Tuesday, August 04, 2015

New Atlantic Yards affordable housing more expensive than would be allowed in de Blasio's mandatory inclusionary zoning proposal

There's been no official press release yet, but some news outlets have reported on a plan by Mayor Bill de Blasio to require 25% or 30% affordable housing--at differing income levels--as part of a rezoning. The plan, which would exclude buildings with ten units or fewer, requires City Council approval.

So it's interesting to compare such mandatory inclusionary zoning to the promises--and now the execution--in the Atlantic Yards/Pacific Park plan, which was essentially a private rezoning or spot rezoning in exchange for a measure of affordable housing.

(The state overrode city zoning to allow developer Forest City Ratner to build at the scale it deemed financially feasible. The provision of affordable housing was one justification for the scale.)

Bottom line: Atlantic Yards might come close to those standards, if built as proposed, but the record so far shows otherwise.

The percentage of affordable housing--2250 of 6430 units, or 35%--is indeed more than the minimum required in de Blasio's proposal. And the total number of units is significant.

However, the devil is in the details. (After all, the project was once supposed to be 50% affordable.)

Were Atlantic Yards/Pacific Park executed as once promised, the significant numbers of middle-income units would make it difficult, but not impossible, to reach one of de Blasio's options, which is 30% affordable at an average of 80% of Area Median Income, or AMI.

However, most of the tenants in two under-construction "100% affordable" buildings--buildings with configurations more generous to the developer and less affordable than originally promised--will pay rents well above the maximum in de Blasio's proposal.

So the three buildings with affordable units under construction skew well over the de Blasio plan, with affordability of those units averaging 112% of AMI.

So much for the mayor's claim last December, at the groundbreaking for an all-affordable building, "This is a symbol of what we intend to do with our affordable housing plan over and over and over and over." And, as I've noted, there's a disconnect with the mayor's emphasis on low-income units. (Also see question marks about double-dipping for subsidies.)

The mayor's plan, and two fundamental contrasts

Capital New York reported, in De Blasio plan would link affordable housing, rezoning:
The plan, outlined to Capital in advance of its rollout by administration and City Council officials, would require builders to set aside 25 percent of their units for affordable housing. The average unit would be rented to residents earning 60 percent of the area median income—a calculation that currently equals $46,620 for a family of three.
The policy, known as "mandatory inclusionary zoning" or "mandatory inclusionary housing," would come with a second option—reserving 30 percent of all units at an average of 80 percent of the area median income, or $62,150 for a family of three.
The Department of City Planning, in concert with the local City Council member for a given development, would decide which option to choose—not the builder, the officials said.
...In conjunction with one of the two mandatory inclusionary options, the local Council member would also be empowered to allow a moderate-income affordable choice [at 120% of Area Median Income, or AMI, more than $93,000 for a family of 3] that does not entail a direct subsidy from the city. That alternative, according to the officials, would be restricted to middle-income areas.
Note that this plan gives more autonomy to local elected officials, unlike with Atlantic Yards, of course.

Another contrast: the affordable housing would be permanent--as noted by the all Street Journal--not limited to the tenure of housing bonds, which has been typical (and is the case with Atlantic Yards).

The Real Estate Board of New York, according to the WSJ, gave it a "cautious welcome," with president John Banks saying “the numbers need to make sense.” 

How many units?

It looks like the mayor is scaling back his ambitions. The WSJ noted:
During the 2013 campaign, Mr. de Blasio drew skepticism with his assertion that mandatory inclusionary zoning in rezoned neighborhoods could generate 50,000 affordable apartments over eight years for poor and middle-class families in New York City.
That turned out to be based on a best-case analysis prepared by an advocacy group, the Association for Neighborhood and Housing Development [ANHD], for the rezoning of the entire city.
Now Department of City Planning (DCP) Director Carl Weisbrod is estimating a more general "several thousand." (That, as noted by Capital New York, suggest the mayor is backing away from campaign estimates.) The ANHD, in a report, estimated more ambitious totals:
  • ANHD’s analysis concludes that the new MIZ [Mandatory Inclusionary Zoning] policy as currently outlined by the de Blasio administration could create an estimated 13,800 affordable housing units over the next 10 years. 
  • The current de Blasio administration could also revisit the previous Bloomberg rezonings and convert all the voluntary Inclusionary Housing Program designated areas into Mandatory Inclusionary Zoning areas. We estimate that this could guarantee at least 1,200 additional affordable units in those limited designated areas. 
  • The City lost out on an estimated 8,000 affordable housing units in the rezoned areas because the Inclusionary Housing program was voluntary and limited to small geographic areas.

The ANHD critique of de Blasio's plan

Crain's New York Business reported, Next phase of de Blasio's affordable-housing plan is out—and for one advocate, the devil's in the details, noting the ANHD's criticism of the affordability levels, notably the moderate-income choice:
"Requiring permanently affordable housing in all future upzonings is a huge step forward for creating the inclusive neighborhoods we need in this city, but we need to ask who will be included and who will be left out," said Moses Gates, director of planning and community development for the nonprofit. "The fact is the rent levels proposed are too high to meet the needs of the New Yorkers who are most desperate for affordable housing."
... If [DCP and the Council Member] choose to require 25% of the project's units be dedicated to affordable housing, then rents for the affordable units will have to average out to serve a household making 60% of a metric called the area median income. For a family of three, that equals $1,165 a month in rent. If they pick the 30% option, affordable units will have to average out to 80% of AMI.
ANHD would like a lower average, to reach lower-income New Yorkers, and opposes the moderate-income option. The city, according to the summary from Crain's, "contends that its mix of incomes allows for a more diverse program, and for developers to reach lower income levels on the other end of the spectrum."

The ANHD statement

Gates wrote on the ANHD blog, City Inclusionary Zoning Proposal a Step Forward, but Affordability Must be Fixed, that the plan was "a significant step forward" given that it was mandatory and permanent, but the rent levels were too low:
There are three options for affordability being proposed:
Option A) 25% affordable at an average of 60% AMI.
Option B) 30% affordable at an average of 80% AMI.
Option C) 30% affordable at an average of 120% AMI.
These levels are, quite simply, not where the need is greatest. 85% of New Yorkers making under 50% of AMI are rent-burdened, and in need of affordable housing. This is compared to less than 10% of New Yorkers making 100% AMI. And in raw numbers, the differences are even starker. There are 14 times more rent-burdened households at 50% AMI and under, than at 100% AMI and up. Any new MIZ policy needs to specifically address this, and require a significant portion of affordable housing for truly low-income New Yorkers across all of these options.
And then there is Option C, which shouldn’t be an option at all. This option is intended to be set in neighborhoods where 120% is on or about the market rate, in order to keep incentivizing market-rate development. Put another way, this option not only doesn’t provide affordability, but is specifically designed to not provide affordability. The option’s purpose is to keep the $2000+ apartments coming, without requiring anything for the lower-income half of New Yorkers. This is at direct cross-purposes with the rest of the proposal. An affordable housing program is for creating affordable housing, not market-rate housing.
The Atlantic Yards plan

Atlantic Yards was originally billed as a 50/50 program, with a 50% of the apartments affordable, 50% market, or rather 50/30/20, with 30% of the units moderate- and middle-income, and 20% low-income. 

Then that ratio was applied only to the 4500 rental units, as 1930 condos were added. So 2250 of 6430 units means 35% affordable.

Here's the proposal--actually one of three income mixes, with the highest income boundaries--from the 2005 Affordable Housing Memorandum of Understanding (MOU) that Forest City Ratner signed with ACORN.

2005 figures; Area Median Income has since risen from $62,800 to $86,300

According to the MOU, which was incorporated into the "legally binding" Community Benefits Agreement, 1,350 of the units--or 21% of the total 6,430 units--would be affordable at an average of 80% of AMI or better

Another 7% would be affordable at an average of 120% of AMI, with another 7% at an average of 150% of AMI.

So if we just looked at the first 1,800 affordable units--28% of the total, the projected affordability would be 74% of AMI. That's under the de Blasio goal of 80% of AMI, but with something of a fudge factor, since that goal is applied to 30% of the units, not 28%.

Here's my math: [(225 x .4) + (675 x .5) + (450 x .8) + (450 x 1.2)]/1800 = 74% average of AMI. 

If we look at all 2,250 affofdable units--35% of the total, the projected affordability would be 89% of AMI. That's higher than the de Blasio goal of 80% of AMI, but again with a fudge factor, since that goal is applied to 30% of the units, not 35%.

Here's my math: [(225 x .4) + (675 x .5) + (450 x .8) + (450 x 1.2) + (450 x 1.5)]/2250 = 89% average of AMI.

The Atlantic Yards reality

Actually, Atlantic Yards/Pacific Park has turned out somewhat differently. The first building, B2, is aimed to be 50/30/20. But the next two "100% affordable" buildings would be significantly different.

Consider the slide below, prepared by Greenland Forest City Partners, using 2014 Area Median Income (AMI) of $83,900. Now, in 2015, AMI is $86,300, and likely will continue to rise.

Based on the slide above, prepared by the developer, of 779 units:
  • 42, or 5.4% of these 779 affordable units, would be low-income, at 37% of AMI
  • 211, or 27%, would be low-income, at 57% of AMI
  • 65, or 8.3%, would be moderate-income, at 80% of AMI
  • 125, or 16%, would be middle-income, at 130% of AMI
  • 336, or 43.1%, would be middle-income, at 160% of AMI
However, that's not quite accurate. The affordable units in 461 Dean Street (aka B2) would rent at different rent levels: 38%/48%/80%/120%/150%.

So, to be precise, the three buildings would contain the following affordable units:
  • 31 at 37% of AMI
  • 11 at 38% of AMI (B2)
  • 149 at 57% of AMI
  • 62 at 48% of AMI (B2)
  • 65 at 80% of AMI
  • 89 at 130% of AMI
  • 36 at 120% of AMI (B2)
  • 300 at 160% of AMI
  • 36 at 150% of AMI (B2)
The result:the affordable units average 112% of AMI.

Here's my math: [(31 x .37) + (11 x .38) + (149 x .57) + (62 x .48) + (65 x .8) + (89 x 1.3) + (36 x 1.2) + (300 x 1.6) + 36 x 1.5)]/779 = 112% average of AMI.

The larger buildout

But let's look at it from another perspective. Note that, while B2 is a 50/50 building, each of the 100% affordable towers is being paired, more or less, with a 100% condo tower. B11 will have 278 units, while B12 will have 265, as the all-affordable B14 (298 units) and B3 (307 units) go up.

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