What watchdogs (including me) missed: City/State Funding Agreements (2007), Development Agreement (2010) not only extended project deadlines, they defined "affordable housing" more generously

It happened in 2010, and it also happened in 2008: those journalistic and civic watchdogs paying attention were so focused on government agreements that extended deadlines for Atlantic Yards that they missed some other crucial fine print: that "affordable housing" had been redefined with much greater latitude for the developer, obviating a requirement to fulfill previous promises.

And that's relevant to the efforts now--as highlighted by the BrooklynSpeaks coalition--to make sure that the income-targeted housing goes to lower-income residents, rather than middle income ones, as a May 2025 deadline to deliver 876 more affordable units looms. 

(I'll have a report soon on their Jan. 26 housing session, but the presentation is here.)

State language left wiggle room

Atlantic Yards was approved in 2006 by Empire State Development Corporation (now Empire State Development) and re-approved in 2009, with gentler terms then incorporated in the guiding Modified General Project Plan. 

ESD is a state authority that oversees and shepherds the project. Regarding affordable housing, it said:

Affordable housing is expected to be financed through tax-exempt bonds provided under existing and proposed City and State housing programs, such as the City's 50-30-20 program. 

Indeed, that 50-30-20 program, with 50% market-rate units, 30% middle- and moderate-income units, and 20% low-income units, was the template long promoted in the 2005 Affordable Housing Memorandum of Understanding (MOU) that original developer Forest City Ratner signed with advocacy group New York ACORN. 

That which was soon incorporated into the much-promoted Atlantic Yards Community Benefits Agreement (CBA), a private agreement the developer signed with eight groups.

But that template, as the MGPP language suggested, was not guaranteed, and even the suggestion of such programs--with cohorts tied to specific Area Median Incomes (AMIs)--was absent from contract documents. The CBA was not enforceable by any government entity, and the promised Independent Compliance Monitor was never hired.

Development agreement left bigger gap

From the 2009 Modified General Project Plan

In January 2010, when the Development Agreement, the project's guiding contract, was belatedly released, I wrote that the developer faced generous deadlines, including six years to build the arena, 12 years to build Phase 1, and 25 years to finish the project. 

That meant a 2035 completion, not 2019, as suggested in the 2009 project reapproval. As seen in the above screenshot, the project was "anticipated to be completed by 2019." (The timetable actually would start after the 5/12/10 "Effective Date," which marked delivery of Phase 1 property.)

What I and others missed was that affordable housing had been generously redefined. That's allowed for a disproportionate amount of middle-income units aimed at renters earning six figures, rather than a majority of the apartments going to low- or moderate-income households.

A curious exchange

From the Development Agreement

As noted in June 2017 coverage of a meeting of the Atlantic Yards Community Development Corporation, the advisory group set up after the 2014 BrooklynSpeaks settlement that set a new 2025 deadline for affordable housing, housing advocate Barika Williams said she thought "we do have to hit a certain number of units at certain AMI levels."

"I don’t remember that in the Development Agreement," said Marion Phillips III of Empire State Development.

He was right. The document--screenshot above right--offers this definition: 

Affordable Housing Units shall mean residential units subject to income and rent restrictions contained in either an HDC, HFA or HPD Regulatory Agreement providing that (a) such units will be affordable to persons or families earning no more than 160% of Area Median Income or, if higher, the highest percentage of Area Median Income used at the applicable time under any HPD, HDC, HFA or other City or State housing initiative intended to provide housing opportunities for low, moderate or middle income individuals, as approved by the City or State (as applicable) and (b) rents for units shall be no more than 30% of 160% of AMI [Area Median Income] or, if higher, 30% of the highest percentage of AMI used at the applicable time under any HPD, HDC, HFA or other City or State housing initiative intended to provide housing opportunities for low, moderate or middle income [sic], as approved by the City or State (as applicable).

Slack was offered in 2007

This wasn't the first time affordable housing was redefined, but the timetable issue got far more play.

As I wrote in March 2008, nine months after the project's initial December 2006 approval, in September 2007, the ESDC signed a State Funding Agreement that gave Forest City a much longer leash, including 12 years to build Phase I and an unspecified amount of time to finish the project.

Soon emerged a separate City Funding Agreement, similarly signed Sept. 12, 2007, which detailed modest penalties for delay, plus allowance for a much smaller Phase 1.

Those were big news--as was the news in 2010. Those documents contained similar language, precursors to the treatment of affordable housing in the Development Agreement.

In April 2008, I asked ESDC about the timetable extension, and got this response:

"We expect the arena and phase 1 to be completed before the outside deadlines. Nevertheless, acknowledging that complex projects are often delayed due to external factors (including market conditions) we determined it was reasonable to provide the developer with flexibility. Those time frames were negotiated. There will be an outside deadline for phase 2. It is presently under negotiation."

As I wrote, it not unreasonable to acknowledge that complex projects are often delayed. But why, then, did the Modified General Project Plan, which ESDC approved just nine months before the funding agreement was signed, "anticipate" that the whole project would take only a decade?

What deserved more attention was that the state also "negotiated"--or, more likely, accepted the developer's request for--that slack in the definition of affordable housing.

Of course the delay in the timetable also affects the notion of affordability, as rising Area Median Income means ever more costly calculation of "low-income"--say 40% of AMI. 

2007 language

Here's the actual language, first from the City Funding Agreement, between the New York City Economic Development Corporation and ESDC:

"Affordable housing" shall mean, residential units subject to income and restrictions contained in either an HDC, HFA or HPD Regulatory Agreement providing that (x) such units will be affordable to persons or families eaming no more than 160% of Area Median Income or, if higher, the highest percentages of Area Median Income used at the applicable time under any HPD, HDC or other City housing initiative intended to provide housing opportunities for low, moderate or middle income families, as approved by the City and (y) rents for units shall be no more than 30% of 160% of Area Median Income or, if higher, 30% of the highest percentage of Area Median Income used at the applicable time under any HPD, HDC or other City housing initiative intended to provide housing opportunities for low, moderate or middle income.

From the State Funding Agreement, between ESDC and two Forest City entities, Brooklyn Arena LLC and Atlantic Yards Development Corporation/AYDC:

Affordable Housing Units. "Affordable Housing" shall mean residential units subject to income and rent restrictions contained in either an HDC, HFA or HPD Regulatory Agreement providing that such units will be affordable to persons or families earning no more than 160% of Area Median Income or, if higher, the highest percentage of Area Median Income used at the applicable time under any HPD, HDC or other City housing initiative intended to provide housing opportunities for low, moderate or middle income persons or families as approved by the City and rents for units shall be no more than 30% of 160% of Area Median Income or, if higher, 30% of the highest percentage of Area Median Income used from time to time under any HPD, HDC or other City housing initiative intended to provide housing Opportunities for low, moderate or middle income persons or families as approved by the City.

Notwithstanding the above, if the Declarant applies for tax abatements under the 421a program, the Declarant will be required to abide by the definitions of affordable housing under subdivision 7 of section 421-a of the real property tax law, the current proposed legislation for which requires that for each 1,500 residential units, 20% of those units must be affordable to persons or families whose incomes at the time of initial occupancy do not exceed 120% of Area Median Income adjusted for family size, and do not exceed an average of 90% of Area Median Income adjusted for family size.

The 421-a law changed, so that income ceiling no longer applies. Nor does a "carve-out" that would allow Atlantic Yards buildings to gain the 421-a tax break if the project, in aggregate, contained a requisite level of affordable housing. 

Since then, Forest City sold the majority of the project going forward to Greenland USA, which dominates the Greenland Forest City Partners joint venture. That sale came with that important slack previously negotiated.