Atlantic Yards and the problem of time: rise in (regional) Area Median Income means "low-income" two-bedroom apartment could now rent for $1,500

It's always useful to try to encapsulate some conclusions about Atlantic Yards/Pacific Park when I lead a walking tour, as I did recently for a law school class.

One conclusion is that a judge's 2010 ruling upholding condemnation of remaining properties needed to build the arena has been proven even more wrongheaded.

"Whatever the pace may be, the nature of those [public] benefits remains the same," he wrote, upholding a contention by Empire State Development---the state authority that oversees/shepherds the project--that projections of tax revenues, jobs, housing, and open space were legitimate, though the predicted ten-year buildout had been extended to 25 years.

As I wrote at the time, "can't the pace for the delivery of public benefits ultimately change their nature? In other words, affordable housing delivered over a decade is far different than housing delivered over 30 years. Ditto for tax revenues."

The same goes for open space, given that the privately operated space is not due until the project is finished, and that could take until 2035, even as the population in the Atlantic Yards/Pacific Park buildings grows. 

As petitioners' lawyer contended, the newly revealed deadline for completion--25 years, rather than ten years--vitiated the argument that completing this project would remove blight, which however dubious, was premised significantly on the existence of an open railyard, which requires a deck.

Less-affordable housing

Perhaps the most blatant example of the problem of time is that delays in building promised "affordable housing"--which the developer blamed on the recession and opponents' lawsuits, but which history suggests also relates to overoptimistic plans and poor execution (such as with modular construction)--mean that housing becomes ever less affordable.

Translation: what in 2006 was considered a moderate-income unit, a two-bedroom renting for $1,418, was more affordable than what now would be classified as a low-income unit, a two-bedroom renting for $1,501, as explained below.

And that rise in rents outpaces the rise in Brooklyn incomes (and, even more so, the increases for low-income households), the artifact of a calculation that involves more prosperous suburban counties.

Those delays are further compounded by a long leash from state overseers, which means that, in contrast with a promised configuration of 2,250 units as 40% low-income, 20% moderate-income, and 40% middle-income, the project's "affordable housing" was generously defined as participating in a government program.

That means that, instead of the "50/50" plan of 50% affordable units in each rental building--albeit, with the latter divided into tranches--we now have buildings with 30% "affordable" units, but aimed only at middle-income households, many earning six figures.

Affordable housing and rising AMI

As I wrote in 2015, for the first few years after Atlantic Yards was announced in 2003, the developer and project supporters described proposed below-market apartments as "affordable and middle-income housing." 

From Housing MOU

Only later was it all generalized as "affordable," which papers over the vast differences in expected rents between low- and middle-income households. 

After all, "affordable" technically means only "income- linked" or "income-targeted," in which households spend approximately 30% of their income on rent.

Affordable housing is calculated based on percentages of Area Median Income, or AMI: low-income housing in Atlantic Yards was supposed to involve households earning up to 50% of AMI, moderate-income up to 100% of AMI, and middle-income up to 160% of AMI , as shown in the 2005 Affordable Housing Memorandum of Understanding, which original developer Forest City Ratner signed with advoacy group ACORN.

 

Those income limits have been stretched slightly in the two "100% affordable" buildings, 38 Sixth and 535 Carlton, which also were significantly skewed to middle-income households. Now there's a oversupply of middle-income units and undersupply of low-income units, with 877 more "affordable" units required by 2025. (That deadline is doubtful.)

But the definition of low-income has changed. Consider: in 2005, as shown in the excerpt above right, 100% of Area Median Income was $62,800 for a four-person household. In 2006, the year the project was first approved, 100% of AMI was $70,900, as shown in the chart below.

In 2016, it was $90,600, and now it's $133,400, as I wrote recently, noting that an apparent change in the calculation also means that lower-income units are getting less of a discount.

It also means, as I've written, that those producing "affordable housing," especially middle-income units, may not even ask for what's allowable, given that such rent levels are uncompetitive in the market.

The bottom line, as the chart shows, is that a moderate-income unit in 2006 now seems like a low-income one. And that--as I'll write separately--raises questions about the future configuration of project units.

But it does seem clear that the nature of the public benefits is not quite the same.