Seriously… to paraphrase the Unity guys: what kind of a project has “community benefits” so vague and dubious that you have to get it in writing that there will actually be some kind of benefit to the community?
From WNYC: “Under the Community Benefits Agreement, Ratner pledged half of the 45-hundred apartments he plans to build for middle and low income residents, and promised to set aside 45 percent of the project’s construction jobs for minorities and women.”
And this is different, how? Brooklyn is a city of minorities. Don’t most of the construction crews you see on the streets of Brooklyn have at least 45% minority representation? Seriously, I’m asking here.
[Seriously, DeeDee is answering here: “the agreement will mean set-asides for minority- and women-OWNED contractors to do the work. This is a very important distinction…”]
And while we’re at it… “affordable housing” sounds suspiciously like one of those terms designed to make you think the exact opposite of what they really mean. Affordable to who? Does the “CBA” define price points for “affordable”? Can obscenely rich people like Mike Bloomberg actually have a realistic concept what “affordable” means?
PHOTO: Billionaire Mike Bloomberg vouches for Bruce Ratner, Real Estate Developer with a net worth exceeding $400 million: “You have Bruce Ratner’s word, and that should be enough for you and for everybody else in this community.” [New York One]
In answer to your question most construction crews might have minority workers but the agreement will mean set asides for minority and women OWNED contractors to do the work. This is a very important distinction.
Typically, in the design and construction industry when “set-asides” are established on public projects, they are referring to the OWNERSHIP of the respective firms, not always the actual make-up of any particular firm’s workforce (although that IS ALSO a factor). Public projects, say a new wing to one of the city-owned hospitals or a CUNY or SUNY project, usually have a requirement of 10-20% for minority owned firms and between 3 and 5% of woman-owned firms.
In design, that would be a percentage of the overall design (architect/engineer and other subconsultants) fee, in construction, it would be a percentage of the actual construction cost.
According to the customary formula (brought to you by the folks at HUD) “affordable housing” means housing rented out to folks earning 60% of the Area Median Income (AMI) and under. The AMI for Kings County is $68,750, so to be eligible for “affordable housing” in Brooklyn means that you have to earn not one penny over $41,250. In some cases rent is capped at 30% of gross income. This is the standard model, but there are many variations. Pretty crazy, eh?
Got any more info on the variations?
the AMI for Kings County is 68,750? are you sure? can you send a link?
The False Promise of Ratner’s Affordable Housing – Redux
By: Will on: Jun 22, 2005 [09:02 am] (17 reads)
http://www.onnyturf.com/tiki-read_article.php?articleId=68
The inclusion of what is know as 50/30/20 affordable housing in Ratner’s plan for the Atlantic Yards is lauded by some City lawmakers and interest groups, and has earned their support. But those guarantees are hardly gurantees at all. Notable among Ratner’s supporters are Gifford Miller, Virginia Fields, and ACORN. 50/30/20 is supposed to mean that 50% of the new housing will be market rate, 30% will be middle income affordable, and 20% will be low income affordable. In exchange for affordable units, developers receive a variety of tax breaks and preferable financing. Opponents of the Ratner plan have been critical of the proposal for several reasons, most recently because Ranter has added an additional 2,800 units that do not seem to be part of any affordable housing provision. But that is a problem specific to the Ratner development, and is minor compared to the problems inherit in the City’s 50/30/20 program, where handouts to developers are secretly institutionalized.
Due to 50/30/20’s formulas and connection to Rent Stabilization rules, it really should be call an 80/20 program. The reality of the 50/30/20 plan is that it only guarantees affordability for the lowest 20% of the equation.
The 50/30/20 program is run by NYC’s Housing Development Corporation. And while the guarantees it makes for that lowest 20% is a good thing, the guarantees set forth under the program for moderate income affordability (that middle 30%) are just false promises.
What’s in the 50/30/20 closet after the click…
There are two major problems with the 50/30/20 program. The first is that the rent rates are based on city wide Average Median Income. Opponents of Ratner plan’s for Brooklyn have been getting this message out and getting some coverage in the media. The problem they frequently cite is that Average Median Income (AMI) for NYC is based on city wide statistics, which means it is pushed higher due to high incomes, mostly of Manhattanites. NYC’s AMI is thus out of scale with the Average Median Income of residents living in communities like those around the Atlantic Yards. Because the root AMI values are disproportionately high the affordable rents created under the 50/30/20 program are disproportionately high, and thus not so affordable. For the Atlantic Yards development this means that rents that should be affordable in the 30% bracket are really market rate. This is why City Councilor Charles Barron has called the Ratner plan “Instant Gentrification”. Only 20% of apartments marked as affordable will actually be affordable to the existing community there.
The second problem with the 50/30/20 program is even more serious. The first problem could easily be addressed if lawmakers would simply change the formula by which rents are calculated. If rents were adjusted in low-income neighborhoods for the lower average incomes there, then the housing under both the 30% and the 20% would be affordable. But doing so would still not be enough to guarantee the affordability of the middle income apartments over time.
The problem is that rent increases on the middle 30% are based on Rent Stabilization rules. And over the past decade Albany and city lawmakers, bankrolled by city landlord interests have systematically been changing the Stabilization rules to run out the program. Among the rules tweaked by lawmakers to accelerate the demise of Stabilization is the one that says how much a landlord can raise the rent when one tenant leaves an apartment and a new one moves in. This is the allowable vacancy rent increase rate. Right now the vacancy increase rate lets landlords raise rents approximately 20% when an apartment changes tenants. What this means then for 50/30/20 units is that even if those 30% of apartments start affordable, they quickly go to market rate. Vacancy increases on the lowest 20% apartments are capped. Those apartments ARE protected as affordable to people earning 60% of the Average Median Income. There is NO such affordability cap for the 30% moderate income units.
This is why the secret of the 50/30/20 program is that it is actually a handout for developers.
Developers receive tax breaks, grants, preferred rate loans, and rights to build even more apartments (known as inclusionary zoning) in exchange for developing these so called affordable units. But while the tax breaks and loans go on for 15 years or more, the affordable housing units in the middle 30% quickly become market rate apartments, and fully profitable for developers. Rents for these middle income apartments start around $1,045 – $2100 a month (this range covers from Studios to 3 bedrooms). At an increase rate of ~20%, it does not take too many vacancies to suddenly rush those rents to market rate. This is the same process by which Stabilized apartments have been disappearing at an ever increasing rate (as covered earlier the month). Add to this that apartments turn over faster in low income neighborhoods, landlords get an even better deal.
All of this adds up to a big handout for landlords while creating a crisis for low income residents. The 50/30/20 plan starts by making the lowest commitment to low income housing, and then allows the majority of so called affordable units to become market rate – quickly pushing people of low income out. Meanwhile, buoyed by new development, rents across the whole area quickly rise as the neighborhood suddenly becomes more desirable to the higher-income classes. The need for affordable housing thus becomes even more desperate as once affordable units become more costly.
The failure of Ranter supporters to pay attention to these details, especially in the case of Mayoral Candidate Virginia Fields and the low income community advocate group ACORN is troubling. What would make more sense for the city, and what advocates like ACORN and city lawmakers like Virginia Fields and Gifford Miller should be pushing for is not just more affordable housing, but for GUARANTEED affordable housing, where the apartments are reserved for low and middle income earners, and where the rents are capped relative to income rates. These adjustments to city plans for affordable housing should be made not just to projects like Ratner’s, but to the basic 50/30/20 program. Developers and landlords like Ratner receive lucrative financial subsidies for building affordable units. The city should be able to keep the affordability it is paying for with those subsidies.
Correction Note: This article was originally published on June 7th with a factual error. That error was an assertion that Low Income Units in the 20% bracket were also subject to Rent Stabilization vacancy increases. The error was brought to light thanks to Deb Howard, President of PICCED. The article was pulled quickly and this is the re-written version to correct that error.
Ratnerville,
I’m glad to see you’re acknowledging that this plan will, in fact, raise the land value of the surrounding area. With all the rhetoric about how it will “destroy” the area, it’s definitely important to at least be consistent on that front. But as to your charge that “instant gentrification” is such a horror, I feel that as a 30 year resident of Fort Greene–born and raised–I have earned the right to challenge that claim. During the supposed halcyon gritty days of the neighborhood, I had to endure my father coming home beaten and bloody after a violent attack, my sister being chased through Lafayette Ave station by a crazy man wielding an axe, and numerous other such assaults and victimizations on my family. Gunfire and crack vials made up the neighborhood ambience. Wanted to eat out? Go to a bookstore? Go grocery shopping? Sorry, there were few to zero such options nearby. Ratner’s plan may well cause instant gentrification, but building a huge mass of “affordable” housing will have the opposite effect: instant slum. Having lived through the latter, I would prefer the former.
And on the subject of affordable housing, it is frankly bizarre how one of the most fundamental laws of economics is so badly misunderstood/ignored. If there is a small supply and a large demand for a product, prices go up. As prices go up, demand goes down, and supply goes up; which, in turn, stabilizes the ratio and reduces the price. This is not some theory; this is to economics what Newton’s laws are to physics. What price controls have been proven to do both by logical necessity and in countless amounts of real-world evidence, is to exaggerate the imbalance. Capping prices reduces the incentive to increase the supply or to decrease the demand, resulting in an even greater imbalance between the two, badly worsening the underlying problem. Misguided rent control policies will create a city in which only the very rich and the subsidized poor can live, and will exclude everyone in between. Wait, no, I should say these policies have already created such a city. We can’t solve the problem by exacerbating the cause.
There are only two genuine options for correcting the housing shortage. One is to decrease demand, which can be accomplished by allowing crime to spread, public facilities to fall into disrepair, and job opportunities to dry up, etc. Then no one would want to live here and we could all live on Park Ave for $400 a month. The better option is to increase the supply of housing, which can only be accomplished by reducing obstacles to development; ironically, you are fighting on behalf of those obstacles.
I applaud your activism, but as someone with a lifetime stake in the neighborhood, I wish you would rethink your false populist crusade.
false populist crusade? give me a break.
there are plenty of people with lifetime stakes in the neighborhood who find the Ratner plan abhorrent. and those who don’t.
again, its the FALSE argument that its Ratner’s way or no way.
FCR’s plan is unimgainitive, inefficient and destructive. A good plan could and should be none of those things.
Did anybody step up with another plan before Ratner? Hell no. But now all of the sudden people are up in arms? Please. Too little too late.
we shall see. but the answer is yes. there as a plan in 1969 to build on the rail yards. and Baruch College wanted to build on the rail yards. but guess what? The MTA said it wasn’t “feasible.”
HA HA HA!
I guess your point is that good urban planning and design, good community development, good economic development is simply building whatever a developer feels like building. not a convincing argument.
I think median family income is closer to $40,000
that $68k figure must be some sort of calculated for family of 4.
But to Ratnerville – this is NYC and of course going to use NYC figures. But don’t fear – they are ‘median’ not average numbers so for every super rich
family in Manhattan there are 2 super poor in the Bronx.
Ratnerville,
Good urban planning, etc., is crucial, no doubt about that. And there’s no doubt that the Ratner plan could be improved upon. However, the UNITY plan is at this point nothing more than a pipedream. Who will build the 2,300 units of housing, the parks, the commercial buildings and infrastructure? If there is legitimate private financing lined up, by all means the investors should seek to offer a higher bid for the land than Ratner has. I find it hard to believe the city would reject cold, hard cash. After all, the city is not buddying up with Ratner now due to his charming personality. On the other hand, if there is no commitment out there for private financing, then the UNITY plan is just a set of nice drawings. And please, please don’t tell me the plan relies on public financing–not after all the hand-wringing and hair-pulling over public subsidies and money taken away from our schools and firefighters, etc.
The Ratner plan is far from perfect, but it’s better than nothing. And nothing is what we will get, yet again, if the plan is killed rather than improved upon.
we shall see.