At Advisory Board Meeting, New Focus on Affordable Housing
Negotiator of original ACORN housing deal points to unmet promises regarding level of affordability and family-sized units. What are the costs to make it work?
The Dec. 2 meeting of the Atlantic Yards Community Development Corporation (AY CDC) was supposed to offer a report-back on the first community workshop, held Nov. 18, and an opportunity for the new development team to repeat its presentation there, explaining how they seek to make the project feasible.
That means, as I wrote, to supersize the Atlantic Yards/Pacific Park:
adding 1.6 million square feet and 2,570 more apartments
designing taller but narrower buildings (and omitting one tower) for more open space;
and seeking unspecified “public resources” to support affordable housing and infrastructure, notably the platform required to allow vertical development over the Metropolitan Transportation Authority’s Vanderbilt Yard.
Nuggets of news
At the meeting, a few nuggets of information emerged from developer Cirrus Workforce Housing and their partner LCOR, which took over the project in October.
First, they aim to build first on Site 5, the parcel catercorner to the arena long home to the big-box stores P.C. Richard and the now-closed Modell’s, and later on parcels B6 and B7, the easiest sites to build over the railyard.
The actual bulk of the proposed two-tower Site 5 project remains unclear, but the towers—an announced 775 feet and an estimated 670 feet—would require a modification of project documents.
Also, while the team is interviewing a landscape architect to design the open space, they are already working with KPF, the major architecture firm Kohn Pedersen Fox.
Due to capacity issues, on Dec. 8, the second community workshop—on streetscape and public realm, sustainability and resiliency, and community-serving retail and facilities—has been moved to the Barclays Center practice court from the previous location, a school in the “Pacific Park Campus” at Sixth Avenue and Dean Street. Register here.
Affordability frustration
Of all the pre-meeting questions I raised, only one really came up, and it wasn’t my doing. Affordable housing, the project’s biggest selling point, remains the biggest deficit, so it understandably sparks interest and passion.
Two AY CDC Directors and one elected official called for improved affordability—the developers have emphasized moderate- and middle-income units, not low-income ones below 80% of Area Median Income (AMI).
Also, an architect of the 2005 Housing Memorandum of Understanding (MOU) signed with the original developer, Forest City Ratner (and part of the much-hyped Community Benefits Agreement, which turned out to be unenforceable), lamented the shortfalls.1
“What we see that got built is not what was promised,” said Ismene Speliotis, executive director of Mutual Housing Association of New York (MHANY), a nonprofit group that succeeded ACORN, the original housing advocacy partner.
Not only have the promised 2,250 affordable units not been delivered, with 876 to go, but the below-market housing has also been skewed to middle-income tenants, all while Area Median Income (AMI), the baseline for calculating affordability, has outpaced growth in local incomes.
The Housing MOU had promised that 50% of the units, in floor area, would be family-sized units (2-BR and above), but that promise wasn’t met. The first tower, for example, had no three-bedroom units, and city officials had to intervene to increase the number of two-bedroom units.
“If we want to build community, you really need to start building some family-size apartments,” Speliotis said. Of the five rental buildings she tallied, only two have any three-bedroom apartments, the 100% affordable 535 Carlton and 38 Sixth, for a total of 31.2
“I appreciate that you stepped in to solve a problem,” Speliotis said to the developers. “We were very clear that you were never going to get truly affordable housing if you were expecting to cover the cost of the platforms and the infrastructure… That just didn’t pencil out 20 years ago. It’s not going to pencil out today.”3
The question is what to do now, she said. “Because if I want truly affordable housing, and the neighborhood deserves truly affordable housing, and the city deserves truly affordable housing, you cannot incorporate the cost of a platform in the housing pro forma [financial forecast].”
“We really need this information if you want us to advocate for you,” she said to the developers. “And then I will argue with you. I will negotiate to get to the deepest affordability I can.” (Joining her at the meeting was former ACORN Executive Director Bertha Lewis, once a fervent Forest City ally. Neither had been to an Atlantic Yards meeting for years.)
Other members of the AY CDC, notably Chair Daniel Kummer, said they could help push to get the housing built. “But we need to know what we’re advocating for in terms of public subsidy,” he said.
My take: the developers should offer a lot more financial transparency about not just the expected project costs, but also their cost basis, to justify direct subsidies, additional bulk worth perhaps $320 million, tax breaks, and other assistance.
My guess: even if the developer can make the numbers work after commitment of “public resources,” once the astonishing density of their proposals gets attention—more on that in a separate article—they’ll face another revision.
Workshop feedback
ESD’s Anna Pycior, Senior VP, Community Relations, reported on “a successful first public workshop” on Nov. 18, citing about 160 people, plus a few walk-ins, “a good turnout that seemed to be from cross-section geographically, multiple community boards, multiple areas of focus and interest.”
She didn’t mention that, given the developers’ connection to the building trades unions, there were a good number of union representatives, and that the location chosen—the former Modell’s, now the temporary Brooklyn Basketball Training Center—was too small for the number of people interested.
Nor did she mention that ESD and consultant Karp Strategies, as far as I can tell, has not put posters up in the immediate neighborhood of the project. (Now, do I suspect, have they offered them to the large apartment buildings that are part of the project.)
Survey questions
Director Gib Veconi asked if it was possible to see questions the community would get at the next workshop. Pycior said “they are largely reflected” in the online survey.
Veconi said he thought the questions on affordability “were quite shallow,” setting up a simple trade-off: more below-market units at higher income levels or fewer at lower income levels.
He said he’d prefer to see questions about where the need is, with information about the project’s unmet obligations.
The coalition BrooklynSpeaks, which Veconi helps lead, has advocated that the developer “provide the missing 1,031 moderate, low- and very low-income apartments from the existing approved project density.”
(In other words, while they have total 876 affordable units to reach the 2,250 required, the skewed delivery means they’re way behind the original promises.)
Pycior said the questions “reflect the honest, candid tension between elements of the project that have to be considered: the feasibility, the height, the density.”
Veconi said that more details—such the acknowledgment that 130% of AMI could mean (nearly) $190,000 for a family of three—would’ve made the feedback more specific.
Director Ron Shiffman, a longtime advocacy planner and academic, reminded them of the unmet original promise. He also criticized the trade-off, suggesting there might be “alternative ways of funding,” including state legislative support for social housing.
Later, Veconi observed, “I don’t know that it’s necessary to get into a lot of hypotheticals about AMI levels before considering what’s already been approved around this project, because there’s been a number of rezonings over the last decade there, and none of them are anywhere near 80 to 130% AMI.”
For example, the Atlantic Avenue Mixed-Use Plan was approved with Mandatory Inclusionary Housing (MIH) Option 1, which offers 25% affordability at an average of 60% of AMI.
A better comparison, Veconi suggested, would be private rezonings, where a single developer is looking for entitlements outside of the neighborhood plan. He noted two private rezonings along Atlantic Avenue had 35% affordability, below 60% of AMI. (With Atlantic Yards, it cuts both ways: the developers seek extra bulk, but would have higher infrastructure costs.)
“This has been established as what elected representatives of the people who live in this part of Brooklyn will agree to in exchange for entitlements for development,” Veconi said. “They don’t agree to 130% [of AMI].”
“I don’t mean any disrespect to the people who attended the engagement meetings,” he said, “but that’s probably a better barometer of what really will get support than the answer to the question, ‘Do you want more units at a higher AMI?’”
He said the buildings might probably qualify for the 485-x tax break, averaging 60% AMI. It’s important to figure that out, he said, “because if you had to build at that higher income level, you’d be challenged with the tax abatement.” (Unless they’re seeking a special tax abatement.)
Presentation
Joseph McDonnell, managing partner of Cirrus Workforce Housing, again described them as “a mission-driven developer” with capital “largely from unions” in and around New York City.
Cirrus is also an affiliate of Cirrus Real Estate Partners, which aims “to generate consistent, attractive returns through identifying investments that offer asymmetric risk-return profiles and significant downside protection.” The latter company, according to its law firm, wrangled the Atlantic Yards deal.
He repeated elements of his previous presentation on Oct. 9 to the AY CDC board and of the presentation at the Nov. 18 workshop.
“We do not have the ability to make Atlantic Yards perfect,” he said, but aimed to be “very thoughtful,” taking advantage of the time and money already invested by Greenland USA, the developer that succeeded Forest City. That includes a new railyard and significant platform elements needed for vertical construction over the Metropolitan Transportation Authority’s Vanderbilt Yard.
McDonnell said that includes affordability “across the income bands”; acknowledging constraints on the site, including not building one tower; and offering a “project labor agreement to provide fair wages for fair work,” which should mean they build faster.
“This is a very, very complex site,” he said. “We unfortunately do not have the luxury of a large rectangle of earth.”
Site 5, across from the area block, is terra firma and thus easier to build on than the railyard. They plan, as did Greenland, to transfer density from the approved B1 tower, once planned to loom over the arena, to Site 5, creating a two-tower project. (Unmentioned: that offers a huge benefit to the arena operating company.)
The railyard challenge
Each railyard site has its own challenges and opportunities, McDonnell said. “B5, for example, is actually quite a difficult site to build on,” he said, given a ramp from Sixth Avenue into the railyard.” Still, he said, Greenland already put in most of the foundations.
The B6 and B7 sites, further east of Sixth Avenue, have the advantage of terra firma jutting south of Atlantic Avenue. That’s an opportunity “to deliver more efficient buildings, to create more room for affordability, more room for open space, and actually to potentially do it quicker than buildings that have to be built fully on a platform,” he said.
LCOR Principal Anthony Tortora reinforced McDonnell’s presentation. He said shrinking the buildings' footprints would make them easier to build and create more open space. (Unmentioned: despite smaller footprints, the buildings would be far bulkier than previous. So coverage by The CITY, which said the buildings would be “smaller,” is misleading.)
The B8 site has a convergence of tracks and “critical MTA switching infrastructure,” so they aim to omit the building, re-allocate the density, and add an acre of open space. “We need to hear the community’s feedback as to the specific program,” he said, but given the location, “we believe this could be a transformative amenity.”
Unmentioned: the increase in population would lower the ratio of open space to population, as I wrote.
Understanding the scale
McDonnell called the image of the Approved Plan versus a Feasible Alternative an “illustration,” aimed to ”give people some kind of relationship between that site plan and what the sky may then look like.” (Was he perhaps mindful of my critique, linked below?)
He acknowledged “it’s one-dimensional, but I think it gives you a sense that you’re really moving bulk from B1 to Site 5.” (Also, as I argued, it misleadingly suggests the buildings would be of equivalent height.)
“We would seek to do more rental there, not just condominium, which many people here know is what Greenland aspired to do with it,” he said. (Maybe they aspired to it, but without the 421-a tax break, it wasn’t realistic.)
Regarding the five towers planned for the platform, McDonnell said they aim to be “growing them all.” That implies a redesign of B5, which was not visible in the illustration but makes sense.
After all, if they’re going to add more than 2.1 million square feet—the 1.6 million additional square feet plus re-allocating the B8 bulk—to the railyard sites, that would be easier to share among five buildings, not four. That would mean a 71% increase in bulk at the railyard, by my calculation.
They aim for 9,000 total apartments, in part because the B1 tower, aimed at office and hotel use, would be used for housing. (I asked later if they’d ruled out a hotel at Site 5, and he said no. I wouldn’t be surprised if BSE Global, which operates the arena, aims to build a hotel there.)
“We’re thinking of focus on moderate- to middle-income housing, not exclusively,” McDonnell said, again citing that 130% of AMI, their maximum, is less than the original ceiling approved. (Also, as I wrote, it’s no sacrifice, given that the rise in AMI means that rents at 130% of AMI are off the chart.)
McDonnell said they plan “much less condo than what is actually allowed under the plan.” Indeed, I calculated, a total of 1,463 rather than 1,930. Still, after subtracting the 278 condos already built in the 550 Vanderbilt tower, that would leave a significant 1,185 condos left to build.
“There are some positive aspects to condo,” he said. “We can actually potentially use some of those tax revenues to build the next platform.” That hints at a potential strategy to redirect tax revenues from the public coffers.
Timing issues
Kummer observed that timing of delivery is important: “An affordable unit delivered in Year 3 is worth more to this community than one delivered in Year 10.” That’s an important point, but we’re already in Year 22 since the project announcement and Year 20 since the Housing MOU.
McDonnell said Site 5 and parcels B6, and B7 would be built first. They’d “convert Site 5 from condo into much more rental, which allows you to try to hit some of the affordability goals while one of the platforms is being built potentially.”
“If you went into the ground with one of the platforms tomorrow, you’re talking about somewhere between 24 and 36 months until you have a foundation,” he said.
It’s unclear how much construction of the platforms for B6 and B7 could proceed while the tower was being built on terra firma. But it’s possible they could build at Site 5 while starting the foundations for B6 and B7—and maybe some work on terra firma.
Design issues
Veconi, noting the taller towers, warned they should “design that in a way that doesn’t end up creating the type of towers in the park-type environment that largely people don’t want to live around any more.”
Did they have a designer, an architect, and a landscape architect? He was then told about KPF.
“The urban design elements of this are really, really important,” Veconi said. It would be helpful to hear from the master planner, he said, “because these are some very large buildings you’re talking about.”
(I’ll write separately about further discussion of project density and the cautionary example of Downtown Brooklyn.)
More on affordability
Shiffman said he was concerned about how the housing would serve families. “I’m not against high-rise buildings. I’m not against high density, but those have to be designed so carefully so that they provide livability,” he said, noting Site 5 was a tight site bordered by Fourth and Flatbush avenues.
Assemblymember Jo Anne Simon also expressed concern about “bumping up Site 5” if the platform doesn’t get built. “I don’t want for the community to be left with two towers at Site 5 and never getting that housing that’s supposed to be over the rail yards.”
She said she wanted more assurances that “those platforms will be built and those apartments will be built,” she said. Later, Director Ethel Tyus observed that it was important to have contracts with “some teeth in it.”
The developer responds
McDonnell called Veconi’s comments on affordability “quite fair,” adding that, “What we’re dealing with on this site is a bit the art of the possible…. We’re really trying to get feedback to talk about the types of capital and public investments that are needed.”
Simon said, “There was never really a feasibility study done early on that this was buildable, and that building over a rail yard was able to be monetized in Brooklyn.”
(Well, yes and no. ESD received a 2006 report from KPMG stating that the consultant had discussed infrastructure and other costs with the developer. “Since these costs have either been negotiated or are in the process of being negotiated, coupled
with the uniqueness of the site issues, we have considered them reasonable,” KPMG concluded.)
“To what extent have you guys done a feasibility study to assure that, in fact, this can be built?” she asked.
“It can be built, from an engineering perspective, and from a cost perspective it’s much more reasonable post-Greenland,” McDonnell said. He likened the costs to those of Hudson Yards but said they were lower because they were not starting from scratch.
Does Greenland make money?
How, asked Veconi, “does Greenland exit? They’re a minority partner now, but they probably want to exit at some point. When do they get to exit, and what do they leave with?”
“Greenland has no real exit rights,” said McDonnell, whose firm Cirrus bought Greenland’s outstanding debt, perhaps for pennies on the dollar, gaining leverage on both Greenland and the holders of the other project debt, initially to immigrant investors under the EB-5 visa program.
(Here’s my coverage of the murky ownership issue, which includes three passive minority partners: Greenland, a USIF (U.S. Immigration Fund, a broker of EB-5 investor visas) affiliate, and Fortress Investment Group. Here’s an update on the ten entities using variants of the name “Brooklyn Ascending.”)
“Their investment has no equity?” asked Veconi of Greenland.
“They’re in the back of the line,” McDonnell responded. “We have a mission-driven fund. It’s not seeking 30% returns. And sometime, very far in the future, Greenland may get something. If I looked at it on paper today, nothing.”
“We had USIF on the one hand and Greenland on the other hand. I don’t know if you guys caught all this,” he said. “They probably like each other as much as you guys like Greenland.”
Then came a little crosstalk in which participants denied having any animus toward Greenland, which, indeed, had never surfaced. (In that moment, it seemed that McDonnell, who comes off as affable and reasonably open, showed that he can be a tough businessman.)
“We had a developer who didn’t show up. We had a lender who’s based in Florida,” he said of the USIF. “They’re funded by EB-5.” Cirrus had leverage over them, so “we thought it made sense to move the project forward.”
The workshop at the arena
Regarding the workshop on Dec. 8, Pycior said of the Barclays Center, “they’re giving us the space. It’s the first public meeting, to my recollection, ever held at the arena.
If ESD’s not paying, that’s a savvy tactic by the arena company, which surely wants to play nice with the state, given the huge bonus the next phase of the project would offer, making the arena plaza—crucial to arena patron flow and advertising/promotion—permanent and free.
(I think they should pay. During the public comment period, resident Robert Puca also pointed out that arena company (and Brooklyn Nets owner) Joe Tsai would be “getting a huge benefit…. what are they going to give back to the community?” Also, BrooklynSpeaks has suggested that Tsai’s BSE Global fund an enforcement unit for quality of life complaints created by the arena.)
Pycior said the third public workshop would be online and held in early to mid-January, with a date yet to be set. Topics will be based on what needed more time in the first workshops and “anything new that was flagged by the community,” she said.
The state also failed to incorporate the housing promises into the guiding Development Agreement.
Speliotis counted the five rental buildings for which ACORN/MHANY helped process tenants, so she omitted the more recent 595 Dean towers, for which developer TF Cornerstone recruited affordable tenants itself. While she said there were only 25 three-bedroom apartments, her math was off: 535 Carlton has 15 three-bedrooms and 38 Sixth has 16, for a total of 31.
Does that mean ACORN, when advocating for the project two decades ago, expected some future change to the project to get the platform built? (I queried Speliotis yesterday and will update this with any response.) At a public hearing in 2014, she suggested that better outcomes relied on political pressure: “But we’re only going to do better if we stop suing, come together, and actually really push the developer, with the city, in partnership, to get the right affordability, the right unit mix….”
Is it really on the table to not build the platforms? Wasn't eminent domain justified on the basis that the rail yards constituted a blight that needed to be remedied? That was the predicate for the whole nine yards! For them to still be there when all is said and done would be an outrageous outcome.