After transmitting developer's flawed stats and provoking doubts, ESD corrects affordable housing chart. A question lingers.

This is the second of two articles on the April 18 meeting of the Atlantic Yards Community Development Corporation (AY CDC), charged to advise on the project and monitor obligations. The first concerned the foreclosure auction, likely to be postponed, and the AY CDC budget passage.

OK, I was right. 

After Empire State Development (ESD), the state authority that oversees/shepherds the project, on March 26 released an Atlantic Yards/Pacific Park Affordable Housing Analysis that prompted questions from me, they went back and corrected it.

The correction, below, acknowledges a shift at 535 Carlton of eleven middle-income units to moderate-income ones, though it doesn't explain--as I had reported and two AY CDC directors noted--that it was done to enable significant tax savings at the condo building 550 Vanderbilt down the block, awkwardly yoked in a "zoning lot."

The revised chart also reclassifies 24 studios at 662 Pacific as middle-income, not moderate-income; though the rent levels of $1,547, as I wrote, meant the studios were attainable to moderate-income households, the building's documentation lists them as middle-income and, of course, middle-income renters were eligible to get a nice bargain.

Bottom line: ESD probably shouldn't outsource such analysis to the project developer, at least not without checking carefully. 

The April 18, 2024 analysis

Also, Atlantic Yards/Pacific Park has gone on so long and gotten so complicated that even those who should know better lose track--I initially didn't notice either mistake--and those coming to it fresh, like the relevant personnel at ESD, don't have institutional memory.

As I've written, the chart does not compare the current configuration to the original promises. Nor does it acknowledge the rising Area Median Income, or AMI, which means even units classified "low-income" rise out of the reach of many.

One question pending

While the meeting did answer one metaphysical question I raised--if a unit open to middle-income households rents at a level affordable to moderate-income tenants, what is it?--it raised but did not resolve a different question.

As posited by AY CDC Director Ron Shiffman: do the eleven 535 Carlton units shifted from middle-income to moderate-income status actually house those with moderate incomes, or did existing tenants, who qualified with higher incomes, simply get a bargain?

He didn't get an answer, so the question lingers. Rents for 2-bedroom units went from $3,223 to $1,591, while those for 3-bedroom units dropped from $3,716 to  $1,831. It's unclear whether they were then--or later became--empty and thus could house moderate-income households.

The discussion

AY CDC President Anna Pycior, who serves as Senior Vice President, Community Relations, explained that the analysis was provided after a request at the Jan. 23 AY CDC board meeting.

In March, ESD presented documentation that was "provided to us by the developer," she said. "After receiving comments that there were discrepancies between that chart and what the most current regulatory agreements present, ESD revisited the numbers."

The March 26, 2024 analysis

She didn't mention who the comments came from, but I cited the 535 Carlton changes in Flashback: the "Zoning Lot" Hustle and the 662 Pacific classification in A Dive Into Affordability Prompts a Metaphysical Question.

"Overall, I will say these adjustments did not significantly impact the overall general distribution of units across the AMI levels," Pycior said, noting that the numbers do reflect a lack of moderate-income units, in the 60-100% AMI range and "a heavier concentration for some units in the 100-165% income range."

Heavier? Well, clearly disproportionate, since there were supposed to be 900 units in the first two categories, or bands, and 900 in the last two, but instead there are 254 and 1,044. (See the top chart, not the one directly above.)

The skew, Pycior said, reprising her comments at the meeting last month, "speaks to the type of affordable housing, financing and the tax incentives available at the time of their construction." 

That's true, but it also speaks to the failure of public officials, and the Atlantic Yards Community Benefits Agreement--the private contract hyped by original developer Forest City Ratner--to lock in promises.

The discussion

Shiffman, referring to the 535 Carlton shift, asked about whether the affordability levels reflected the rent or the tenants. 

"It is the eligibility for those who then lease the apartments," Pycior said. 

That's standard, of course, but may not have been the case for the eleven units at 535 Carlton, unless they were empty.

 

Shiffman asked if some were "benefiting from deeper subsidies even though they can afford more."

"I believe through the [city's] Housing Connect program there's an income screening," Pycior said. Again, that's standard--though this case may have been different, given that the units were likely already occupied.

ESD's Arden Sokolow, Executive VP, Real Estate Development and Planning, noted that tenants' incomes may have changed, which is acceptable in such programs.

ESD Director Gib Veconi shifted the discussion to 662 Pacific: "In other words, due to market conditions, some of the developers offer these apartments at lower rents associated with those AMI levels in order to rent the apartments, but if the target income eligibility is still higher, we should be counting as affordable the higher target income eligibility, not the actual lower rent."

That, indeed, is what ESD had already agreed.

AY CDC Chair Daniel Kummer asked, "Is there any anecdotal evidence that there's a problem in that regard? Because I'm a little concerned--I think it's good for us to give these kinds of data-gathering homework assignments to staff, but I want there to be some basis for suspicion."

Veconi said it's a question of whether the classification is based on "the unit's income qualification thresholds or are they based on what the unit's actually rented for"--again, the question ESD had already resolved.

(I had written that I would tentatively consider the 24 studios at 662 Pacific as moderate-income, but with the caveat that it depended on the incomes of the actual tenants.)

ESD's Joel Kolkmann, Senior Vice President, Real Estate, said the data presented was based on regulatory agreements and restrictive declarations--binding documents.

Back to the issue

Shiffman returned to 535 Carlton: "My question is generated by the fact that two buildings were merged at a later date in order to take advantage of the tax loophole and I want to make sure that that will result in real increase in affordability."

Veconi suggested that likely didn't require a data-gathering exercise but rather an identification of the restrictive declaration regarding 535 Carlton.

Kolkmann said they could take a look at the regulatory agreement.

"You've probably already done that," Veconi said, citing the revised chart.

Kolkmann agreed and later said "we can formally show you the numbers for 535 Carlton at the next meeting."

Well, the city regulatory agreement is public, and indicates the shift of eleven units from middle-income to moderate-income status. But it doesn't answer Shiffman's question, which requires more digging into the rental history of those eleven apartments.