Thursday, October 30, 2014

Looking at the agreement for affordable housing and public oversight: what was gained, what's missing, what's coming

The first full public discussion of the deal that led to a new 2025 deadline for Atlantic Yards affordable housing--and other important but contested issues--will be held tonight at 8 pm at the Soapbox Gallery at 636 Dean Street, between Carlton and Vanderbilt avenues.

That's across the street from the southeast block of the project, where construction on two towers will begin in December.

The meeting is sponsored by the Prospect Heights Neighborhood Development Council, whose most prominent member, Gib Veconi, was one of the two community signatories of the agreement in June.

"Learn more about the settlement reached between the Empire State Development Corporation [ESD], Forest City Ratner Companies, and community advocates," states the notice (right), citing:
  • Shorter construction duration 
  • New affordable housing commitments 
  • Public oversight with local representation 
Those issues all involve potential complications, as I wrote last week, some of them pointed out by the Dean Street Block Association, whose members live very close to the project site.

As I wrote, the shorter construction timetable, while in some ways superior to an elongated buildout, could lead to cutting corners, especially since Greenland Forest City Partners has put aside plans to use modular construction--supposed to reduce the amount of workers and trucks--on the next buildings.

But I'd like to focus on the other two issues, both of which were distorted in the initial New York Times exclusive on the agreement. (I'd say the history of bad faith and cheating regarding Atlantic Yards should have inspired more skepticism.)

The agreement was signed by members of the BrooklynSpeaks coalition, individual plaintiffs, and other groups preparing a lawsuit on fair housing issues, which argued that delay in building the subsidized housing would have a disproportionate impact on African-Americans, as displacement trends mean fewer could take advantage of the 50% preference to locals in affordable housing lotteries.

The settlement averted a suit and thus allowed the planned joint venture, in which the Chinese government-owned developer Greenland Holdings bought 70% of the project going forward, forming Greenland Forest City Partners and thus (seemingly) rescuing Forest City Ratner.

The new affordable housing commitments

The "affordable housing" mantra reaps inevitable support from elected officials, but the devil is in the details, since "income-linked" is a more precise way to describe subsidized housing for households ranging from low-income to middle-income.

The agreement means all 2,250 affordable apartments must be built by May 2025, with significant penalties for non-performance ($2,000/month per unit), and that two all-affordable towers, with at least 590 units, must start within 12 months. A minimum of 35% of all units for which construction has commenced must be affordable until the first 1,050 affordable apartments are finished.

All penalties will be paid into the New York City Housing Trust Fund administered by New York City’s Department of Housing Preservation and Development to create or preserve affordable housing, with preference for projects in the four Brooklyn community districts around the project. And Forest City will contribute $250,000 to a new tenant protection fund.

Those were major advances. However, unmentioned in the publicity that emerged from the agreement was that half the subsidized units in the two, all-affordable towers would go to households earning 165% of area median income, or about $140,000 for a family of four (and commensurately less for smaller households). 

That means a two-bedroom unit would cost nearly $3,000--below market but hardly "affordable" to many who put their hopes in the project or are getting priced out of the neighborhoods near the project.

Obscuring the issue

In a press release hailing the agreement, issued 6/27/14 by the governor's office, Veconi said:
The economic realities of solving the city’s affordable housing crisis will increasingly call for public/private partnerships similar to the Atlantic Yards project. Today’s agreement shows that communities can work with the State to hold developers accountable for their commitments to the public.
Veconi has a significant record of advocacy and often insightful commentary, but I'd say that's straining to portray the agreement in the best light. In a June 2013 essay, when he had a more critical posture toward Atlantic Yards, Veconi wrote:
The reality is, unless the desired outcomes are quantified, they probably won’t happen. It’s not enough, for instance, for a project to simply claim it will create affordable housing, even in the hundreds or thousands of units. To make sure the expectations of the community will be met, the degree of affordability must also be specified, and schedule on which apartments will be made available must be spelled out.
(Emphasis added)

In the recent agreement, the BrooklynSpeaks negotiators got the second but not the first of those requests. Their explanation deserves scrutiny.

At a 10/9/14 meeting of Community Board 8, Veconi noted that city affordability housing bonds would be used to finance the subsidized towers. "Those bonds require certain income levels to be targeted for the apartments they finance," he said, and those income levels rely on Area Median Income, which is set by the federal Department of Housing and Urban Development. (The New York AMI incorporates wealthy suburban counties.)

Veconi rightly pointed out the growing disparity between federal AMI and local incomes in Brooklyn, which compounds the cost of delay.

"Our settlement did not address directly the issue of affordability levels," he said. "The fair housing claim gave us a platform to demand that the affordable housing be made available sooner, but it did not give us a platform to challenge the city’s calculation of affordability."

That obscures the issue. The housing bonds more precisely require income ranges (not levels) to be targeted within the categories of low-income, moderate-income, and middle-income.

The affordability ranges in the next two towers, while within the range in each category, depart from the previous promises regarding Atlantic Yards. For example, instead of having 20% of the affordable units go to middle-income households earning between 140-160% of AMI, 50% of the affordable units will go to households earning 165% of AMI. And the ceiling for low-income units will be 60% of AMI, not 50%.

(Yes, the two towers represent some 600 affordable rental units, rather than being part of 50% market/50% subsidized buildings, but they will be balanced later by two all-market rental towers, not to mention two soon-to-start condo buildings.)

Also, Veconi's words could have left the impression that it was impossible to "challenge the city’s calculation of affordability," because it's based on AMI. But the city's calculation depends on both AMI and the percentage applied to it. That leaves room for negotiation between the developer and the city and--as BrooklynSpeaks has said--for future advocacy to achieve more affordability.

If the potential plaintiffs couldn't challenge the level of affordability, they didn't have to agree to give up the right to sue on all Atlantic Yards issues existing at the time.

Or, pragmatically accepting the compromise, they might have signed the agreement under the condition that they could call attention to the skewing of affordability. Instead, they participated in a gubernatorial press release and released one of their own that promoted "affordable housing" with no details about the actual affordability.

Also, Mayor Bill de Blasio got to say, "And what’s remarkable is that compared to the project's first building, we’ve secured nearly twice as many affordable units for our City investment.” That's deceptive, since half the affordable units are so expensive they're not eligible for subsidies.

Oversight is advisory

As part of the agreement, the ESD will create a subsidiary, the Atlantic Yards Community Development Corporation (AY CDC), with a 14-member board that includes five members appointed by local elected officials.

That represents a step forward on the oversight issue, but not what BrooklynSpeaks sought, nor what it had pushed Assemblyman Walter Mosley to propose. 

As stated last November, along with requesting a new commitment for affordable housing, the groups asked
that the Governor, ESDC and Forest City Ratner publicly commit to improving the accountability of the Atlantic Yards project to the public, stating their support of legislation to create a dedicated local development corporation to oversee the project until its completion whose board includes outside directors appointed by the elected representatives of the people of Brooklyn.
Even that was secondary to a new timetable, as Assemblyman Jim Brennan acknowledged at a press conference last November: "There are many issues, but our main focus is affordable housing."

“This is the first time in the history of the Atlantic Yards project," Veconi told Community Board 8, "that there has actually been formal local involvement in oversight.”

The CDC will review proposed changes to the plan and advise the ESD board, as well as monitor the developer's compliance with public commitments, and monitor and respond to construction impacts and quality of life issues. It will meet at least quarterly and likely rely significantly on existing ESD staff. It has an advisory role, rather than formal oversight.

At the CB 8 meeting, Dean Street Block Association representative Tracy Collins (a photographer who's regularly contributed to this blog) read a block association statement raising caveats:
In addition, differing from BrooklynSpeaks’ longtime goals, the oversight structure is merely advisory. Decision-making and enforcement remains with the current ESDC board and staff, who continue to let the public down in so many ways. The Governor has retained nine of the fourteen appointments, as well as the Chairmanship. The developer can reach the Governor, but we can’t. Despite a relatively broad scope of work, the board has no defined resources, and the State may choose to support the committee with the staff the board is being created to oversee.
Any oversight regime will work to some extent if it is approached in good faith. But each oversight regime with Atlantic Yards/Pacific Park has failed because the State and developer approached them in bad faith.
Veconi responded to the notion that "we somehow broke away from our advocacy position on oversight, on representative oversight, because the Atlantic Yards CDC is advisory, because it doesn't replace the ESDC board."

However, he said, even if legislation to create such a body had passed, the public authority would still have been controlled by the governor. "We did not feel we were giving up the world by having an advisory agency with a board made up of gubernatorial appointees," Veconi said.

Perhaps, but the difference was significant enough for Forest City and the state to resist. And Veconi seemed to be arguing against a point he made in a June 2013 essay:
And unlike other State projects, Atlantic Yards doesn’t benefit from a local development corporation dedicated to achieving the project’s goals. Instead, decisions made by its developer are rubber-stamped by the board of the Empire State Development Corporation, all of whose members are appointed by the Governor.
The decisions will remain with the ESD board.

That said, Mosley told me earlier this month that he considered it a reasonable compromise, given the difficulty in getting legislation past the Republican-controlled state Senate, where legislators follow the lead of Brooklyn Sen. Marty Golden, who's close to Forest City. "I think this was the best case scenario for us," he said.

The bill sponsored by Mosley to create the Atlantic Yards Development Trust would also have established a stakeholder council--essentially adding another layer of local input beyond the entity's new board--and that council would have a non-voting member on the board. (The bill was a return of more prescriptive legislation, rather a more general governance bill, which Forest City still opposed.)

And Mosley's latest bill would have come closer to fulfilling one of the Regional Plan Association’s recommendations for large-scale projects: "An independent entity should monitor project costs and benefits over time."

What might be missing

I wonder whether the focus on affordable housing will make for other trade-offs. Consider the example of the New Domino Project in Williamsburg, in which the second iteration meant far taller towers in exchange for more open space and new office space.

Perhaps the Atlantic Yards model (right) shown to potential Chinese investors--which seems (though I'm not certain) to represent buildings with different heights than proposed--is a harbinger of future changes in the project design. The model has not been shown publicly in New York.

Such changes, I'd bet, would go through as long as "affordable housing" is delivered.

More transparency, new penalties?

When the agreement was signed in June, the Dean Street Block Association, which left the PHNDC, warned:
Decision-making and enforcement will stay as always with the overarching ESD board, also appointed by the Governor. The funding and staff of the new board is undefined, and there is no description whatsoever of how the board will fulfill its key mission of monitoring on-site conditions.
For example, while the state has implemented additional measures to improve construction oversight, including requiring the developer to hire an outside On-Site Environmental Monitor, that hasn't convinced the closest neighbors.

As Dean Street resident Peter Krashes observed last week, "At the end of the day, what the community impacted by construction deserves is transparency in real-time, meaningful recourse like penalties when things go wrong, and oversight during work that is impartial and motivated."

At a Dean Street Block Association meeting last week, he noted that the new penalties for affordable housing delays are not matched by similar penalties for lack of compliance with environmental commitments.

Nor has there yet been increased transparency. A July 2012 report to Atlantic Yards Watch by Sandstone Environmental Associates recommended that the quarterly reports from consultant Henningson, Durham & Richardson (HDR) to ESD regarding compliance with environmental commitments be issued more quickly, and that HDR's weekly report be posted online without a Freedom of Information Law requested needed to pry it open. We'll see if the new CDC can achieve that advance.

Making it work

Veconi, speaking at Community Board 8 earlier this month, defended the new CDC, noting that "this is the way the project can be made accountable. It’s not some other way. We actually have to make this work."

Thus, the Dean Street Block Association has participated in the process, suggesting to CB 8 that the new CDC "needs technical expertise and candidates who bring their own resources."

Mosley said that he and colleagues would recommend board members with technical expertise regarding construction, environmental impacts, and finance as they relate to mega-construction projects.

He told me that "ESDC has assured us they will be providing us with appropriate staff level, to complement and supplement whatever is lacking… this board will not be out there left to fend for itself."

Speaking at a Dean Street Block Association meeting on 10/2014, Mosley acknowledged more uncertainty, saying “it’s still an ongoing negotiation as to what type of resources are available.”

At the meeting, he said he and fellow legislators had recommended several appointees to both Assembly Speaker Sheldon Silver and the governor's office. (The governor has nine appointees, while the other five will be appointed by the Mayor, Brooklyn Borough President, Council Speaker, Senate President, and Assembly Speaker, in consultation with local legislators.)

In response to skeptical questions from the audience, Mosley said he felt more confident the new CDC could pursue compliance regarding the project. But when asked about the CDC's power, both Mosley and Council Member Laurie Cumbo exaggerated the issue.

"They have the ability to veto," Mosley said. "Let’s say there are engineering concerns, transportation plans, just like any corporation, you can bring it to a vote.”

Cumbo later added, “The board is going to have the power and authority that the state would have.”

That's not so, and Krashes later tried diplomatically to clarify the issue without criticizing the legislators. "We would love for a powerful board, but that’s not what we were necessarily getting," he said, adding he hoped the board would be able to provide significant input.

For now, Empire State Development seems to be playing it close to the vest. I asked ESD who was vetting the names submitted and making recommendations to the governor, and when the CDC would start meeting.

I didn't get a full response, but was told "members will be announced and a meeting will take place in December."

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