At AY CDC, dismay about not-so-affordable housing and lottery lag. Are middle-income units not "developer's fault"? Are new subsidies needed--or fines enforced?
This the second of four articles on the 4/11/23 meeting of the Atlantic Yards Community Development Corporation (AY CDC). The first concerned open questions about the future of the platform and fines for affordable housing. The third concerned plans for the Urban Room and possible new public engagement. The fourth concerned AY CDC transparency.
It has 798 units, with 240, or 30%, designed “affordable”--though better described as income-targeted or income-restricted.
Ongoing work will complete open space around the buildings, which, when combined with the previous open space at the adjacent 535 Carlton (B14) and 550 Vanderbilt (B11) towers, will mean 3 acres of open space on the project's southeast block.
“We expect the affordable housing lottery to open in the coming weeks,” Jaiyesimi said, noting that developer TF Cornerstone was working through the final approvals with the city’s Department of Housing Preservation and Development.
She didn’t mention that TF Cornerstone had not revealed the expected rent levels or that, as I wrote, it had last November teased the lottery as “opening soon.”
That later led board member Ron Shiffman, a longtime advocacy planner and academic, to ask if there’s a way of making sure in the future that the lottery is scheduled so market-rate unit and below-market residents can move into the building simultaneously.
“That’s a good point,” allowed Jaiyesimi, saying she’d follow up.
Acting Board Chair Daniel Kummer asked how long the time lag has been previously.
“I can’t recall the timing for the previous lotteries,” Jaiyesimi said.
As I wrote in November 2012, the Citizens Housing and Planning Council reported that, on average it takes 371 days to fill all the units in a NYC housing lottery, despite units being available and ready for occupancy, and that one in three housing lotteries did not begin until months after a building was already ready for occupancy. It blamed the city bureaucracy.
Middle-income units not so affordable
Director Gib Veconi drilled down on 595 Dean, emphasizing how little the "affordable" units serve the needy. “This is really for the benefit of other directors, some of whom are new to the project,” he said.
“The affordable units are being subsidized through Affordable New York Option C,” he noted. That's the successor to the 421-a tax break, which fully exempts taxes for a construction period of up to 3 years and then 35 years post-construction, and requires units at 130% of Area Median Income (AMI).
Veconi, after citing the income range, observed, “That’s almost a market-rate apartment.”
Well, in some neighborhoods, yes. Consider this June 2018 article from Ariel Property Advisors, which crowed about the advantages:
Another way of looking at Veconi's quote re "almost a market-rate apartment” is that people with those incomes can afford apartments on the open market, if not necessarily in new, highly-amenitized buildings in those neighborhoods.
What’s allowed at AY
“The [Atlantic Yards/Pacific Park] project agreements allow up to 165% of AMI to be considered affordable housing,” Veconi continued.
Actually, the guiding Development Agreement is more flexible:
Instead, the allotment has been disproportionately middle-income, enabled by that loose definition of affordability, first incorporated in 2007 in the State and City Funding Agreements, then the guiding Development Agreement, which surely resulted at least in part from lobbying by the developer.
That has been compounded by two factors that I think Veconi was referencing. First, the structure of tax incentives and subsidies has evolved, which means buildings offering 30% of their units at 130% of AMI qualify as affordable. Second, that base figure for calculating affordability, AMI, has risen steadily, in part because it incorporates wealthier suburban counties.
Veconi added that there’s no community preference for units funded by the 421-a tax break, though the initial buildings came with half their affordable units assigned to residents of the four nearby Community Districts: Community Boards 2, 3, 6, and 8.
Later in the meeting, Shiffman noted that, “when this thing was debated originally… the idea of affordability was at a much lower level. I think we have to figure out how to urge the developer and urge local government to meet that original obligation… Otherwise, we’re going to have an economically segregated community.”
Urge, bribe, or compel?
Director Ethel Tyus noted an MTA-owned site at Franklin and Atlantic avenues.
“That'll get into another negotiation with the MTA,” observed Veconi.
Piggybacking on the Governor’s plan
Shiffman cited Gov. Hochul’s proposal that every county increase by 3% its production of housing. “This is a low-hanging fruit in a way because it's already been designated,” meaning the entitlement at Atlantic Yards/Pacific Park has already been approved.
He suggested that ESD “go back to the governor's office to see if there are any other kinds of subsidies or incentives that could be provided in this situation.”
Kummer suggested that, as the representative of the Brooklyn Borough President on the AY CDC, Shiffman could inquire with BP Antonio Reynoso.
Shiffman agreed, saying they need to consult elected officials at all levels: “But here we have a situation which can be a project that should be moved along, because it's in the making, and for it to falter because we don't provide it with the subsidies necessary to make it work, that could create a backlash to future development that could take place. If we could do it here, we could do it east of this site.”
Leverage questions
Or, perhaps, ESD should first use the leverage possible to collect fines, and maybe even try to get a piece of the upside regarding the arena.
Not only is the Atlantic Yards/Pacific Park affordable housing behind schedule, the hundreds of units most recently delivered are aimed at middle-income households, who, however much they appreciate new rent-stabilized units below market levels, are hardly the needy.
So a few AY CDC directors suggested ways to get the project back on track, even as a representative of the parent Empire State Development (ESD), the state authority that oversees/shepherds the project, expressed no qualms when she discussed the newest "affordable" units.
The two most vocal AY CDC members, both affordable housing advocates, made a clear case for more affordability, but to my mind were overly generous to the developer and seemed to prioritize increased subsidies rather than the low-hanging fruit of enforcing the existing housing deadline and fines.
Update: as noted below, Ron Shiffman clarified for me that his comments envisioned a project with greater public and non-profit involvement, not simply the same developers.
Tobi Jaiyesimi, AY CDC Executive Director, briefed the board on progress at the two-tower complex 595 Dean (B12/B13), which as of the board's last meeting in June 2022 was still completing facade work, but now has its initial TCOs, or Temporary Certificates of Occupancy.
It has 798 units, with 240, or 30%, designed “affordable”--though better described as income-targeted or income-restricted.
Ongoing work will complete open space around the buildings, which, when combined with the previous open space at the adjacent 535 Carlton (B14) and 550 Vanderbilt (B11) towers, will mean 3 acres of open space on the project's southeast block.
The remaining 5 acres depend on the start--and completion--of the platform over the Vanderbilt Yard, slated to support six towers.
Housing lottery lag
“We expect the affordable housing lottery to open in the coming weeks,” Jaiyesimi said, noting that developer TF Cornerstone was working through the final approvals with the city’s Department of Housing Preservation and Development.
She didn’t mention that TF Cornerstone had not revealed the expected rent levels or that, as I wrote, it had last November teased the lottery as “opening soon.”
That later led board member Ron Shiffman, a longtime advocacy planner and academic, to ask if there’s a way of making sure in the future that the lottery is scheduled so market-rate unit and below-market residents can move into the building simultaneously.
“That’s a good point,” allowed Jaiyesimi, saying she’d follow up.
Acting Board Chair Daniel Kummer asked how long the time lag has been previously.
“I can’t recall the timing for the previous lotteries,” Jaiyesimi said.
The first Atlantic Yards/Pacific Park building with only middle-income "affordable" units, Plank Road (B15, 662 Pacific St.), opened its lottery in November 2021, weeks after market-rate move-ins began.
The second, Brooklyn Crossing (B4, 18 Sixth Ave.), opened its lottery in January 2022, about a week after market-rate units were said to be available.
We haven't gotten reports on the timing to lease up, but there's typically a 60-day application window. Then it may take two to ten months to hear back, according to the city, which is followed by an interview and evaluation process.
As I wrote in November 2012, the Citizens Housing and Planning Council reported that, on average it takes 371 days to fill all the units in a NYC housing lottery, despite units being available and ready for occupancy, and that one in three housing lotteries did not begin until months after a building was already ready for occupancy. It blamed the city bureaucracy.
Middle-income units not so affordable
Director Gib Veconi drilled down on 595 Dean, emphasizing how little the "affordable" units serve the needy. “This is really for the benefit of other directors, some of whom are new to the project,” he said.
“The affordable units are being subsidized through Affordable New York Option C,” he noted. That's the successor to the 421-a tax break, which fully exempts taxes for a construction period of up to 3 years and then 35 years post-construction, and requires units at 130% of Area Median Income (AMI).
That, he said “means about $135-140,000 for a family of three.” That's in mid-range, indeed, but the maximum is $156,130, while--for example--at the Brooklyn Tower, the range is $96,378 - $156,130 for a three-person household in a one-bedroom and $115,200 - $156,130 in a two-bedroom.
Veconi, after citing the income range, observed, “That’s almost a market-rate apartment.”
Well, in some neighborhoods, yes. Consider this June 2018 article from Ariel Property Advisors, which crowed about the advantages:
The Affordable New York tax incentive is enormously attractive in neighborhoods in Central Brooklyn where the Area Medium Income (AMI) requirements are close to market rents, such as Flatbush. The incentive allows developers to charge up to 130% of AMI, which corresponds to $2,993 for a two-bedroom apartment. For the same two-bedroom apartment in Flatbush, free market rent is $2,150.
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.
In more desirable areas like Downtown Brooklyn and Atlantic Yards/Pacific Park, units at 130% of AMI are well below-market for the buildings themselves.
Consider, the cheapest past market-rate two-bedroom at Brooklyn Crossing rented for $5,995, while the "affordable" rate was $3,344, slightly below allowable guidelines. The developers of both Brooklyn Crossing and Plank Road strategized to set rent levels for studios and one-bedrooms well below the city’s allowable limit, in order to ensure takers.
That's because middle-income buildings can be hard to fill. "I spoke to an agent of a building we turned down recently," stated one apartment-seeker on a message board, "and he basically said every time he shows apartments for 130% AMI people tell him they’ve been called for 4 or 5 different buildings at the same time, because they are hard to fill."
Another way of looking at Veconi's quote re "almost a market-rate apartment” is that people with those incomes can afford apartments on the open market, if not necessarily in new, highly-amenitized buildings in those neighborhoods.
What’s allowed at AY
“The [Atlantic Yards/Pacific Park] project agreements allow up to 165% of AMI to be considered affordable housing,” Veconi continued.
Actually, the guiding Development Agreement is more flexible:
Affordable Housing Units shall mean residential rental units that are 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 individuals or families earning no more than 160% of AMI or, if higher, the highest percentage of AMI used at the applicable time under any HPD, HDC, HFA or other City or State housing initiative.”So, while previously the highest band marketed was 165% of AMI—half of the units at “100% affordable” 535 Carlton and 38 Sixth buildings—they could, theoretically, go higher, though that seems impractical.
After all, even units at 130% of AMI today are not marketed at the maximum possible rent.
As I wrote in November 2021, by then, middle-income units at 130% of AMI allowed for higher incomes than middle-income units at 165% of AMI in 2017, when 535 Carlton and 38 Sixth were marketed. Moreover, the most expensive units at those latter buildings had been so hard to rent some came with free-month incentives common to market-rate units.
Not the developer's fault?
“So this is really—I mean, it’s not the developer’s fault, they’re performing according to the agreements and state law," Veconi said, "but the project was structured in a way that, today, given the change in AMI, doesn’t really deliver housing that’s very affordable.”
That’s overly generous and, in part, wrong.
“So this is really—I mean, it’s not the developer’s fault, they’re performing according to the agreements and state law," Veconi said, "but the project was structured in a way that, today, given the change in AMI, doesn’t really deliver housing that’s very affordable.”
That’s overly generous and, in part, wrong.
The developers don’t deserve to be let off the hook so easily. First, the 2010 Development Agreement. which allows that loose definition of affordability cited above, differs enormously from the configuration of affordability promised by original developer Forest City Ratner in the 2005 Affordable Housing Memorandum of Understanding, signed with advocacy group ACORN and incorporated in the “legally binding” Community Benefits Agreement.
The latter documents were supposed to guarantee that 40% of the affordable units would be low-income, 20% middle-income, and 40% middle-income, in a total of five tranches.
Instead, the allotment has been disproportionately middle-income, enabled by that loose definition of affordability, first incorporated in 2007 in the State and City Funding Agreements, then the guiding Development Agreement, which surely resulted at least in part from lobbying by the developer.
 |
| Note that the units at 615 Dean and 595 Dean, combined as 595 Dean, are confirmed as middle-income |
That has been compounded by two factors that I think Veconi was referencing. First, the structure of tax incentives and subsidies has evolved, which means buildings offering 30% of their units at 130% of AMI qualify as affordable. Second, that base figure for calculating affordability, AMI, has risen steadily, in part because it incorporates wealthier suburban counties.
Veconi added that there’s no community preference for units funded by the 421-a tax break, though the initial buildings came with half their affordable units assigned to residents of the four nearby Community Districts: Community Boards 2, 3, 6, and 8.
“So not only is it not particularly affordable, it’s not preferencing communities around the project,” he said.
Another reason the developers don't deserve to be let off the hook: they've avoided candor regarding the units' affordability.
In March 2021, when I asked Greenland USA--which built Brooklyn Crossing with The Brodsky Organization--about evidence that the below-market units would be at 130% of AMI, they refused to confirm it. (Greenland USA owns 95% of Greenland Forest City Partners.)
When asked about affordability at 595 Dean, a TF Cornerstone rep demurred, though its past filings with a state agency already confirmed the 130% AMI income target.
Back to the plan, but how?
Urge, bribe, or compel?
Note that ESD already has leverage: the $1.8 million a month in liquidated damages--destined for the New York City Housing Trust Fund--required if Greenland does not deliver 876 (or 877) units of affordable housing by May 2025.
The requirement to deliver 2,250 affordable units by that deadline was negotiated in 2014 by the BrooklynSpeaks coalition, which Veconi helps lead.
As reported yesterday, ESD's Jaiyesimi responded cagily when asked about enforcing such penalties: "that this time there have been no changes to the project documents."
Veconi noted that, given the current sunset in the 421-a program, even 130% of AMI would not apply. (Gov. Kathy Hochul has proposed a successor, but nothing's passed yet.)
“So if a building went up, the affordable units would be at 165% AMI," Veconi said, "because that’s the maximum allowed in the project agreements.” (As noted, I’m not sure about that.)
Shiffman suggested that, if public money subsidizes the platform, that could lead to deeper affordability. That's not an unreasonable tradeoff, but needs to be discussed publicly.
Shiffman suggested that, if public money subsidizes the platform, that could lead to deeper affordability. That's not an unreasonable tradeoff, but needs to be discussed publicly.
Update: Shiffman later clarified that his comments envision a new structure with greater public and nonprofit involvement.
Shifting the housing?
Veconi said, that, given the “virtual certainty that the affordable housing deadline” of May 2025 cannot be met, “I think we have an obligation to try to find another place to put the affordable housing.”
He noted that the deadline was important, not just to incentivize the developer, but to provide housing to a "part of Brooklyn experiencing very significant displacement right now."
He cited the current discussions about upzoning Atlantic Avenue east of the Atlantic Yards/Pacific Park site, called the Atlantic Avenue Mixed-Use Plan (AAMUP), which is led by Council Member Crystal Hudson.
Shifting the housing?
Veconi said, that, given the “virtual certainty that the affordable housing deadline” of May 2025 cannot be met, “I think we have an obligation to try to find another place to put the affordable housing.”
He noted that the deadline was important, not just to incentivize the developer, but to provide housing to a "part of Brooklyn experiencing very significant displacement right now."
He cited the current discussions about upzoning Atlantic Avenue east of the Atlantic Yards/Pacific Park site, called the Atlantic Avenue Mixed-Use Plan (AAMUP), which is led by Council Member Crystal Hudson.
That proposed rezoning, which would extend from Vanderbilt to Nostrand avenues and, in part, a few blocks north or south of Atlantic, could take a few years to be approved. So shifting housing there implies significant delays for the platform.
“There may be some opportunity for higher density there,” Veconi said. “I don't really know, but I think we have a moral obligation to deliver affordable housing.” I'd note that it seems clear that the AAMUP plan will include higher densities in exchange for affordable housing.
When affordable housing is placed offsite, chimed in Shiffman, it typically comes with a multiplier—at least a two-for-one replacement. (That example was set when expensive projects in Manhattan spun off funds for areas like the lower-cost Bronx, but the zone east on Atlantic Avenue, especially closer to Vanderbilt Avenue, is a relatively similar market.)
Director Ethel Tyus noted an MTA-owned site at Franklin and Atlantic avenues.
“That'll get into another negotiation with the MTA,” observed Veconi.
Piggybacking on the Governor’s plan
Shiffman cited Gov. Hochul’s proposal that every county increase by 3% its production of housing. “This is a low-hanging fruit in a way because it's already been designated,” meaning the entitlement at Atlantic Yards/Pacific Park has already been approved.
He suggested that ESD “go back to the governor's office to see if there are any other kinds of subsidies or incentives that could be provided in this situation.”
Kummer suggested that, as the representative of the Brooklyn Borough President on the AY CDC, Shiffman could inquire with BP Antonio Reynoso.
Shiffman agreed, saying they need to consult elected officials at all levels: “But here we have a situation which can be a project that should be moved along, because it's in the making, and for it to falter because we don't provide it with the subsidies necessary to make it work, that could create a backlash to future development that could take place. If we could do it here, we could do it east of this site.”
Leverage questions
Or, perhaps, ESD should first use the leverage possible to collect fines, and maybe even try to get a piece of the upside regarding the arena.
After all, beyond a piece of the arena's naming rights or even the sale of the team--both opportunities missed by the state-- the preservation of the "temporary" arena plaza, which would allow a shift of bulk from the unbuilt "Miss Brooklyn" tower to the parcel across Flatbush Avenue known as Site 5, benefits the arena company significantly, not just Greenland. (I'll write more on Site 5 tomorrow.)
Note that, in 2019, the ESD board ignored the deadlocked vote by the AY CDC, as well as Veconi's presentation to them, to dubiously reclassify space at 595 Dean once assigned to parking as a new category, "recreational" space, without requiring further study or amending the guiding General Project Plan.
Note that, in 2019, the ESD board ignored the deadlocked vote by the AY CDC, as well as Veconi's presentation to them, to dubiously reclassify space at 595 Dean once assigned to parking as a new category, "recreational" space, without requiring further study or amending the guiding General Project Plan.
That vastly increased the value to the developers, with no reciprocity.
BrooklynSpeaks had, with local elected officials, asked then-Gov. Andrew Cuomo and ESD to deny that new underground space for a Chelsea Piers fitness center and field house until an environmental review and a requirement to include offsetting public benefits--as well as a road map to deliver the required 2,250 units of affordable housing.
That failure in reciprocity looms large more than three years later, as no road map was delivered, and the affordable housing deadline surely won't be met.
Comments
Post a Comment