Wednesday, July 02, 2014

On Inside City Hall, Deputy Mayor Glen papers over change in affordable housing by saying those earning over $100K need housing; also hails 35% family-sized units

Appearing with Inside City Hall host Errol Louis last night on NY1, Deputy Mayor Alicia Glen and developer Bruce Ratner hailed the new agreement on Atlantic Yards housing.

Glen revealed that the two new towers to start this year would have more family-sized units than the first one under construction, a step forward, but artfully papered over a change in affordability,  a step backward.

Timing and delay

Leading off, Louis said he was "confused a little bit" about the promises that the 2250 affordable units would be finished by 2025.

"As I understood it, you had really up until 2035 to really build out all of the housing," the host said. "So when people said it was stalled, I was like, Nah, it may be too soon to tell. Was there some delay?"

Louis failed to mention that the promise for years was to build Atlantic Yards in ten years, but after the project was re-approved, Forest City Ratner was given 25 years, until the outside date of 2035 to build the project. Though he long promised ten years, Ratner later said that ten years was never supposed to be the timetable; also his executives have said that they always planned to build faster that 25 years.

"The delay was because the first building, B2, was delayed," Ratner responded to Louis. "It's under construction. It's modular, we're having some issues with it."

Ratner later said that the modular construction "worked out technically perfectly. The issue is it's taking longer to build the actual modules... I think the future of it is really excellent... But we'll get there, and I think it will be something I think that will make New York a better place."

The modular delay is not the only reason. Forest City had determined it was cost-effective to build Atlantic Yards--including high-rise affordable housing--only by building modular. Its parent company then decided that it was too risky to hold on. So they sold a 70% stake in the project going forward to a deep-pocketed Chinese developer, the Greenland Group.

(I wonder if this will turn out like the Brooklyn Nets, the team Ratner sold at a discount to the Russian oligarch Mikhail Prokhorov because his company didn't have patience for losses. The team has since rocketed in value.)

"The second thing, I think there was real concern by everybody--where's the affordable housing?" Ratner continued. "This administration is appropriately, as I am, very concerned about having enough affordable housing and having it quickly. So when they came to us and said, build it quicker, we made a deal that I think is great for everybody."

That's wrapping it up rather neatly. Ratner wasn't concerned about affordable housing enough to to do what Greenland decided to do: build the next three towers (likely four) using conventional construction. And his firm was facing a state deadline to start the next tower on the arena block by December.

What's happened between Forest City's decision it could only build modular and Greenland's decision to build conventional? Well, the Brooklyn market is hotter. But Greenland also may accept a lower profit level, given its desire to make a splash in the New York market. And Greenland's relative bargain for 70% of Forest City's Atlantic Yards investment may make building conventional easier.

What's the deal?

Ratner cited "a deal that I think is great for everybody."

But what's the deal? We know there's a new timetable, plus penalties of $2000 a month if units aren't delivered, subject to an Affordable Housing Subsidy Unavailability.

Those don't look like inducements for Ratner and Greenland to build. 

What did Forest City get? For one thing, the state is letting Ratner fulfill an obligation to start a second tower on the arena block by transferring that obligation to Block 1129, the southeast block of the project site, leaving time for a crane to be used to build a green roof over the arena.

Unexplained was how the city has allowed a significant skewing of affordable units toward better-off households, which means rents come much closer to market rate.

"The previous administration was not nearly as hands-on," Louis stated. "There wasn't any real attempt to sort of modify the deal. What made it different for this administration?"

That's both simplistic and inaccurate. The overall deal is the province of Empire State Development, the state agency overseeing/shepherding the project. During the time of the Bloomberg administration, ESD did modify the deal, giving Ratner until 2035. 

And the Bloomberg administration did let Forest City build the first tower with only 20% two-bedroom units, despite a pledge, in the Atlantic Yards Affordable Housing Memorandum of Understanding (MOU) signed with ACORN, to build 50% of the affordable units, in floor area, as two- and three-bedroom apartments.

"We were very excited about the opportunity to sit down with the Forest City team, and really try to tie in what was going on with Atlantic Yards with the agenda we've articulated as part of the housing plan," Glen responded. "To see as much affordable housing built as quickly as possible, because we are in a real time affordability crisis for a massive number of New Yorkers."

"We also wanted to make sure that when we're talking about affordable housing, we are serving a very wide income range," she continued. "The affordability crisis is hitting people not just at the low-end of the spectrum." 

She cited "really our moderate and middle income families.... That's our workforce, those are our cops. Those are the very people who lived in these neighborhoods for generations and need housing."

Yes, people earning six figures in today's New York have trouble finding decently located housing that costs 30% of their income, as per the affordable formula. But the two new towers would have 50% of the affordable units assigned to the highest middle-income "band," while the MOU assigns only 20% of the units to that band.

More family size units

Glen hailed their decision to build 100% affordable--unmentioned is that Ratner is starting two condo buildings at the same time--"and also make sure we have more family size units."

The towers will have 35% two- and three-bedrooms.

"The first building only has 20% twos and threes," Glen said. (Actually, it has no three-bedroom units.)

It's generally more expensive to build affordable family-size units, since subsidies are keyed to each unit, regardless of unit size. Forest City vigorously negotiated to ensure that the two-bedroom units added to the first tower would go to the highest middle-income "band" rather than be distributed evenly, thus saving money.

So the increase in family size units--though we don't know if they're distributed evenly--does add cost to the developer, which may be mitigated by the disproportionate amount of units for households earning six figures.

Affordability issues

"Affordability--that's always in the eye of the beholder," Louis said, in what turned out to be the closest thing to a tough question. "About 60% [actually 65%] is going to be for families of four where the household income is over $100,000... which for some people is a bit of a shock. Is that inflation, is that reality?"

"I think it's shocking that the city has gotten so expensive over the past decade that people who make $100,000 a year are now considered really in the sweet spot for needing affordable housing," Glen responded smoothly. "Let's say it's a nurse and a teacher. These are really our working-class families. Given where rents are, which is a real reflection of how expensive it is to build, we've got to figure out a way to target our programs."

That's true. But consider that de Blasio's announced affordable housing plan is supposed to direct only 11%--not 20%, not 50%--to middle-income households.

"So I don't think it should be shocking to people," Glen continued, disregarding the departure from the Housing MOU. "I also want to point out that... we're also serving 30% of the families at or below $40,000 a year. Very low income families which are struggling.. So I think his really reflects a balance trying to reach both ends of the spectrum and recognizing that quality housing that's affordable to people in New York City is a fundamental objective."

Actually, only 5% of the units--or one-sixth of the low-income units in the next two towers--would serve families below $40,000 a year. The rest would be $51,540 for a family of four, which is 60% of the $85,900 Area Median Income, or AMI. 

The Housing MOU set 50% as a cap, though low-income housing can go up to 80% of AMI--even though there's a disconnect between AMI, which incorporates wealthier suburban counties, and Brooklyn median income.

Also, while 30% of the units for low-income households adds 180 units, a significant chunk, the Housing MOU dictates 40%. (According to Council Member Brad Lander, in a message reproduced below, the Atlantic Yards affordable housing overall will have the promised 40%, or 900 units.)

Community pressure?

"A community coalition called BrooklynSpeaks say they were about the file a lawsuit and that was the impetus" for the deal, Louis said.

"We were aware they were very concerned with the lack of progress," Glen responded. "That was not the primary objective from the administrations point of view. We had begun discussions with Forest City well before we were made aware of this lawsuit... then talking with the state... all of these things came together."

I don't doubt that the de Blasio administration was talking with Forest City well before the lawsuit surfaced. But--and this will remain murky until more information surfaces--I suspect the lawsuit threat played more of a role than Glen acknowledges.

"I don't think it's anybody's interest to see this project stopped again," Glen continued. "So, to the extent we could work with the advocates to make sure they were comfortable with the income mix and get the commitments that we've received from Forest City about this accelerated time frame, it really was a win-win for everybody."

That's a confusing statement. The advocates who pushed the lawsuit were made aware of the new timetable, not the income mix. (Was Glen referring to other advocates who shaped the affordable housing deal from the beginning?)

Gentrification issues

"It looks like the average income in the area is going to go up quite sharply, compared to Brooklyn as a whole," Louis said. "Brooklyn is poor." He was getting at--though not quite saying--that, while Atlantic Yards was supposed to stem gentrification, it looks like it will contribute.

"We don't have anything there now," Ratner responded, papering over the smaller amounts of working-class (and market) housing that was demolished. "Whatever you're adding is additive.... This doest, in my view, a lot toward that. You're hitting low-income, moderate- and middle-income. The rent burden has not only increased among low-income, but moderate and middle... if you really look at Fort Greene, it is a mixed neighborhood... So, I think, in a lot of ways, it's going to wind up reflecting what Fort Greene is in today's world. The good news is it's not just upper income. Most of the stuff that's being built high-rise in the city is upper income, and this is different. I'm proud to be part of it. I have a progressive view of this."

Sure, Atlantic Yards offers more subsidized housing than other high-rise buildings. It also got more special privileges.

Arena noise

Louis, citing kids lining up along Atlantic Avenue for concerts, asked if he was concerned new tenants would complain about arena-related noise.

Ratner's answer focused on noise emanating from the arena. "We have someone called a sound concierge right in that arena," he said, citing a staffer aimed at ensuring that sound is dealt with more carefully.

"Second, we are building a green roof. It will have additional sound properties. So, it's good right now, we don't get complaints, we don't get violations," he said, in a comment that is accurate right now but does not reflect the numerous complaints and single fine paid since the arena opened. "Now, with the extra green roof, it's going to be doubly assured."

The DNC in Brooklyn?

Louis noted the city's pitch to hold the 2016 Democratic National Convention in Brooklyn, but suggested the limited number of hotel rooms in Brooklyn posed logistical issues.

"We have the most amazing public transportation system," countered Glen. "Barclays is so well served by public transportation." She suggested that taking public transit to the arena would be a much faster trip than from a hotel in another city to the convention site.

When people "get to Barclays, and get to that neighborhood... which really represents the economic and ethnic diversity that is the Democratic Party," she asserted, "it's a no-brainer."

Comment from Brad Lander

I asked Lander, who endorsed the agreement:
  • if he'd been informed about the AMI distribution in the two towers ahead of time
  • if he knew there'd be more family-sized units
  • if the MOU will be adhered to
  • whether he thinks the distribution of units in the next two towers address the gentrification issues that prompted the proposed litigation or were a necessary trade-off.
His response:
As I said when the agreement was announced, I am pleased to see affordable housing, more units for families, and public accountability all accelerated at Atlantic Yards, as a result of the agreement between BrooklynSpeaks, FAC [Fifth Avenue Committee], PHNDC [Prospect Heights Neighborhood Development Council], and the other potential fair housing litigants; FCRC; the City; and the State.
I have been assured that the commitment to 900 total low-income units (out of the 2,250 total affordable units) will be adhered to. You are correct that this band will now go up to 60% (though I would note that "low income" in the de Blasio Administration housing plan is defined as going up to 80%, so these are still a good deal lower than that). The next two buildings will produce 180 of those 900 low-income units.
As Deputy Mayor Glen said tonight on Inside City Hall, 35% of the affordable units at B3 and B14 will be two- and three-bedrooms, which is a significantly higher percentage than in B2. While I was not a part of those negotiations, and did not have advance knowledge of the details, I have been pushing (along with many other elected officials, advocates, and neighbors) for a higher percentage of family-size units, both at Atlantic Yards, and in affordable housing financed by the City of NY more broadly. So I am enthusiastic to see this change.

I'm also glad to see public accountability advanced through the new Atlantic Yards Community Development Corporation.
I believe that BrooklynSpeaks, FAC, PHNDC, PSCC [Park Slope Civic Council], and the other groups in the coalition that was considering litigation achieved very real progress here.
Note that it's not clear--and maybe we won't know until the project goes forward--whether the rest of the MOU will be adhered to or whether the moderate- and middle-income units will skew higher. 

As to the tradeoff between getting units faster while seeing affordable units skew toward six-figure households, well, that question lingers for many of those involved and commenting on the housing deal.

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