Real estate lawyer admits that allowing "affordable" units at 130% of Area Median Income was "a mistake." Last four Atlantic Yards towers had only 130% AMI.

From an April 24 article in the Real Deal about the new 485-x tax break, a successor to 421-a, Developers have a new tax break. Now they must figure it out:

The new one provides property tax exemptions for up to 40 years, and eliminates the highest income band permitted for “affordable” units under the previous program: 130 percent of the area median income.

“We knew that 130 percent AMI was going out the window,” said Alvin Schein, a founding partner at Seiden & Schein. Some landlords actually had a difficult time renting out those units. The 130 percent AMI units forced owners and prospective tenants to navigate city bureaucracy and were a punching bag for critics, who ridiculed their “affordable” label.

“I think 130 was a mistake,” Schein said. “It helped give 421a a bad name.”

Indeed, "affordable" merely means rents targeted to 30% of household income, so the baseline matters--and the term "income-linked" or "income-targeted" are more accurate.

The Atlantic Yards record

Schein was speaking generally, not targeting Atlantic Yards/Pacific Park.

But it's worth noting that the last four buildings in the project--662 Pacific (B15), 18 Sixth (B4), 595 Dean (B12/B13)--qualified for 421-a by devoting 30% of their units affordable to middle-income households earning 130% of AMI, in many cases six figures. 

See chart below, by Ben Keel originally for my Urban Omnibus overview article on Atlantic Yards/Pacific Park. It focuses on 2-bedroom units, but the distribution was relatively consistent across unit types.

The new law would require future Atlantic Yards/Pacific Park buildings to have 25% affordability, but at an average of 60% of AMI. That said, AMI keeps rising.

Difficult to rent?

By the way, that hyperlink in the Real Deal's second indented paragraph above led to a November 9, 2017 Real Deal article headlined Why developers can’t find tenants for certain “affordable” apartments, which cited a number of factors, including the significant paperwork and delays, which higher-income tenants with more options are more likely to resist.

Another issue: an overlap between income "bands," which occurred for example at 535 Carlton (B14) at Atlantic Yards/Pacific Park, in which a person earning $80,000 might have been seeking a studio for $1,729/month but also was eligible for one renting for $2,137/month.

That's part of why developer Greenland Forest City Partners had to go outside the housing lottery to recruit potential tenants for both that building and the similar 38 Sixth.

Rhetorical issues

At the time, the Real Deal noted a then relatively new tactic: promoting the units as “rent stabilized,” as well as “affordable,” since middle-income New Yorkers--who, after all, are less rent-burdened than lower-income ones--didn't think they were eligible.

“People do not understand that they qualify,” said Ashley Cotton, then of Forest City New York. “Education is crucial.”

In other words, the term "affordable" was by then a handicap for the developers. However, when getting public support for the project's approval, the umbrella term "affordable" was very helpful.

The latter term was deployed, as I wrote, after the developer and project supporters initially used a more precise, if less self-serving, locution: "affordable and middle-income housing."