Phase I residential units would be market rate and the remaining 479 would be affordable.

The change, however, remains notable.

From 2000 to 2011, the percentage of wealthy more than doubles

Households earning $100,000 or more were 16% of the study area in 2000, according to the Final EIS, while the percentage as of 2016, without Atlantic Yards, was estimated at 21%.

Instead, by 2011, the percentage already reached 34.5%. Without Phase 2, the percentage would be 40.7%, a growth of 6.2 percentage points but an 18% increase.

With Phase 2, the total would be 42.9%--a larger percentage of wealthier households. The shift from 34.5% to 42.9% is 8.4 percentage points but represents a 24.3% rise.

The irony is that the future without Phase 2, at least with an extended buildout, would be slightly more affordable. After all, the goal of the project was to create more affordability. (We haven't gotten an estimate of the figure associated with a ten--year buildout.)

I'll repeat the dramatic numbers: as of 2000, according to the Final EIS, 16% of households in the study area occupied the highest income cohort.

By 2011, that more than doubled, to 34.5%.

That percentage will rise, with a delayed Phase 2 or without the project.

A public policy lesson

One lesson is surely that, for all the debate about Atlantic Yards, it was unwise to place so much hope in one project subject to a developer's extravagant promises and shifting plans, amid multiple economic cycles.

As I reported 5/29/09, longtime advocacy planner Ron Shiffman, an Atlantic Yards opponent, said  affordable housing “should be part of public policy” rather than part of a Community Benefits Agreement because it “allows the developer to literally buy” support for a project subject to special approvals, as with Atlantic Yards.

Rather, he said, there should be a level playing field. It's taken a long time to focus on that.