Former Deputy Mayor: Cuomo's 421-a revision kneecapped de Blasio's pursuit of lower-income affordable housing (now, 130% AMI for Atlantic Yards)
Max asked Been if, in retrospect, the administration of Bill de Blasio should have designed its affordable housing "with a little bit more of the of the focus on very lowest income New Yorkers?"
"If we had had perfect foresight into what all would happen," Been said, "we probably would have aimed a little bit we would have aimed for a higher share of the housing to be affordable" to low-income households earning 30% to 50% of Area Median Income, or AMI.
The Affordable New York revision
They had "counted on" the 421-a tax break "as providing more housing at the 60 and 80% AMIs in our planning," Been said, but when the law was revised in 2017 into Affordable New York, "at the last minute, Governor [Andrew] Cuomo changed the benefit package on that pretty substantially, which caused us to end up with a lot of higher income homes, at 130 or 120 or 110% AMI and those are valuable homes to keep the middle income New Yorkers housed. But they were far higher than the 60 and 80% we had really anticipated."
Indeed, for certain neighborhoods, 130% of AMI was equivalent to market-rate rents. Ariel Property Advisors in May 2017 advised potential investors:
Meanwhile, in the outer boroughs, namely Central Brooklyn, the affordable rents are extremely close to the market rents. In Flatbush, the “affordable” two-bedroom at 130% of area median income is $2,652, while the free market rent for the same unit in the same location is $2,600. The law, therefore, provides a clear path for developers to capture the whole rental market and fair market rents across the board in budgeting rental communities.
That provoked what Ariel in November 2017 called an "onslaught" of investment. Ariel in June 2018 added, "The law, consequently, provides a clear path for developers in Flatbush to utilize the advantages of the tax abatement while operating a rental building at market rent."
At Atlantic Yards
Regarding Atlantic Yards/Pacific Park, the two buildings that have opened most recently, B15 (662 Pacific St., aka Plank Road) and B4 (18 Sixth Ave., aka Brooklyn Crossing) got the tax benefits for providing 30% of the units at 130% of AMI.
And for both of them, the allowable rent at 130% of AMI is too high to attract renters. They've adjusted the rents, considerably for the studios and 1-BRs, less so for the 2-BRs. In other words, Atlantic Yards may not be Flatbush, but the developers are still taking advantage of the generous provisions.
The two buildings under construction, B12 and B13 (615 Dean St. and 595 Dean St.), almost surely will have the same affordability configuration.
Going forward, Gov. Kathy Hochul has proposed a revision of Affordable New York, focusing on lower incomes--but it's been embraced by the real-estate industry and criticized by the affordable housing advocates who've so far commented. (I'll have a separate article soon about the impact on Atlantic Yards/Pacific Park.)
Some obfuscation
"So had we anticipated that from the beginning, had we known that there would be a pandemic and a budget crisis that really affected the way that we can finance our buildings, we probably would have aimed higher," Been said.
That's somewhat obfuscatory, since the Affordable New York revision was in 2017 and, for various tactical reasons (I suspect) related to Cuomo's general bullying of de Blasio, the city was pretty quiet about it.
She did emphasize that the city's target of 25% affordability "was a real stretch that was much more than had been done, we think, in prior housing plans. Part of the issue there was that prior housing plans, there hadn't been a lot of attention paid to exactly what the AMIs that were being financed were."
About rezonings
Max asked Been if she had second thoughts about the administration's slow rollout of rezonings, especially in wealthier neighborhoods (like Gowanus and SoHo), aimed ti increase affordability.
"Rezonings tend to come with both housing and other amenities, investments in schools, parks, those kinds of things, as I mentioned, and we were also hearing calls from neighborhoods that felt like they have not been invested in," she said.
"And so we were trying to address both of those concerns, right: let's invest in neighborhoods that have not seen the kind of amenities and the kinds of investment that they should have seen," she said. "And let's require more from neighborhoods that are already amenity rich."
So that's why they started in East New York, she said. (City Limits reported that the rezoning did not spur industrial jobs but has emboldened house flippers.)
"But you know, I certainly understand the criticism that well, maybe you could have done both at the same time," she said. "That's really a capacity problem." She later expressed concerns about new Mayor Eric Adams' proposed budget cut and hiring freeze for city agencies, saying HPD is already stretched while being asked to do more.
She added that new requirements imposed by legislators impose costs, which need to be funded: "We don't want any child to suffer the effects of lead poisoning. But that has to come with a lot of enforcement tools and a lot of additional inspectors."
Lessons learned: upzoning
Max asked Been about advice for the Adams administration, which he described as "sort of pro-development."
First, said Been, "seize the moment that you have with the state. We we tried for eight years to get the state to lift the cap on residential floor area" in New York City, which limits Floor Area Ratio (FAR, a ratio of bulk to the underlying plot) to 12.
But "you can build much higher for commercial development," she said. Now Hochul has proposed lifting that cap, which could lead to rezonings in neighborhoods like the Upper East Side and Upper West Side of Manhattan.
Lessons learned: work with communities
Another of "the most important lessons," she said is that "you have to work with communities holistically... You can't just say we're going to provide new housing here--you need to bring along all the other things that come with it."
At HPD, she said, "I separated the planners from the financiers and made neighborhood planning a separate unit within HPD. It had been basically just to service, the rezonings needed to secure new housing, but it wasn't focused on all the other things that a neighborhood needs and it wasn't particularly focused on working with a neighborhood to think about what the neighborhood wanted."
Except that's not what's happened in Community Board 8, where the push for a rezoning (known as M-CROWN) was stymied by the city, leading to contentious piecemeal spot rezonings, one passed (840 Atlantic Ave.) and two others stalled down the block, at 870-888 Atlantic Ave. and 1034-1042 Atlantic Ave.
What about a city plan?
Max asked about what some consider logical: comprehensive planning for the city.
Comprehensive planning, "sounds like a no-brainer in the abstract," she said. "But like so many tools, it can be misused, and it tends to favor people with more resources. Right? So the neighborhoods that already have more resources can hire attorneys, can hire planners, can get pro bono work from people who live in the neighborhood." And that can encourage resistant litigation.
Max pointed to an alternative, that some want "a mayoral administration to sort of present a comprehensive plan of sorts to the public as a vision."
Been said they had debated whether to announce "the 15 neighborhoods that we thought would be the best candidates for for rezoning and why," but thought such notice could be used to litigate.
"It's a hard call," she allowed, "and maybe we got it wrong, because maybe if we had said, Here are the 15 neighborhoods, people would have said, Okay, well, if you look at that, it's balanced."
Changing ULURP?
Max asked if the city should change its Uniform Land Use Review Process, known as ULURP.
"I see big gaps," Been said. "You know, environmental impact review is is just not working as everyone hoped that it would right and I think we need a fundamental reform there. I'm not sure that fundamental reform is really possible because there are many, many entrenched interests in that process. But that would be at the first of my list, and I certainly plan to try to think more about that back at NYU." She's returning to New York University.
"But the other thing is, I think,, we have to limit the number of bites of the apple and a good example of that right now is you're seeing newly elected city council people say, Well, I know that you've spent two years on a ULURP process and the only thing left is the City Council vote but I want you to start all over again. Because now I'm in office. You know, the process engaged the community, maybe you maybe the newly elected council member has a slightly different view or a different view of what it is that the community wants, but the community has been involved already for two years."
That seems to be a swipe at Crystal Hudson, newly elected Council Member for the 35th District, as detailed in a rather developer-friendly article in the real-estate publication The Real Deal regarding the two stalled Atlantic Avenue spot rezonings. I'm not sure the process engaged the community that much.
"And to start all over again, is, like I said earlier, that imposes two years of delay, that's how a lot of cost and means that families are not going to be in a in a stable affordable high quality home for another two years," she said. "So it's a serious problem."
Overcoming "supply skepticism"
Max cited a 2018 paper Been co-authored with NYU Furman Center colleagues titled Supply Skepticism: Housing Supply and Affordability, which concluded, "from both theory and empirical evidence, that adding new homes moderates price increases and therefore makes housing more affordable to low- and moderate-income families."
"But the fear that new housing will somehow raise the rents in the neighborhood, change the neighborhood and and push people out," she said, is not borne out by the evidence, since "studies have shown that when new development comes to a neighborhood the rents decline compared to where they would otherwise have been.""So I think one of the things that we really need to think more about and we've started this at the city is to think about ways of, of enabling community members to feel more of a stake in what's happening in the community as a whole," she said.
That is very interesting. She added, that HPD put out a "request for proposals about ways in which we could increase the ability of renters as well as owners to enjoy some of the increasing incomes in a neighborhood." Also very interesting.
Indeed, concerning the general issue of supply skepticism (though not the specific paper), Rick Jacobus wrote 2/19/19 in Shelterforce, Why Voters Haven’t Been Buying the Case for Building:
And while I believe that resistance to development is causing great harm, particularly for lower-income people, I don’t think we can overcome that resistance without addressing the real question that people are raising. To do that we have to look more closely at who benefits most from new development and think a little harder about what steps local government can take to share that benefit more widely.
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