The State Legislature has passed the revised bill but it has yet to be signed by Gov. Eliot Spitzer. Various forces, including the city administration, are calling for a revision or a veto. Brennan had told the New York Observer’s blog The Real Estate Observer that “It’s not a carve-out… The only thing that happened was that Atlantic Yards got grandfathered in.”
That seemed inaccurate, given that there’s a special provision that could only apply to Atlantic Yards, allowing the requirement of 20 percent affordable housing to be spread over the project as a whole rather than applied to each building, as the law otherwise would require, and also nudging up the income limit for Atlantic Yards affordable units. (Instead of requiring affordable housing at 60% of Area Median Income, at Atlantic Yards the limit would be 70%.)
Brennan told me yesterday he’s revised his stance: “I’ve been thinking through that a lot. The main bill I actually support. I’d still like to see the 421-a renegotiated, because I’d like to see Atlantic Yards back on the table. I had a factual misunderstanding... I would be happy if Spitzer vetoed the bill, because I’d like to see some rethinking of Atlantic Yards and the program. If he didn’t veto the bill, I still think there’s a lot of people who want to see a renegotiation.”
Brennan noted that the reform passed by the City Council and the Legislature (A4408 and A9293) would limit the assessed value subject to tax benefits to $650,000 of a unit's price. Atlantic Yards units would cost more and might receive only a partial exemption. However, projects providing affordable housing on-site would not be subject to the cap, and the state reform would allow Atlantic Yards to fit in that framework.
Brennan acknowledged, “Atlantic Yards may ultimately need a full 421-a tax break to be viable, and the 421-a tax break until now has been a standard subsidy. Ratner would’ve gotten it under the old system, as any developer would.” Still, he said that, “because Atlantic Yards is so complex, and has many irrationalities on the surface of it, both physical and financial," the project should be put back on the table, and 421-a is part of that renegotiation.
FCR’s Bender distorts history
In an article about 421-a in this week’s Courier-Life chain headlined “Please play fair, Mr. Ratner,” Forest City Ratner Executive VP Bruce Bender offered his comments in response to the stance taken by Jeffries and Montgomery.
The newspaper reports:
“In 2005, we signed a historic affordable housing program with [the community group] ACORN that will create 2,250 units of housing for the low- and middle-income families which utilized the then existing 421-a regulations,” said Bender.
“All we are seeking to do is to preserve the ACORN agreement and build these units for the working families of Brooklyn,” he added.
Actually, if the original agreement were preserved, Forest City Ratner would have no trouble complying with the 421-a reform. The project then contained only the 4500 rental units addressed in the agreement; thus, each building would include 20% low-income units on-site and be eligible for the tax break.
However, the 1930 condos since added to the project complicate the calculations and drove the “carve-out.”
Yes, they would've been eligible when announced after the ACORN agreement was signed. But they were not part of the ACORN agreement. And reform of 421-a, if the "carve-out" is eliminated, would apply the tax breaks only to the rental buildings with on-site affordable housing.