Why Affordability Matters at Atlantic Yards

And why B2 shouldn’t be the future of affordable housing in Brooklyn.

A few weeks ago, while doing research for a potential neighborhood project, I received a spreadsheet showing changes in median income for Brooklyn census tracts between 2000 and 2011. I was surprised to find that average income in my census tract had doubled, from $60,000 to $120,000.

This is the type of statistic that someone not familiar with the accelerating pace of change in Prospect Heights might approvingly consider “economic development.” To those who live here, however, it’s a way to quantify the demographic shift we’ve seen on our streets over the last decade. The jump in income unfortunately doesn’t mean our next-door neighbors have received big raises. More likely, it means our neighbors have changed. And the change isn’t limited to increasing affluence: a recent study by the Fordham Institute found that Prospect Heights’ 11238 zip code saw its share of white residents grow by 20% between 2000 and 2010. These trends are troubling not just because they mean long-time residents are being displaced, but because diversity is being lost in the community that remains; a 2004 survey by the Pratt Center for Community Development found that residents of Prospect Heights cited socioeconomic diversity as the third most-valued characteristic of their neighborhood (ahead of both public education and open space).

The challenge of harmonizing economic development and displacement was supposed to be addressed at the Atlantic Yards project, which Forest City Ratner claimed in 2003 would deliver thousands of units of both affordable and market rate housing. But by 2009, Forest City renegotiated the project plan, extracting unilateral concessions from the State of New York that extended the time to complete most of the residential portion of the project from ten years to twenty-five years. Unfortunately, that limited any stabilizing effect of Atlantic Yards’ affordable housing: you can’t stem a tide of displacement happening in the present with affordable housing delivered decades in the future, no matter how many you may promise then. By that time, the problem may even have taken care of itself—there may be no working families left to displace.

Into the gulf between promise and reality last month stepped B2, the first residential tower to be constructed at Atlantic Yards. B2 was heralded at its groundbreaking ceremony as being 50% “affordable,” and there would appear to be no better opportunity for Forest City to show how its project could have a meaningful impact countering the tide of displacement in surrounding communities. However, it turns out that “affordable” in the context of B2 doesn’t mean the rents charged will be affordable to working people being priced out of the neighborhood. It instead means the apartments are “eligible for government housing subsidies,” and (as I wrote in September) government regulations allow Forest City to market subsidized apartments in B2 to families with incomes well over $100,000. In fact, of its 180 “affordable” apartments, only nine will be suitable for families earning the median income for Brooklyn or below.

A major reason B2 isn’t more affordable may be its cost. Making some inquiries of some Brooklyn-based non-profit developers, I found that $300 per square foot was an upper bound for their mixed affordable/market rate projects. At a recent Community Board 8 meeting, a for-profit developer presented plans to build an 80-unit affordable-only project at a cost of about $350 per share foot. But at 340,000 square feet, and $180,000,000 of development expense, B2 will cost a whopping $560 per square foot. Because NYC Housing Development Corporation affordable financing is issued on the basis of number of apartments in a building, it’s easy to see why subsidies don’t go as far at B2 as they do at other projects. B2’s subsidized apartments are skewed toward smaller studio and one-bedroom units, and are being marketed to income ranges mostly well above the $40,000 median for Brooklyn.

Unfortunately, B2’s economics are likely to be a sign of more to come, and not just at Atlantic Yards, but across brownstone Brooklyn. “HDC financing was designed at a time when there was more City-owned land available for affordable housing,” one non-profit developer explained to me. With little available public land in Brooklyn, new affordable housing will increasingly have come as a portion of the units in high-rise developments built on private land. These projects are much more costly to build, and their developers are happy to leverage existing subsidy programs as they assemble financing. The result is that the apartments created will tend to reinforce current trends of displacement, not counter them.

Allocating more government funding for subsidies as the construction costs for affordable housing increase may be necessary, but it’s not the whole solution. For-profit developers will typically not go deeper than the minimum levels of affordability required by subsidy programs. Some affordable housing advocates are therefore pressing the City to lower the income targets for subsidized apartments.

But in times of government belt-tightening, the option for developers to cross-subsidize affordable units with revenue from market rate apartments in their buildings must be pursued aggressively. Although they can’t be forced to charge below-market rates for apartments built as-of right on private property, developers that ask for access to zoning overrides and public land should be required to make a continuing commitment to maintain levels of affordability that can help local residents at risk of displacement. One would further argue that transferring public land to a private developer should only be done through a competitive bidding process in which bidders must commit to specific cross-subsidization targets in order to qualify.

That brings us back to Atlantic Yards. In 2006, Forest City Ratner was required to make no such commitment prior to being awarded 22 acres, mostly in Prospect Heights, by the State of New York. (All affordable housing at Atlantic Yards will be subsidized by the public, not by Forest City Ratner.) And in 2009, the Empire State Development Corporation agreed to extend the construction schedule to twenty-five years, without making any effort to find other development partners who would agree to complete the project’s affordable component in the original ten-year timeframe. The State effectively gave away the best resource this community had to preserve diversity without even trying to make a stand for affordability. In so doing, it also gave Forest City (which surely was aware of the neighborhood’s increasing affluence) every reason to wait to develop in order to maximize the value of the land for luxury apartments.

Three years, one lawsuit and two failed appeals later, ESDC is under court order to revisit the project plan through a Supplemental Environmental Impact Statement. An SEIS requires the study of alternatives, and in this case, an alternative that involves completing the project on its original schedule by bringing in other development teams clearly must be considered. In order to deliver on the original promise of the Atlantic Yards vision, these other teams should be chosen through a competitive process prioritizing their ability to provide real affordability to residents of Prospect Heights, Fort Greene, Clinton Hill, Park Slope and Crown Heights in danger of being priced out of their neighborhoods.

A new Atlantic Yards plan with competition for building rights would do more than improve Prospect Heights' opportunity to retain diversity in the face of a booming real estate market. It would send a message that our Governor (the former Secretary of Housing and Urban Development under President Clinton) and our elected officials haven’t forgotten about the urgent need for truly affordable housing in New York City. They owe our communities no less.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Eustace Greaves Jr January 24, 2013 at 10:36 PM
Excellent job, Gib.
Adam January 28, 2013 at 10:06 AM
Why should people who live in other neighborhoods, or other parts of the state, subsidize people to live in prospect heights just so the residents can hang onto their beloved diversity? I like diversity too, but not when our tax dollars go to ensuring it. Also, Forest City Ratner bought almost all the property around it and then paid $100 million for the rail yards. Less than the MTA appraised value? Yes. But the city also had to decide on a developer that would actually do a good job and make something out of the yards. FCR did this with the Barclays Center and will eventually build housing. Yes FCR did benefit from tax exempt bond funding, but this will be a great investment for the city and state as taxpaying businesses and citizens move in. Lets stop pretending things were just given away, and that taxpayers must pay for diversity.
Gib Veconi January 28, 2013 at 01:20 PM
Adam: Our State and City governments subsidize affordable housing to avoid homelessness, which is a much more expensive problem to solve. The reason people outside of Prospect Heights should subsidize people to live here is because we have in Atlantic Yards a tremendous resource of State-owned land, and publicly-owned land is generally the most economical place to build affordable housing. And the Atlantic Yards site is very much public land. FCRC has in fact not paid $100MM for the development rights over the entire Vanderbilt rail yards, but only $20MM for the rights for the area where Barclays Center now stands. The firm has a 25-year right to acquire the rest, locking in a price from 2009--a can't-lose deal for the developer. The rest of the Atlantic Yards site was condemned through eminent domain and is now in fact owned by the State. Although it's true FCRC had previously purchased property in the footprint from private owners, it did so under the threat of eminent domain, a powerful negotiating weapon. Further, under the terms of the Atlantic Yards project, FCRC would receive zoning overrides for those properties, making them worth much more to the developer than to their then-owners. Last but definitely not least, FCRC was given $300MM in taxpayer funds to help cover the cost of buying out the property owners. So if you don't like your tax dollars paying for diversity, how do you feel about them paying for displacement?
Adam January 28, 2013 at 02:51 PM
Thank you for the reply, and fair. I guess I don't like my tax dollars going to either. That being said, the people who were displaced were offered very fair prices for their apartments (more than fair for real estate prices at the time), and not so ruthlessly evicted as many articles I've read seem to suggest. Overall, I guess I support the redevelopment of the area. And if it was necessary to provide financial incentives to firms to get it done, and at the end of the day it's profitable for the city, good. That being said, I would have a hard time believing the city got a good enough deal and FCRC probably didn't put enough skin in the game and got some shady politicians to help them out. Thanks again for your thoughtful reply. Adam


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