Skip to main content

Gilmartin says return of 421-a "will allow Pacific Park Brooklyn to continue" (really?)

OK, a red-carpet interview before an awards banquet is not exactly the same as a deposition under oath. But I do think Forest City Ratner CEO MaryAnne Gilmartin, who recently received a lifetime achievement award at the Real Estate Board of New York’s annual gala, wasn't fully candid about the return of the 421-a tax subsidy, now dubbed by Gov. Andrew Cuomo "Affordable New York."

"Well, instantly it's going to allow Pacific Park Brooklyn to continue and for us to build it as quickly as possible," she said in an interview (below) with the Real Deal's Hiten Samtani. "Because without it, it would not be possible to meet the timeline, so that's critical."

Maybe. But the Greenland Forest City Partners (GFCP) joint venture already has 421-a benefits locked in for two sites, B12 (615 Dean) and B15 (664 Pacific). While the latter has been stalled by a legal case regarding access to a neighboring property, B12 could have started already. And it hasn't.

That's likely because of two additional factors cited by Forest City Ratner's parent Forest City Realty Trust (FCRT): rising construction costs and a glut of luxury units in and around Downtown Brooklyn.

That said, the return of 421-a (and, perhaps, some other public help) may help GFCP meet the 2025 deadline for the remaining affordable housing. (Nearly 800 of the promised 2,250 below-market units will be finished soon. Note that it seems that a specific provision extending the tax-break to buildings without affordable housing will have to be renewed.)

But parent FCRT in November announced a financial model for the project stretching to 2035, which suggests construction could stretch well past 2025. (There are 6,430 total apartments projected, as well as office and retail space.)



On the award

“This award--I’m a proxy. I"m a proxy for an industry that has finally gotten their head around the fact that women have been overlooked and underrepresented,” Gilmartin said in the interview. “And for that, this award is really for all of those women. And for a borough, for all of the boroughs outside of Manhattan, that have been overlooked and under-served by the REBNY community."

As the Real Deal reported, in her speech, she said, to loud cheers, “I dedicate this award to all the women whose talents and ambitions were overlooked and underrated by our industry."

The 421-a deal

The bill would extend the tax break from 25 years to 35 years, with affordable housing guaranteed 40 years (with Atlantic Yards it's 30-35 years), and require wage minimums on large projects in more coveted areas.

As the New York Times reported, in De Blasio and Cuomo Spar Over Cost of Affordable Housing Plan, Cuomo had rejected a de Blasio proposal because it didn't mandate wages for construction workers. An effort to get the Real Estate Board of New York and a consortium of unions to agree led to a stalemate--and now a one year suspension of the tax break.

The Times reported:
According to Vicki Been, the commissioner of the city’s Department of Housing Preservation and Development, the subsidy for every unit of affordable housing will swell to an estimated $544,329 per unit in forgiven taxes under the governor’s plan. Under the city’s proposal, the cost per unit was $421,693.
Under pre-2015 421-a (which included condos), according to HPD, the cost was $614,029 per unit.

The Times quoted Carol Kellermann, president of the Citizens Budget Commission, who called it a policy choice: “The governor’s proposal raises the city’s cost in foregone property tax revenue in order to subsidize construction workers’ wages, without increasing the expected number of affordable housing units."

Wouldn't it be worth seeing alternative proposals to deliver such housing?

According to Politico, summarized in the Real Deal, the proposed changes "would cost the city about $82 million a year more than legislation supported by the de Blasio administration in 2015." A Cuomo spokeswoman called the cost "minimal."

Also, ProPublica reported that Cuomo's "proposal would also let developers collect the tax savings without limiting rent increases on most of the market-rate apartments they build, as required under past iterations of the program."

That means that instead of 35 years of relative stability, the rent increases would begin after the first tenant moves out, as long as the rent is more than $2,700 per month, the current floor for luxury deregulation. (ProPublica has reported that the current regulation often isn't met.)

Update: the IBO on 421-a

A report from the New York City Independent Budget Office (IBO) asked, "An Efficient Use of Public Dollars?: A Closer Look at the Market Effects of the 421-a Tax Break for Condos":
Despite the substantial cost of 421-a in foregone tax dollars, there has been little research examining its effects on housing prices and whether the tax benefit efficiently fosters housing development—the primary goal of the 421-a program.
IBO has explored these questions in regard to condo units receiving 421-a benefits. To do this, we compared more than 17,000 repeat condo sales from 2005 through 2015. Among the key findings based on this analysis:
  • Condo buyers in Manhattan pay on average $35,500 more for an apartment with a 421-a benefit than buyers of similar units without the tax break. Condo buyers in the other boroughs pay on average $31,200 more for units with the 421-a benefit.
  • Because of the higher purchase prices for condos receiving 421-a benefits, owners in Manhattan spend on average 53 cents to 61 cents for each $1 of tax savings. Condo owners in the rest of the city spend on average 42 cents to 50 cents for each $1 of tax savings.
  • Owners of condos receiving 421-a benefits get more in tax savings than they are spending in higher purchase prices. As a result, the city “wasted” a total of roughly $2.5 billion to $2.8 billion in tax expenditures in 2005 through 2015 by providing tax relief to owners as opposed to encouraging additional housing development—the program’s intended purpose.
As policymakers again consider renewal of 421-a, a reduced and better-targeted set of benefits could, at least in theory, lessen the program’s inefficiency while still providing some incentive for condo development. A program that does not oversupply tax subsidies would help make better use of scarce public resources.

Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

No, security guards can't ban photos. Questions remain about visibility of ID/sticker system.

The bi-monthly Atlantic Yards/Pacific Park Community Update meeting June 14, held at 55 Hanson Place, addressed multiple issues, including delays in the project, a new detente with project neighbors,concerns about traffic congestion, upcoming sewer work and demolitions, and an explanation of how high winds caused debris to fly off the under-construction 38 Sixth Avenue building. I'll have more coverage.
Security issues came up several times at the meeting.
Wayne Bailey, a resident who regularly takes photos and videos (that I often use) of construction/operations issues that impact residents, asked representatives of Tishman Construction if the security guard at the sites they're building works for them.
After Tishman Senior VP Eric Reid said yes, Bailey asked why a guard told him not to shoot video of the site, even though he was on a public street.

"I will address it with principals for that security firm," Reid said.
Forest City Ratner executive Ashley Cotton, the …

Atlantic Yards/Pacific Park graphic: what's built/what might be coming (post-dated pinned post)

This graphic, posted in November 2017, is post-dated to stay at the top of the blog. It will be updated as announced configurations change and buildings launch. Note the unbuilt B1 and the proposed shift in bulk to the unbuilt Site 5.

The August 2014 tentative configurations proposed by developer Greenland Forest City Partners will change. The project is already well behind that tentative timetable.

How many people are expected?

Atlantic Yards/Pacific Park has a projected 6,430 apartments housing 2.1 persons per unit (as per Chapter 4 of the 2006 Final Environmental Impact Statement), which would mean 13,503 new residents, with 1,890 among them in low-income affordable rentals, and 2,835 in moderate- and middle-income affordable rentals.

That leaves 8,778 people in market-rate rentals and condos, though let's call it 8,358 after subtracting 420 who may live in 200 promised below-market condos. So that's 5,145 in below-market units, though many of them won't be so cheap.

As…

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Atlantic Yards/Pacific Park in 2017: no new towers, unfilled affordable units, Islanders prepare to leave, project timetable fuzzy

My 2018 preview.

It was another wait-and-see year for Atlantic Yards/Pacific Park, with one big twist--the beginning of a slow goodbye for the New York Islanders--but continued delays for towers, a lost (mostly) 421-a subsidy for condos, and new skepticism about unfilled not-so-affordable housing units.

So ongoing questions linger regarding the project's pace, affordability, and even future ownership.

In my 2017 preview, I predicted--not exactly going out on a limb--that two and likely three more towers would open, though it would be unclear how fast they'd lease up and sell.

Indeed, we've learned that the middle-income below-market units at 461 Dean (which opened in 2016) and 535 Carlton have leased very slowly, while it's too soon to assess progress for commensurate units at 38 Sixth. (At 535 Carlton and 38 Sixth, middle-income units make up half the "100% affordable" buildings.) Meanwhile, many apartments are up for rent at the 550 Vanderbilt condo buildin…