In state budget: 485-x, a yet-unspecified incentive for rental housing, plus an extension of 421-a deadline. Both presumably somewhat helpful to Atlantic Yards.

A state budget recently announced, if not fully specified, should incentivize new rental housing and also provide a lifeline to projects that started construction--put footings in the ground--under the only 421-a program.

That should make construction of the remaining Atlantic Yards/Pacific Park towers somewhat more viable, though 1) the devil's in the details and 2) these aren't the only factors.

Notably, the six development sites over the Metropolitan Transportation Authority's (MTA) Vanderbilt Yard face a foreclosure auction of developer Greenland USA's stake. That is scheduled for April 30, after being postponed twice, and it's unclear if it will go forward.

Not only is a tax incentive needed to make the numbers work, any bidder must factor in the cost of a platform to enable vertical construction, the remaining cost to pay the MTA for development rights, and the pending damages of $2,000/month for each of the 876 affordable housing units not delivered by May 2025.

It's unclear, though, whether Empire State Development, the state authority that oversees/shepherds the project, would waive or extend those penalties to get the project going.

The announcement

From Gov. Kathy Hochul's announcement:

Securing a historic agreement to address New York’s housing crisis by creating a new 485x tax incentive for affordable housing; extending the 421a incentive for projects already in the pipeline; making it easier to convert unused office space into affordable housing; eliminating outdated density caps in New York City; unlocking the potential of units that have been vacant since 2019; establishing a new law to protect tenants from price gouging.

The pipeline

The B5 tower, aka 700 Atlantic Avenue (or 698), was said by a Greenland rep to have qualified for the 421-a pipeline. The site is directly east of Sixth Avenue, over the railyard, and plans were filed with the Department of Buildings.

The Real Deal reported that the construction deadline would be extended for six years, until June 15, 2032, but developers would no longer qualify by devoted 30% of the units to "affordable" housing at 130% of Area Median Income (AMI).

The last four towers in Atlantic Yards/Pacific Park all contain 30% income-linked units available to households earning 130% of AMI, a middle-class cohort that, while surely appreciating a rent-stabilized relative bargain, is not nearly as rent-burdened as those earning less.

If they can't build 30% of the units at 130% of AMI, Option C, the most likely alternative would be Option B, with at least 10% of units up to 70% of AMI and 20% up to 130% of AMI.

The new program

The new 485-x (or 485x?) provision would offer a "40-year tax exemption for projects that set aside 20 to 25 percent of the units as affordable," according to the Real Deal. 

Presumably the income ceilings would be well below 130% of AMI, but that's not the only factor; a legislative wage requirement, which is/was being hammered out with construction unions, also affects the equation.

City & State quoted the Real Estate Board of New York as saying that 485-x wouldn't deliver as much housing as 421-a. Then again, it may well deliver more affordability, and the New York Building Congress praised it.

The bigger picture

From Hochul's statement:

Creating a statewide tax incentive for multi-family housing; making $650 million in discretionary funds exclusively available to Pro-Housing Communities; providing incentives for communities that want more accessory dwelling units; investing $500 million to develop up to 15,000 new housing units on State-owned sites; and protecting homeowners from deed theft.

As City & State put it, quoting the pro-development YIMBY group Open New York:

Annemarie Gray, the group’s executive director... praised the lifting of the density cap for housing in the city and including a new tax incentive program to build housing, but said the package doesn’t do enough to promote statewide housing growth or to tackle restrictive zoning in the city.

The density cap

Also note that "eliminating outdated density caps in New York City" apparently means allowing a Floor Area Ratio (FAR) exceeding 12, the current cap for residential (not office) in the city, including in the Downtown Brooklyn rezoning.

The FAR for some specific projects, such as 80 Flatbush (now the Alloy Block), is considerably larger, 15.75.

The potential FAR for Site 5 across from the Barclays Center, at least the two-tower concept floated in 2016, would be about 23.5. Then again, because New York State overrode city zoning, that density level would be up to Empire State Development, should it approve proposed changes, assuming they return.

From Village Preservation:

This would let the City rezone any residential neighborhood or area to as great of density as it likes, with no limits whatsoever. Mayor Adams has already made clear he would take advantage of such allowances, and no doubt neighborhoods like ours would be in his sights and those of other future Mayors, over whom real estate interests hold enormous sway. Village Preservation has called for keeping the limit in place except to allow residential conversions of office buildings, and if it is lifted, to protect historic districts and moderately scaled residential neighborhoods, and limit its use to entirely or largely affordable developments and/or to areas that already allow large-scale commercial development like Midtown, the Financial District, and Hudson Yards. 

Note that Village Preservation includes Downtown Brooklyn as a neighborhood where the density cap could be lifted.