Wednesday, April 15, 2015

A second look at that 2006 ACORN report on "sweetheart development" and the shifting Atlantic Yards housing configuration

When I looked recently at the report on minority- and women-owned business enterprises (MWBE or M/WBE) from the Black Institute, it sent me back to another report issued by an organization headed by Bertha Lewis--and how the portrayal of Atlantic Yards was, in retrospect, too rosy, portraying the project as more affordable than it would be.

Compounding the challenge, the passage of time has lifted the Area Median Income (AMI), which relies not just on New York City but wealthy suburban counties, pushing subsidized units further out of reach of ACORN's low-income constituency.

Not only did the ACORN report describe an affordable housing configuration that differed from that soon tweaked by developer Forest City Ratner, the latter's configuration has undergone further changes.

The subsidized housing, at least in the next two all-affordable buildings, is skewed toward middle-income households, rather than low- and moderate-income ones. That means two-bedroom units renting for $3,000 or more.

It's another reminder that "affordable" merely means "income-linked," with renters paying 30% of their household income.

And it's a reminder that ACORN and its successors are too entangled with Forest City Ratner--getting direct support and also expecting to help manage the process of recruiting/selecting tenants--to criticize Atlantic Yards/Pacific Park.

Report makes waves criticizing 421-a

Sweetheart Development: Gentrification and Resegregation in Downtown Brooklyn (embedded below) was issued 3/16/06 by New York ACORN. When issued, the report prompted New York Times coverage, focusing on a valid observation that has taken too long to sink in: tax breaks for market-rate development were no longer needed.

The Times reported on the context of the mayor's rethink of the 421- subsidy:
"What we're trying to do is inform that process," said Jonathan Rosen, an Acorn spokesman. "We want to take the mayor's opening and point out that in places where you're selling condos for a million dollars overlooking the East River, you probably don't need to subsidize those developments with money from middle-class homeowners."
The Times briefly referenced Atlantic Yards:
New York Acorn, which successfully pressured the Forest City Ratner Companies to include mixed-income housing in its 9.1 million-square-foot Atlantic Yards project in Brooklyn...
Ah, but the devil's in the details, then and now.

From the report

The report stated, with emphases I added in bold:
One notable exception to these trends in Downtown Brooklyn development, the Forest City Ratner Companies’ Atlantic Yards Project, will lie on a 22-acre site, bordered for the most part by Flatbush, Atlantic and Vanderbilt Avenues and Dean Street. It will include a professional sports arena, a hotel, an office complex and residential mid-and high-rises containing 4,500 units of new rental housing. 
Forest City has entered into a Community Benefits Agreement (CBA) with ACORN and seven other community groups that commits the developer to making 50% of the rental units – 2,250 units – affordable. Developers and government agencies typically define “affordable housing” using broad income brackets that encourage the development of housing affordable only to the highest-earning members of each bracket, who may earn as much as $141,600 for a family of four. But the CBA tiers Atlantic Yards’ affordable housing to much smaller income brackets, ensuring that units will be affordable to every low- and moderate-income family:
The remaining 450 apartments, 20% of the affordable units, could include people making 101-160% of the AMI, depending on the development’s financing negotiations and funding commitments. The project will also include between 600 and 1,000 affordable condos. 
With 2,250 total units of affordable housing, including 1,350 affordable to low-income families, Atlantic Yards will far exceed both the 467 units of affordable housing of the other 87 developments combined and the 201 of these units affordable to low-income families. The project is currently undergoing environmental impact review.
What was missing from the report

Instead of having 450 units over 100% of AMI, the scenario soon shifted, with 900 units over that threshold.

The ACORN report referenced one of the three potential configurations in the Affordable Housing Memorandum of Understanding, with 80% of the affordable units (1800 total, representing 40% of the total rentals) up to 100% of Area Median Income, and 40% of the units between 50-100% of AMI. (At the time, AMI was $62,800 for a four-person household.)

That changed significantly, since developer Forest City Ratner understandably chose the configuration that generated more revenue (and required less scarce subsidy):


In other words, 900 units (40% of the affordable total, or 20% of all rentals) would be geared to middle-income households over 100% of AMI.

Would 1,350 units be "affordable to low-income families"? Not quite, though the issue is fuzzy.

Rent for that middle tier would be based on 80% of AMI, which is now the upper limit for low-income under some programs, though the New York City Housing Development Corporation, which places Atlantic Yards/Pacific Park in its 50/30/20 program, stops at 60% of AMI.

Also, households in that middle-tier could earn up to 100% of AMI, which is definitely not low-income by federal standards--and, this year at $86,300--clearly out of sync with Brooklyn incomes.

That scenario has persisted, as suggested--focused only on Phase 2--in the Final Supplemental Environmental Impact Statement, issued last June:


But it neither reflects reality today, nor ACORN's recommendation from 2006.

ACORN's recommendation

In the 2006 report, ACORN proposed a more formalized program of guaranteeing affordable housing: rezoning, with a requirement of 30% affordable housing in exchange for tax-breaks.

The report stated:
3. All affordable units in all developments should be income-tiered so that the units are targeted to and affordable for all low- and moderate-income families, at 30 percent of household income.
4. Any developer who receives a tax exemption should be required to enter into a Community Benefits Agreement (CBA) with relevant community organizations, covering labor participation and training, minority contracting, etc., as well as affordable housing.
Well, we know that CBAs don't necessarily work unless they have teeth, and the Atlantic Yards CBA signatories--including ACORN--have been compromised because they have received financial support from the developer.

And we know that, as long as there's no formal requirement, developers will choose to provide affordable housing at the highest price point possible--middle-income households.

The plan now

Based on the new AMI, here are the income maximums for residents in one of the two all-affordable towers, B3. (The configuration is the same for the other, B14, but with a slight difference in the total of units. Note that the two all-affordable rental buildings will be matched by two all-market rental buildings, so the planned 50/50 scenario is maintained.)

Note that not only is the configuration of units skewed toward middle income households, the income maximums for each band have gone up.



The rents will be calculated at a discount from the maximum income; residents will pay 30% of the figures in the table below.



Below is my calculation of the rents for each unit, taking 30% of the figures in each box above and dividing by 12 monthly payment. The number of units per band is an estimate, since, as footnoted, some units may have more people, and they will pay a higher rent.

But it's clear that the building is skewed to Band 5--middle-income households.



ACORN SweetheartDevelopment 3-16-06 by AYReport

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