Rising baseline: new middle-income apartments at 130% of Area Median Income can house those earning more than those earning 165% of AMI four years ago

"Affordable"--it's a "relative thing," right?

While those most in need of low-cost housing tend not to see their incomes rise much, the Area Median Income (AMI), the regional formula that serves as a base for calculating affordable rent and income levels, tends to rise steadily, since it includes prosperous suburban counties.

The Atlantic Yards project as of 2005 relied on a regional area median income (AMI) of $62,800 (for a family of four), well above that in Brooklyn.

That was memorialized in the 2005 Atlantic Yards Affordable Housing Memorandum of Understanding (MOU), signed by developer Forest City Ratner and the housing advocacy group ACORN.

The number has risen steadily. In 2021, astoundingly, 100% of AMI for a four-person household is $119,300. That's a 90% increase over 2005. That means that "low-income," as a fraction of AMI, has risen commensurately. 

And that means that "affordable" can mean two-bedroom apartments renting at $3,219/month for middle-income households--below-market compared to comparable new apartments, but hardly what ACORN was marching for.

The impact of delay

So delays in Atlantic Yards/Pacific Park have significantly set back those seeking affordable housing, since rising AMIs have put it ever out of reach for low-income people. So too has a shift from a range of income "bands," to a focus on middle-income tenants. 

And, as described below, today middle-income units at 130% of AMI allow for higher incomes than middle-income units at 165% of AMI in 2017--and those apartments have been so hard to rent they've often come with free-month incentives common to the market-rate units.

About those delays: yes, some housing advocates blamed Atlantic Yards opponents for protesting and suing, which was certainly part of it.

But the recession, a failed effort at modular construction, changing tax policies, unrealistic promises/expectations, and shifting commitments by the developers--aided by the state and city--have surely played a larger role.

What's low-income?

Initially, low-income was defined as a maximum of 60% of AMI, according to the MOU, and low-income units were supposed to repesent 40% (900) of the affordable units.

Now, according to city guidelines, excerpted at left, the low-income maximum is 80% of AMI--but the the Atlantic Yards Development Agreement does not require the originally promised configuration of incomes. Rather, it simply defines affordable as participating in a city, state, or federal program.

So it might be better to use the terms "income-linked" or "income-restricted," since such middle-income households, many earning six figures, have incomes well above the Brooklyn median.

See the graphic at right, from NYU's Furman Center. (It uses 2019 data.)  

Middle-income focus

Ironically enough, much of the Atlantic Yards/Pacific Park "affordable housing" is geared to some of the least needy households--and, even with lowered income floors, the housing still doesn't serve those in the bottom half of the income range.

The building that just opened, 662 Pacific St. (B15, aka Plank Road), and the next one, 18 Sixth Ave. (B4, aka Brooklyn Crossing), will each have 30% of their units--94 and 258, respectively--affordable, but all for households at 130% of AMI. (That likely will be the case for the upcoming B12/B13, or 615 Dean St./595 Dean St., expected to open in mid-2023.) 

And AMI keeps rising, which means middle-income units can get more expensive.

Rising AMI

By 2006, the year of an Affordable Housing Information Session sponsored by Forest City, the AMI was $70,900.

By 2012, when there was first talk about the first tower with affordable units, B2 or 461 Dean St., the AMI was $83,000.

As of January 2017, when the lottery for 38 Sixth Ave., the second of two "100% affordable" buildings (after 535 Carlton), launched, 100% of AMI--based on 2016 figures--was $90,600. But the 2017 figure was $95,400.

As of 2019, 100% of AMI for a four-person household was $106,700. (Note that, at some point, the city started citing income limits for three-person households, as if to avoid accentuating the increase.) By 2020, it was $113,700.

Today, it's $119,300. So 130%--the maximum for middle-income households eligible for "affordable" units at 662 Pacific St. (aka B15, or Plank Road)--is $155,090 for a four-person household, as shown in the listing above from Housing Connect.

Comparison with 38 Sixth

What's notable how the income limits and rents compare--and in some cases contrast--with the units at 38 Sixth Ave. marketed for middle-income households, as of 2016-17, at 165% of AMI. See graphic below.

For studios, the income limit at 38 Sixth was $104,775, at 165% of AMI. At 662 Pacific, more than four years later, the income limit is $108,680, at 130% of AMI.

Note, however, that the income floor--especially for studios--is much lower at the newer building, in an attempt to better market the units, and that the rent is considerably lower: $1,547 vs. $2,121.

That was a calculated decision by the developers, who apparently recognized that expensive studios--pretty much market rate--wouldn't get leased, even with the advantage of rent stabilization.

For one-bedrooms housing two people, the income limit at 38 Sixth was $119,625, at 165% of AMI. At 662 Pacific, the income limit for two people is $124,150, at 130% of AMI.

Again, the rents at the newer building are lower: $2,273 vs. $2,663. That implies a relative bargain for those at the higher end of the income scale, while those near the bottom of the income floor still find the units "affordable"--close to 30% of income.

For two-bedrooms, the gap narrows. At 38 Sixth (165% of AMI), the income limit for three people was $134,640 and for four people $149,490. At 662 Pacific (130% of AMI), the income ceilings are $139,620 for two and $155,090 for four.

38 Sixth lottery ad. I've crossed out the 3-bedroom units because 662 Pacific has none

For two-bedrooms, the rents at the new building, $3,219, are higher than the $3,206 at 38 Sixth, even though they're not set at what the city could allow: $3,397. See chart below. And yes, the "affordable" rents at 662 Pacific are well below the market rents.

A look on StreetEasy shows the cheapest two-bedrooms in Prospect Heights are at another "100% affordable" building, 535 Carlton, where the listed rents are $3,223, but come with a free month on a 12-month lease, bringing "net effective rent" to $2.954. 

There are definitely cheaper two-bedroom apartments in nearby neighborhoods--around $2,500--though they aren't necessarily comparable in terms of size, location, quality, amenities, and new construction. But people do have options.

Note: as I wrote, the listed rents at 662 Pacific all discounts off the maximum allowable rents, but those discounts are very inconsistent. For studios, that $716 reduction is a 31.6% discount off the maximum. For one-bedrooms, that $565 reduction is a 19.9% discount. For two bedrooms, that $178 reduction is just a 5.2% discount.