Monday, June 15, 2009

Affordable housing in Atlantic Yards project could mean just 300 units in 12 years, 120 of them low-income (or ten a year)

One element of the testimony May 29 at the state Senate oversight hearing on Atlantic Yards deserves more attention: a city official acknowledged that Phase 1 might result in only 300 affordable units.

What he didn't say was that Phase 1 could take 12 years--after the delivery of property via eminent domain--and that the 300 subsidized units would include 120 low-income units.

In other words, just ten low-income units a year over 12 years would go to the prime constituency of ACORN, the organization that signed the Housing Memorandum of Understanding (MOU) with developer Forest City Ratner.

Of the promised total 2250 affordable units, 900, or 40%, would be low-income, or up to 50% of Area Median Income. The rub is that Area Median Income, which is based not only on New York City but some wealthy suburbs, is a good deal higher than the median income in Brooklyn. (Graphic by Michael D.D. White of Noticing New York; click on graphics to enlarge.)

Subsidies for housing and beyond

Keep in mind that all the subsidized housing would rely on perhaps $1.4 billion in housing bonds (as revealed after project approval in testimony in the case challenging the AY environmental review) issued by the New York City Housing Development Corporation.

Beyond that, the city and state are contributing $305 million in direct subsidies to the project, for infrastructure and for land purchases on the arena block.

While AY would not exactly be an affordable housing project--it's primarily an arena and luxury housing--it has gained political support because of the inclusion of affordable housing. But, putting the arena aside, if the direct subsidies of $305 million were simply applied to housing, each of those 120 low-income households slated to benefit from Phase 1 could have an apartment worth at least $2.5 million.

Any development at the Vanderbilt Yard site would probably require some subsidies for infrastructure, given the challenges of building at the site. Still, we should recognize that AY does not promise to deliver significant amounts of housing affordable to the people who came to the July 2006 AY affordable housing information session.

April 2008 calculations

In March 2008, the Empire State Development Corporation quietly revealed the September 2007 State Funding Agreement, which gave Forest City Ratner six years to build the arena without penalty (after the delivery of property via eminent domain), 12 years to build Phase 1, and no timetable for Phase 2.

In April 2008, I gained, via a Freedom of Information Law (FOIL) request, the City Funding Agreement, also signed in September 2007. (Note that these agreements, which give Forest CIty Ratner a much longer leash than the ten years "anticipated" when the project was approved in December 2006, were reached well before the economic downturn.)

Notably, the City Funding Agreement includes no penalties as long as the developer builds, within 12+ years, 1.5 million square feet in Phase 1--some 44% smaller than promised less than a year earlier.

It requires that 30% of the housing units be affordable. I did a ballpark calculation of 1000 housing units, after subtracting 500,000 square feet for office space, and came up with 300 affordable units.

There's no plan now to build any office space soon, but it's not out of the project, as far as I know. Last month I did another calculation, based on the estimate that the affordable units would be smaller, and suggested there might be 360 affordable units in 12 years.

But I was apparently being too conservative.

Hearing testimony

About two hours into the Senate hearing, Assemblyman Hakeem Jeffries (right) asked New York City Economic Development Corporation President Seth Pinsky (below) several questions about affordable housing. (Photos by Adrian Kinloch)

HJ: Under what’s currently contemplated by Forest City Ratner, they’re going to build the arena simultaneous to exactly how many units of affordable housing?

SP: It’s not clear that they’ll be building simulatanously, the buildings and the arena. There’s a time period within which they have to have built the arena and, I believe it’s four of the towers that surround the arena. So they may go up at the same time, they may go up sequentially, but they have to be done within a certain time period.

Actually, the requirement of 1.5 million square feet could be met by three towers, and maybe even two. The unmentioned "certain time period" is 12 years.

HJ: You’re saying that the overall number of affordable units, of that basket of buildings, is what--three, four hundred affordable units?

SP: A minimum of 300 units, or 30 percent of whatever the total number of units that are built if that number is greater.

Some more context

I don't remember seeing 300 as a minimum number, but I'll take Pinsky's word for it. That was the first time such a minimum was mentioned in public, as far as I know. 

(I should add that the Modified General Project Plan approved in 2006--before the City and State Funding Agreements--refers to a minimum of 1005 residential units, which would mean just over 300 affordable units.)

As noted above, nobody did the math to point out that 1) the buildout could take 12 years and 2) the subsidized units vary considerably in affordability.

While 40% of the subsidized units would go to low-income families, perhaps another 10%--meaning a total of 50% of the subsidized units--would be "real housing for the real Brooklyn," the Daily News's term for those eligible for public housing or Section 8 vouchers.

ACORN's silence

When ACORN signed the Housing MOU, the project was to include 2250 affordable units over a decade. Of those subsidized units, 900 would be targeted to ACORN's prime constituency.

Since then, but before the economic downturn, Forest City got much more generous terms. ACORN has not complained. Not only is the organization contractually obligated to support the project, it is the beneficiary of a $1.5 million grant/loan bailout from Forest City Ratner.

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