Saturday, June 28, 2014

Disconnect with needy? In two new 100% affordable Atlantic Yards towers, 50% of units would go to households earning up to $142K [updated]

Note correction on income ranges, in second paragraph. 

There's always a catch, isn't there?

It turns out that some 65% of the units in the two all-affordable buildings to be expedited for Atlantic Yards would be weighted toward middle-income households earning at least $125,000 for a family of four. Most of those middle-income units, and 50% of the each building, would go to households earning more than up to $142,000 for a family of four.

[Updated and corrected: While I originally wrote "more than $142,000," that was incorrect if we look at 2013 incomes, since that's the approximate income ceiling. It is quite possible that the income floor will have risen to or near $142,000 by 2016.]

If they're paying 30% of their income in rent, a two-bedroom unit could easily cost more than $3,000. Smaller middle-income families, in a one-bedroom, would pay about 17% less, based on the pattern for the first tower.

That distribution of units departs severely from that long promised for Atlantic Yards, in which middle-income households would get only 40% of the affordable units.

Also, only 30% of the subsidized units in the next two towers would go to low-income households, though they've been promised 40% of the affordable rentals, or ultimately 900 of the 2250 affordable units.

The new configuration hollows out the center, leaving just 5% of the units in the two new towers for moderate income households, rather than the 20% long promised.

Departure from promises

While middle-income households may need a boost, such "workforce housing" is not why ACORN gathered its low-income followers to rally for the original Affordable Housing Memorandum of Understanding (MOU), signed in 2005 with Atlantic Yards developer Forest City Ratner.

Also, such households likely do not fit the profile of the potential plaintiffs (including a teacher's aide) gathered by the BrooklynSpeaks coalition for the planned housing discrimination lawsuit that forced the city, state, and Forest City to agree to expedite the affordable housing ten years faster than the 2035 "outside date" agreed to in 2009 after a ten-year buildout was long promised.

"[T]he community has been crying out for affordable housing now,” Michelle de la Uz, executive director of the Fifth Avenue Committee, told the Times. 

It's not clear if future towers would contain disproportional low-income units, or whether the promise will not hold.

The details

Crain's New York Business has the details:
The breakdown of the 600 units is as follows: 5% will be for families earning up to 40% of AMI [or $34,360 of the Area Median Income for a family of four), 25% for those earning 60% of AMI [or $51,540], 5% for those earning 100% of AMI (or $85,900], 15% for those earning 145% of AMI [or $124,555], and 50% for those earning up to 165% of AMI [or $141,735].
(Note that the ceiling for low-income households has been raised from the promised 50% of Area Median Income, or AMI, to 60%. Also note those numbers will rise significantly by the time the buildings open in 2016, at the earliest. The income ranges are adjusted for smaller or larger households.)

By weighting the affordable units towards those able to pay $3000 for a two-bedroom unit--a bargain for a new apartment near Downtown Brooklyn but hardly a service to the neediest--the city will make it easier for developer Forest City Ratner to profit without having to devote too large an amount of direct or indirect subsidies.

A configuration with more low- or moderate-income units would require more subsidies. But the city can still count these new units toward Mayor Bill de Blasio's ambitious goal to create or preserve 200,000 units of affordable housing.

I don't understand why de Blasio could say, "The agreement means two 100-percent affordable buildings will go in the ground starting next year, with units serving a more diverse range of families."

In an interview in 2007, when asked if those earning six figures should get subsidized housing, de Blasio responded, “Definitely below six figures. Absolutely below six figures. Over eighty [thousand] I don’t think is what I’m thinking about, although there may be some exceptions.”

A bargain?

Crain's reported:
Forest City Ratner will receive $11.8 million in city subsidies for each building. Under the Bloomberg administration, the developer had netted a similar amount for the construction of 181 affordable units in B2, the under-construction modular-building adjacent to the arena that will contain a total of 363 apartments when finished.
In essence, the city is paying the same amount of money for twice the number of affordable units. Mr. de Blasio called the investment “remarkable.”
I don't think the city is paying the same amount of money and getting twice as much because 1) the city is also allocating tax-exempt affordable housing bonds (unspecified, as of now) and 2) it's not getting the same distribution of affordable housing units.

Here's the distribution for the first tower.

Note that 40% of the affordable units would be low-income, with 50% of AMI (not 60%) as the upper bound. Also, 40% of the affordable units would be middle-income, split evenly between 100-140% of AMI and 140-160% of AMI, rather than weighted toward the upper band, as with the two new towers. And the upper band now stretches to 165% of AMI.

(None of the press releases issued yesterday revealed the income ranges. Public Advocate Letitia James yesterday told a TV interviewer, "To negotiate this deal behind my back is totally unacceptable." And while it's understandable that negotiators might exclude a longtime opponent of the project, none of the elected officials who endorsed this deal--including Rep. Hakeem Jeffries, Assemblymember Walter Mosley, and Council Members Laurie Cumbo and Brad Lander--addressed the income distribution.)

Details emerge

The Daily News reported:
Most of the “affordable” housing units to be built at the long-stalled Atlantic Yards project will go to families making at least $100,000 a year — a reflection of the high cost of living in the city, officials said.
Nearly two-thirds — 65% — of the 600 units in the two planned buildings in Brooklyn are set aside for families of four making six figures and will have rents that start at around $2,600, under a deal to speed up construction at the site that Gov. Cuomo announced Friday.
There will be 300 units for families whose income is around $130,000 a year. 
Projected rents for first tower, B2, as of 2012
When it opens in 2015, rents will be higher
The two all-affordable buildings will open
after that, with no market-rate units
That's not merely a reflection of the high cost of living but a decision by the city to devote a finite amount of subsidy while still being able to claim the building is "affordable."

Despite the Daily News formulation, I doubt that 390 (65%) of the 600 units will go to families of four earning six figures, since that suggests that there would be 390 two-bedroom units.

It's unlikely that family-sized units, which are more expensive to build, will represent a majority of the buildings; the Housing MOU set a goal of 50%--in floor-area--for family-sized units.

Rather, I suspect that 390 units--ranging from studios to three-bedroom units--will go to the income bands that include families of four earning six figures. (Smaller households can earn less.)

Also, I think rents will go over $3,000.

Calculating rents

Rent is based on Area Median Income (AMI), a federal formula that does not rely on Brooklyn or even New York City income but wealthier suburban counties.

The Atlantic Yards Housing MOU set an upper bound at 160% of AMI--or, based on 2013 formulations, $137,440 for a family of four. However, city housing programs allow 165% or 175% of AMI, and the former is being used in this case.

Click to enlarge
Indeed, a document in the Atlantic Yards Development Agreement signed in 2009 contemplated multiple scenarios for the first tower, beyond the 50% market/50% scenario that was eventually adopted.

The configuration for the first tower, as indicated in the graphic at right, could have included 60% to 80% middle-income units, all considered affordable, at 165% of AMI.

These new towers fit that range, with 65% middle income units.

The rest of the units

As the Daily News reported:
...Moderate income families — who make between $67,000 and $100,681 a year — will get around 5% of the remaining units [30] and pay about $1,700 a month in rent.
And 180 units will go to families who make $30,000 to $40,000 a year. Their rents will be from $700 to $1,100.
The income mix currently contemplated

According to the Affordable Housing MOU, as shown in the graphic below, 20% of the overall rental units, or 40% of the affordable ones, would go to low-income households earning 30% to 50% of AMI.

Another 10% of total rentals, or 20% of affordable rentals, would go to moderate-income households earning 60% to 100% of AMI. And 20% of total rentals, or 40% of affordable rentals, would go to middle-income households earning 100% to 160% of AMI.

The figures below are based on 2005 AMI levels, which have shot up far faster than local incomes, which is one reason for the urgency of the housing deal.


The income mix originally promised

Note that the above chart represents one of three potential scenarios posited in 2005. When the housing deal was first announced, the chart below was presented as the scenario.

While the percentage of low-income housing was the same, there would have been twice as much moderate income housing--AMIs from 60% to 100%--and half as much middle-income housing, with AMIs over 100%. Also note that the AMI would be capped at 140% rather than 160%.

But this formulation, while attractive as a public relations strategy, was not in Forest City Ratner's economic interest.


The unhelpful Times

The Daily News and Crain's offer far more detail than the unhelpful New York Times scoop, which stated vaguely:
The new agreement specifies that a portion of affordable units would be for low-income families of four that make $48,000 or less, moderate-income families earning up to $88,000 a year, and middle-income families earning up to $104,000.

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