Pacific Grand emerges, with more lower-income units than in other early M-CROWN buildings. Market-rate not set. A good deal for the developer, a first mover.

As noted by New York YIMBY, the affordable housing lottery is open for the Grand Pacific Apartments, aka 985 Pacific Street (or 979 Pacific Street), one of the first buildings to emerge from spot rezonings in Community Board 8's so-called M-CROWN district.

A larger area around Atlantic Avenue, between Vanderbilt and Nostrand avenues, is currently being studied for a rezoning, with expanded development opportunities and city infrastructure investment, as part of the Atlantic Avenue Mixed-Use Plan (AAMUP).

Of the 69 units at the intersection of Pacific Street and Grand Avenue, 18 (26%) are below-market, at a blended average of 60% of Area Median Income (AMI): 14 affordable to low-income households, at two income "bands," and four affordable to middle-income ones.

This spot rezoning delivered somewhat more public benefits, in terms of affordability and job-creating space, than two other spot rezonings that proceeded while Council Member Laurie Cumbo was in office, but, as I explain below, it still looks like a great bargain for the developer, Elie Pariente of EMP Capital.

Since then, given increasing AMI, CB 8 and Council Member Crystal Hudson have sought and achieved more and deeper affordability in spot rezonings--at least with larger buildings along broader Atlantic Avenue. (The target AMIs from the pending rezoning are yet unclear.)

Applications at or to the city's HousingConnect portal are due by September 5. Residents of Community District 8 have a preference for half the slots in the lottery. Also, smaller percentage of units are set aside for city employees and for those with mobility or vision/hearing impairments.

Affordability

At 40% of AMI, there are seven units: four 1-BRs at $735 and three 2-BRs at $823. At 60% of AMI, there are seven units: five 1-BRs at $1,183 and two 2-BRs at $1,360.

At 130% of AMI, there are four units: three studios at $2,600 and one 2-BR at $3,619. Note that rent levels for such middle-income units are set below the city's allowable 2023 limits of $2,756 and $4,130, respectively, but that developers, recognizing the reality of recruiting tenants, do not seek the maximum.

By contrast, at the recently opened two-tower 595 Dean complex in Atlantic Yards/Pacific Park, which contains 240 middle-income units at 130% of AMI, rents were set at $2,290 for a studio and $3,360 for a 2-BR. In other words, even though the rents were based on 2022 income limits, they could have asked as much as Grand Pacific, but didn't.

The rent levels were below the city's allowable 2022 limits of $3,035 for a studio--which might have been a mistake--and $3,903 for a 2-BR. That housing lottery, which was extended twice, likely because of the challenge of recruiting middle-income applicants and an increase in the income ceiling, closed Aug. 15.

Market-rate units

The Grand Pacific building promises "luxurious living" with "energy-efficient appliances, in-home washers/dryers, and impressive countertops," plus a "business center, media room, gym, and party room."

The building's market-rate units are not yet available, but the marketing website (see screenshot below) offers teaser information, suggesting that the lowest-priced studio will be at or near $3,400 a month. 

According to StreetEasy, the least expensive studio at 595 Dean rented for $3,470, with one month free, setting a net effective rent of $3,181, while the least expensive studio currently available is $3,630, with 1.5 months free, setting a net effective rent of $3,181. 

While 595 Dean is surely a better location, closer to retail and with new open space outside, it has a lot more units to fill. That said, incentives on lease-up for market-rate units at new buildings are common, so it wouldn't be surprising to see them at Grand Pacific.

The backstory

Compared to the two previous spot rezonings, at 1010 Pacific Street and 1050 Pacific Street, Community Board 8, along with Council Member Laurie Cumbo, drove a better bargain with the Pacific Grand rezoning.

For example, they were able to ensure that the income-targeted housing would be more affordable than in the other two rezonings, and were able to ensure--thanks to a restrictive declaration--that a percentage of the ground floor space would be devoted to what's called "M-CROWN uses."

But evidence suggests it was still a very good deal for developer Pariente. And while he agreed to lower the height of the building to 9 stories, he got the bulk of an 11-story building.

EMP Capital paid $6.05 million. For 48,551 square feet residential, that works out to $124.61/square foot.  At 1050 Pacific/953 Dean, the developer claimed $48 million in land costs for 160,000 residential rentable square feet, or $300/square foot. 

(The comparison isn't precise, because the affordable units there are at 80% of AMI and there's no required job-creating space, and there may be a distinction in how the two developers calculate available square feet.)

In exchange, EMP Capital had to devote 25% of the ground floor space to light industrial, arts and community facility uses. “This agreement may be a model for other communities looking to engage with and hold developers accountable for commitments to affordable manufacturing space,” said Ben Margolis, Executive Director of Southwest Brooklyn Industrial Development Corporation, in an 8/28/20 press release from Community Board 8.. 

Then again, the space might just house a pre-K facility, as Pariente said in 2/12/20 testimony to City Council. (He also mentioned the possibility of a wholesale kitchen.)  He also promised the arts-focused Cumbo--who started as a museum curator and now heads Mayor Eric Adams' Department of Cultural Affairs--a mural on the building.

More on the agreements

Here's the City Planning Commission report 2/5/20, voting 12-0-1 to approve, which includes a 12/8/19 CB 8 letter reporting a vote 27-1-0 to disapprove with conditions--withholding support unless the applicant agreed to limit the height and ensure job-creating space--and then-Borough President Adams' 1/2/20 letter to disapprove with conditions. 

Here's the City Council file, with approval 8/28/20. A day later, CB 8 issued its press release, which stated:

As part of the agreement, EMP filed a restrictive declaration that requires the floor area designated for the defined light industrial, arts and community facility uses to be labeled on plans filed with the Department of Buildings. Further, liquidated damages will apply in the event there is a failure to meet those requirements. Damages also apply in the event of an extended vacancy of the space. Any amounts paid will be received by the Friends of Brooklyn Community Board 8, Inc., a supporting not-for-profit organization, into a fund to subsidize manufacturing uses in Community District 8.

Here's the restrictive declaration. Here's a document binding that to successors.

Affordability changes

From the 2020 press release:

Because 985 Pacific Street will be developed under the City’s Mandatory Inclusionary Housing policy, 25% of the residential units will be affordable to tenants earning an average of 60% AMI, or $61,440 for a family of three, comparable to the median income of $57,281 in Community District 8.

Those numbers have changed. Today, a three-person household at 60% of AMI can earn $76,260, a 24.1% increase in just three years. In other words, any such statement upon approval of a project should come with a caveat that the numbers aren't firm. However, accurate projections are difficult.