Magical thinking: ESD CEO says developer Greenland might meet 2025 affordable housing deadline by converting existing market-rate units.

Beyond what I reported yesterday, there was another set of questions for Empire State Development CEO Hope Knight about Atlantic Yards/Pacific Park at Tuesday's joint legislative hearing, and the answer elicited by Assemblymember Robert Carroll was truly curious.

No, embattled developer Greenland USA cannot deliver the required 876 (or 877) units of affordable housing by May 2025--and thus avoid $2,000/month penalties for each missing unit--by converting existing market-rate units because it doesn't own or control that many. Nor does it (likely) make financial sense.

As shown in the graphic below, the only building in which Greenland has partial ownership interest is B4, 18 Sixth Ave. (aka Brooklyn Crossing), which it built in tandem with The Brodsky Organization. There are 558 market-rate units. 

That's not enough--and how could they go through the regulatory process to reclassify units and vet the financials of the in-place tenants?

Financial sense?

Nor does it make financial sense--though, amazingly enough, it might make partial financial sense.

Keep in mind that, according to loose state strictures, "affordable housing" is defined not as the low-, moderate-, and middle-income mix long promised for Atlantic Yards but rather as participating in city, state, or federal program that set income and rent restrictions.

That said, on StreetEasy, I found 60 studios at Brooklyn Crossing under the current $3,498 rent threshold for "affordable" units at 165% of Area Median Income (AMI), and only 48 above that threshold. I found 91 one-bedrooms under the $4,370 "affordable" rent threshold, and 89 above it. 

I found no two-bedrooms under the $5,242 "affordable" rent threshold, nor any three-bedrooms under the $6,057 "affordable" rent threshold.

Note the 240 "affordable" units at that building are at 130% of AMI--below market, but aimed at middle-income households. Such not-so-affordable "affordable housing" has already generated ire, so if existing market-rate units were turned into upper-middle-income affordable housing, that would generate more outrate.

Asking about a plan

Carroll, as indicated in the video excerpt below, observed that of the missing units--he erroneously said 871--there seemed no possibility that anything would be built by 2025. 

"What is the plan?" he asked. "Do we actually have a buyer who's going to step into the shoes of Greenland or are we going to figure some other way out for Greenland to continue on?"

 

Knight noted that a foreclosure auction is "scheduled for next month," on Feb. 12 "And so we believe that there will be a buyer to step into Greenland's place."

Both of those statements are hardly assured. The auction, for Greenland's interest in the six sites over the railyard (B5-B10), has already been postponed once. 

And if the new buyer has to assume the cost of building the platform and paying the Metropolitan Transportation Authority for development rights--and possibly assume the $2,000/month affordable housing penalties--what's in it for them?

Magical thinking

Regarding the missing affordable units, Knight said, "those units have to be built or delivered. And so there could be a situation where Greenland is able to deliver 870 [sic] affordable units, which is why we can't go on the basis of an anticipatory default. We have to wait until 2025."

That's never been brought up before.

"And so our plan is to see the outcome of this auction," Knight continued. "We believe that there will be a buyer that steps forward and begins to build the housing that this community is looking to see."

About the platform

"Do you believe that EDC"--he meant ESD--"and the MTA are prepared to move on the platform that needs to be built over those railyards so this project can continue?" Carroll asked. In this case, "move on" would mean approving plans by private companies, unless the state takes over the site.

"Well, there's an obligation for that platform to be built," Knight responded.

Carroll asked about the timeline.

"We know that there are footings in the ground for the platform," Knight said. "So it should take a couple of years to complete the platform."

Deadline issues

Carroll noted that there would be a default, given the time to build the platform and then new housing.

"Unless Greenland delivers 870 units," Knight responded.

How could that happen, asked Carroll.

"They can convert the existing market-rate" units, she responded. 

It would be flabbergasting if they could, so it's unfortunate there was no time to follow up on it.

A comment

Carroll posted part of the exchange--though not the key ending sequence--on X/Twitter, and got some skepticism from advocate Gib Veconi, a leader of the BrooklynSpeaks coalition.

If somebody would be willing to bid for the development rights at next month's auction, Greenland would have sold them months or years ago, and @EmpireStateDev knows it.

— Gib Veconi (@GibVeconi) January 31, 2024