Friday, February 05, 2016

In Times Real Estate section, 461 Dean gets promotional treatment (no mention of modular troubles; affordability misleading)

A correction in the Times responds to my critique:
An earlier version of this article misstated the maximum income for a family of four to be eligible for an affordable two-bedroom apartment at 461 Dean Street in Brooklyn, based on information supplied by the developer, Forest City Ratner Companies. It is $138,080, not $124,000.
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Somehow the troubled B2 tower, aka 461 Dean Street, gets prominent position--a photo at the top of the web version--of an upcoming front-page New York Times Real Estate section article headlined New York’s New High-End Rentals (and in print "Advance of the Rentals").

Notably, there's nothing in the article about how this building has taken two years longer than promised, that developer Forest City Ratner and former modular factory partner Skanska are locked in litigation over huge cost overruns, and that lower floors of the building were plagued by leaks and mold.

Nor is there mention of Forest City's claim that it had "cracked the code" for modular construction, but this is the only Atlantic Yards/Pacific Park building to be built modular, as Forest City aims to sell the factory it operated with Skanska and then operated itself to finish the modules.

Nor that people are--hello--living next to an arena, with attendant crowds, some of them loud, and an arena loading dock that does not operate seamlessly as promised but sometimes stalls trucks on the street, snagging traffic.

What's the affordability?

But that's not all. The article misleads people about the affordability. Here's the relevant text:
One new rental in the current crop, 461 Dean Street in Brooklyn, will be split almost evenly between apartments with below-market rents and market-rate apartments.
The 363-unit project from Forest City Ratner Companies, which is made of prefabricated modules, will have 181 apartments with lower rents. About 40 percent of the affordable units, or 72, will be for people making 100 percent to 160 percent of the area’s median income, or up to $124,000 for a family of four. That family could end up paying $2,800 a month for a two-bedroom, said Susi Yu, an executive vice president of Forest City.
Interestingly enough, that ignores the 109 affordable units for lower- and moderate income people, who perhaps are not expected to read the Times.

Also, that misstates the current Area Median Income (AMI) and projected rents, since it relies on 2012 numbers. And it fails to point out that, while income limits are 160% of AMI, the rent for that cohort is calculated from 150% of AMI.
From FCR presentation

When the building launched in of 2012, when AMI was $83,000, income limits (160% of AMI) were $132,800, according to a Forest City presentation. See chart at right.

However, since rents would be set at 150% of AMI, for the best-off "affordable renters," rents would be calculated at 30% of $124,500. 

That should equal $3,112.50. (Here's the math: [$124,500 x .3]/12.)

But yes, in 2012, the New York City Housing Development Corporation (NYC HDC) did estimate rents at $2,740 a month, so obviously there's an adjustment factor. See chart below.

From NYC HDC
Today, the most recently available AMI, according to the NYC HDC, is $86,300 for a four-person household. 160% of AMI is $138,080. Now, it's possible the AMI has dipped down or nudged up for 2016, but it's clear Yu's $124,000 figure is wrong.

Rents will be set based on 150% of AMI, or $129,450 for a four-person household, based on 2015 numbers.

That should equal $3,236.25. (Here's the math: [$129,450 x .3]/12.)

Again, however, there's clearly an adjustment factor. 

Let's look at it another way: the most recent AMI, $86,300, represents a nearly 4% rise from $83,000. Apply that percentage to the previous figure of $2,740, and the monthly rent should be $2,849.

That's not too far from Yu's estimate--a little less than 2%--but its far enough off that they shouldn't be rounding off the numbers.

Reaching the better off

From the article:
“This is actually a segment of the market that really has been overlooked,” Ms. Yu said, referring to the income bracket of that same family of four.
Well, it may have been overlooked by developers--what middle-income household doesn't want a deal?--but actually the segment is a tiny fraction of New Yorkers, and hardly those who most need subsidized housing. See the chart at right from the Association for Neighborhood Housing and Development.

What's market rate?

From the article:  
Forest City has not yet determined what a market-rate two-bedroom would cost in the building. In December, the median price of a two-bedroom in Brooklyn was $3,350 a month, Elliman said.
That's only a 17.6% premium. That said, the median price in the area for new construction may be higher. StreetEasy says the least expensive two-bedroom rental in a new or newly converted building in Downtown Brooklyn is $3,754, while in Park Slope, Boerum Hill, Fort Greene, and Prospect Heights it's $3,300. (That's eliminating one cheaper anomaly.)

While 461 may offer some luxury amenities, the location and troubled history may make it difficult to get premium prices.

About the lottery

The article states:
To score one of the coveted reduced-rent units at 461 Dean, renters must enter a lottery, which will be organized by Forest City and the city’s Housing Development Corporation.
When the lottery is announced, which is expected “imminently,” according to a project spokeswoman, applicants will have 60 days to register at the New York City Housing Connect web page, or by paper application. To get the word out about the application process, Forest City will contact labor unions, community boards and churches.
Each applicant will receive a number. If that number is drawn, he or she must submit tax returns, landlord references and bank statements to verify eligibility. Priority will be given to people with visual impairments and other disabilities, and secondarily, to those who live within the boundaries of Brooklyn Community Boards 2, 3, 6 and 8. Municipal workers also will have an advantage.
(Emphases added)

Note that, in public discussion (and, yes, most of my coverage), mention of the lottery cites the 50% priority to residents (or recently-departed residents) of the three Community Districts.

As I wrote in July 2006, covering an affordable housing information session:
There is a housing lottery, but the preferences announced, required by city regulations, deflated some people in the room. Half the affordable units—1125 of 2250—would be reserved for residents of the three Community Boards, CBs 2, 6, & 8. Five percent would go to police officers and another five percent to city employees. Five percent would go to the mobility-impaired and one percent each to the sight- and hearing-impaired. That’s two-thirds of the units, plus ten percent for seniors, though there could be some overlap.
Note that that was before the preference was expanded to residents of Community Board 3. Also note that the preferences may be re-allocated depending on different buildings. But it also means that a lot of people, especially those seeking low-income units, will be frustrated. 

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