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From Shelterforce: What If We Didn’t Have to Beg for Community Benefits?

Given the hype--and the warnings, since confirmed--about the Atlantic Yards Community Benefits Agreement (CBA), it's worth thinking, albeit with the benefit of hindsight, about how it could have gone differently.

One way would have been to tie promises of jobs, job training, and affordable housing into an enforceable CBA, one signed by public entities. Another would have been to avoid a CBA completely, yoking such promises to a rezoning, a process with City Council and City Planning Commission oversight.

And another, suggested by Michael Spotts and Ahmad Abu-Khalaf in a 2/7/18 essay for Shelterforce, What If We Didn’t Have to Beg for Community Benefits?, is to be "reversing the traditional community benefit paradigm in which private market developers provide concessions to the community, and shifting toward a community-based, mission-oriented master developer approach."

They work for Enterprise Community Partners, a New York-based, nationally prominent housing nonprofit. (Here's some of their projects in New York City.) They cite a paper, Public Benefit from Publicly Owned Parcels, as well as a case study from Washington State. They write:
Over the course of researching this project, we observed a common pattern, particularly for large sites. The public agency would release a request for proposals to identify master developers who can meet a given set of development parameters. This approach has the merits of shifting certain development decisions, day-to-day responsibilities, and risks from the agency (which may or may not have robust real estate development capacity and experience) onto the private sector. The selected developer generally gains the ability to profit from the development of the site in exchange for some combination of site control payment and an agreement to provide community benefits, such as public infrastructure, community facilities, and affordable housing. A notable success story is the redevelopment of the former Robert Mueller Municipal Airport in Austin, Texas, which is projected to create 5,700 homes at full buildout, 25 percent of which are to be affordable at a range of incomes.
Note that the full Atlantic Yards/Pacific Park site was never subject to a request for proposal, just the Metropolitan Transportation Authority's Vanderbilt Yard, and the clear preference for Forest City Ratner's bid was shaped by leading officials' desire for an arena and team.

Trading off risk

There are two key factors here. One is that the public agency, as noted in the above excerpt, "may not have robust real estate development capacity and experience." That seems to be a pattern, in New York City at least, in which private companies take the lead.

Another is that, "In exchange for these benefits and the (non-trivial) assumption of development risk, a successful master developer generally receives the full upside potential of property value appreciation."

With Atlantic Yards/Pacific Park, that development risk has certainly turned out to be non-trivial, but a different or modified plan, as shaped by public agencies, might have produced a more viable project.

Putting a nonprofit in charge

The authors suggest:
What if instead, public agencies granted site control—and the ability to capture a greater percentage of value appreciation—to a mission-driven entity such as a large-scale nonprofit developer, community development corporation, cooperative, or community land trust? This community-based, mission-oriented master developer could then theoretically subcontract with market-rate developers for portions of the site from a position of strength, and ensure that the community-serving portions of the development are not marginalized. Over time, a successful development would not just provide affordable homes and community space, but it could also provide on-going dividends to the community that might otherwise flow to non-local corporations and shareholders.
That's a non-trivial challenge, since that nonprofit would need significant juice. The authors say they didn't see "exact examples of this model in our research," but did find "partial lessons" from other examples, such as land banks and use of a land conservancy.

They acknowledge potential barriers, including institutional capacity and a willingness by public entities to mitigate risk

From the study

Here's the full study, Public Benefit from Publicly Owned Parcels: Effective Practices in Affordable Housing Development, published last year.

I'll note that, in the section Site-Based Principles and Recommendations for Efficient and Equitable Development, there seem to be a few Atlantic Yards lessons, including:
• Consider subdividing larger sites if agency capacity or the developer network is limited and/or to encourage competition.
• Create back-up plans in the event of market disruptions.

Regarding Large/master-planned sites, the authors note:
The scale of the site may create both challenges and opportunities. It is critical that social equity considerations play a critical role from the outset of the planning process. There will likely need to be a range of mechanisms and tools to ensure that housing affordability is a part of development plans. Public agencies should consider site subdivision to engage with a  broader range of developers capable of contributing to the site redevelopment.

Among Tools to Facilitate Affordability, the authors citethe New York City Department of Housing Preservation and Development (HPD), which "facilitates the development of affordable and mixed-income housing on city-owned parcels by conveying those parcels, in most cases, to developers for a nominal price of $1 per tax lot."

An enforcement note and mortgage locks it in. As an example, they cite a November 2012 HPD  solicitation for a site catercorner to the Brooklyn Academy of Music and write:
A development team led by Jonathan Rose Companies was chosen [city press release] in October 2013 to develop a 12-story, mixed-use development that will include 50 affordable housing units, 73 market-rate units and the space for arts programs. These benefits were accomplished without additional city subsidy beyond the discounted land value.
The site, called BAM North Site II, is now the Caesura, with 49 below-market units. The difference between this and Atlantic Yards/Pacific Park is that Forest City Ratner had to pay significant sums, albeit with significant partial reimbursement, for the site, with a private upzoning as a reward, but didn't plan for the delays and the cost of carry.

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