Skip to main content

"Impeccable" affordability? Next two subsidized towers skewed to those earning six figures

Also note analysis regarding on the claim of "Brooklyn's newest neighborhood," the delay in the promised Atlantic Yards Community Development Corporation, and the already-launched effort to sell condos to Chinese buyers.

Keep your eye on the ball, people.

The "affordable housing" in the next two Atlantic Yards/Pacific Park towers containing such subsidized units won't be that affordable, as it will be skewed to middle-income households earning six figures.

It was a huge gap in the claimed community victory that got the developer to agree to build the 2,250 units of affordable housing (of 6,430 total units) by 2025 instead of the outside date of 2035.

Also, despite the focus on the first all-affordable tower starting tomorrow and a second one next June, the context--the most likely plan-- is that four market-rate towers will start in the next 18 months or so. 

Unspecific claims of affordability

At tomorrow's groundbreaking for 535 Carlton, Greenland Forest City Partners promises an "impeccable variety of rental apartments affordable to low, moderate and middle-income New Yorkers." 

Daily News columnist Denis Hamill, in a typically sycophantic preview, focusing on Forest City CEO MaryAnne Gilmartin, wrote, "Located at Carlton Ave. and Dean St. in Prospect Heights, Brooklyn, all of the 298 units are destined for low, moderate and middle-income families."

Crain's New York Business reported:

The 298-unit building now underway by Greenland Forest City Partners is known as 535 Carlton Ave. All the units will be designated as affordable. The partnership also plans to immediately begin construction on a 275-unit market-rate condo building at 550 Vanderbilt, and then in June to begin work on 30 Sixth Ave., another 100% affordable building that will contain 300 units.
In total, the two affordable buildings will provide units based on a metric called area median income [AMI], which in New York City was $85,900 for a family of four in 2013.
Of the nearly 600 affordable apartments, about 30 of them will be for families earning up to 40% of AMI, about 150 will be for 60% of AMI, another roughly 30 for families earning 100%, about 90 for families earning 145% and about 300 for families earning up to 165%.
What it means

Let's break that down. If we use the numbers from Crain's, it means that about half the units would go to households earning six figures, especially if we consider that AMI likely will have risen by 20165.

And while such households certainly would appreciate a discount off a market-rate unit, and may have trouble finding quality housing in a prime location at an affordable cost, they were hardly the people rallying for affordable housing.
2014 AMI is actually lower, at $83.900, but AMI when the building opens  surelywill be higher
The differs significantly from the arrangement in the Affordable Housing Memorandum of Understanding Forest City Ratner signed with ACORN in 2005, and which was incorporated into the Community Benefits Agreement, as shown below..

Note that 40% of the affordable units are supposed to be low-income, but only 30% in the next two buildings would be low-income.

Also note that only 20% of the affordable units are supposed to go to the best-off cohort, earning 140%-160% of AMI, but instead 50% would go to the best-off cohort, earning as much as 165% of AMI.


Changing rent levels

There are multiple ways to make adjustments, thus bringing the developer more revenue. The first, as noted above, is to change the configuration, skewing more of the total affordable units toward middle-income households.

The second, as noted above, is to tweak the bands, raising the percentage of income for each of the cohorts, so, for example, the maximum for low-income households is 60% of AMI rather than 50%,

The third is where the rent levels are set. For the new towers, rents will be set at 37% of AMI, 57% of AMI, 80% of AMI, 130% of AMI, and 160% of AMI. Notably, the latter two figures are above the 120% of AMI and 150% of AMI originally promised.

If rents are based on 160% of AMI, and 2013 AMI is $85,900 (as reported in Crain's), that suggests a four-person household in the top cohort would pay $3,436 for a two-bedroom unit, based on 30% of income.

If rents are based on 160% of AMI, and 2014 AMI is $83,900 (as I was told by city officials), that means a four-person household would pay $3,356 for a two-bedroom units

Due to other adjustments in the calculations, the numbers are slightly different.

As I reported in BKLYNR, low-income two-bedroom units in the next Atlantic Yards towers would rent at $647 and $1,025 a month, if available in 2014, and moderate-income ones would cost $1,458. But those income “bands” make up only 35 percent of the total affordable units. Another 15 percent would rent to a middle-income cohort for which two-bedroom apartments would cost $2,405.

And fully half the units would be reserved for another middle-income group, who’d pay $1,967 for a studio, $2,470 for a one-bedroom, $2,972 for a two-bedroom, and $3,430 for a three-bedroom, according to current projections.

And those numbers surely will go up.




Comments

  1. Anonymous5:44 PM

    What should be addressed is that Jonathan Springer is a former Empire State Development Corporation employee.
    http://www.nychdc.com/content/pdf/BoardMaterial/072513/Appointment%20of%20Senior%20Vice%20President-Jonathan%20Springer.pdf

    In what best interest does NYCHDC when they are a arm to HPD?

    ReplyDelete
  2. Anonymous12:42 AM

    This gets more ridiculous. The person who wrote how reduce the cost of affordable housing is giving loans out - http://furmancenter.org/files/publications/NYCHousingCost2005.pdf

    ReplyDelete

Post a Comment

Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…