As city housing agency considers bonds for Albee Square tower, FUREE promises a protest

The now-demolished Albee Square Mall site in Downtown Brooklyn is slated to become the CityPoint tower, and the image at right from the CityPoint web site presumably illustrates the target audience.

Below, additional images from the web site suggest other elements of the target audience.

The web site promises 900,000 square feet of apartments, while the New York City Housing Development Corporation (NYC HDC) predicts 810 units, which indicates that either the amount of space has shrunk or there would be a significant number of apartments exceeding 1000 square feet.

NYC HDC will hold a public hearing Monday at 10 a.m. to hear comments on the proposed issuance of $400 million in bonds for CityPoint, which would include 20-25% (162-202) affordable units. (I'm assuming the units would be affordable to low-income households, but I'm not certain.)

The location is the main Conference Room of the New York City Housing Development Corporation, 110 William Street, 10th Floor.

FUREE protest

However, Families United for Racial and Economic Equality (FUREE), a fierce critic of plans emanating from the Downtown Brooklyn rezoning, has called (below) for members to protest the plan, stating, "The developers who bought the historic Albee Square Mall and evicted all the small businesses there are now asking the City for $400 million for the 60 story luxury tower they want to build."

Actually, it's $400 million in low-interest financing, not a $400 million grant. Such bonds, which can carry an interest rate of some 175 basis points less--e.g., 4.25% vs. 6%--are attractive to borrowers. The federal government, which takes the hit on lost interest, limits each state's allocation.

FUREE argues that the building should include 50% low-income affordable housing. (Atlantic Yards, btw, was initially promoted as 50% affordable, given 20% low-income rentals, and 30% middle- and moderate-income rentals among the 4500 rentals, but the addition of 1930 condos--at least 1730 market-rate--would bring the affordability ratio down.)


Subsidy may be high

For 202 units at CityPoint, the $400 million in bonds works out to $1.98 million per unit. For 162 units, the $400 million would be $2.47 million per unit.

That may be high. Earlier this year, in an effort to make the best use of volume cap, the state Housing Finance Agency, NYC HDC's counterpart, suggested that developers not ask for more than $1.7 million per unit, and set other allocation criteria, such as project readiness, length of affordability, and consistency with the city's goals.

Indeed, Forest City Ratner asked for only $1.5 million per unit in its 80 DeKalb Avenue project.

(I need more details, however, to know if this is an apples-to-apples comparison.)

Is this case different?

It's not unusual for developers to seek 80/20 affordable housing deals; in this case, given the fact that city land is involved, FUREE argues that increased affordable housing is merited.

Given the current financial hardship for so many, the City is obligated to require a "MUCH higher percentage of truly affordable housing in exchange for public support of development, particularly when that development is occurring in a low-income area," FUREE argues.

Whether Downtown Brooklyn is low-income depends on where you draw the lines, but I think there's a stronger case for increased affordability: the developer seems to have gotten a deal.

As Metro reported 5/25/07:
The city is offering developers a chance to buy the land under the former Albee Square Mall at a deep discount — $100 million less than they reportedly paid to lease it this winter, according to a document obtained by Metro.

The deal proceeded like this. In 2001, Forest City Ratner sold the long-term lease on the Gallery at MetroTech--then the name of the mall-- to developer Joseph Sitt for $25 million. Though Sitt renamed the mall the Gallery at Fulton Mall, it was unsuccessful.

However, Sitt's lease became much more valuable after the 2004 Downtown Brooklyn rezoning vastly increased development rights. In February 2007, Metro reported, Sitt sold his lease to the current developers, Albee Development LLC for $120 million.

After 25 years Albee Development will have the option to buy the property outright for $20 million, Metro reported. FUREE members last year protested tax breaks being granted by the city Industrial Development Authority, and were evicted from the meeting.