The Making of Downtown's New Housing Bond-Doggle

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In announcing his administration's financial plan for redeveloping lower Manhattan, Mayor Bloomberg recently talked up the need for housing. But the mechanisms his administration has put in place for making some of the new apartments affordable closely resemble a decades old plan that by many accounts never quite worked–at Ground Zero's neighbor, Battery Park City.

Governor Pataki and Mayor Bloomberg announced on August 7 that the state and city will evenly split $8 billion from the feds to rebuild downtown under the New York Liberty Bond Program. These funds, which officials hope private investors will help supplement, are slated to go toward commercial ($2 billion), retail ($800 million) and residential ($1.6 billion) development.

Since that announcement, the state's Housing Finance Agency has come under fire for planning to put most of its $800 million in housing funds toward market-rate apartments. Albany's program requires developers to dedicate only 5 percent of their new units for low- and moderate-income tenants, despite the fact that most tax exempt bonds mandate 20 percent.

The city's plan is no more generous. Tracy Paurowski, a spokesperson for the Housing Development Corporation (HDC), the city's bond issuer, said the administration plans to give preferential treatment to developers who agree to construct some affordable housing near the old Trade Center site, but it will not require such a commitment. Instead, HDC will charge each developer a 3 percent fee on the bonds, which will then be put into a fund. The city expects to pool up to $25 million for 2,500 units of affordable housing to be built throughout the boroughs.

How and when that money will be spent, however, has not been decided, said Paurowski.

Without these details outlined up front, housing and budget watchdogs fear the promise of affordable apartments will be lost, much as they say it was at Battery Park City. In 1989, then-Mayor Ed Koch signed an agreement to funnel up to $1 billion of Battery Park City's revenue to the city for the development of affordable housing.

To this day, some city budget watchdogs say, much of that money has not been spent as intended. According to a study by City Project, the city had invested only $143 million in Battery Park City revenue in affordable housing as of 2000. The rest went to plug the city's budget gaps. Calls to Mayor Bloomberg's office were not returned by press time.

Bonnie Brower, director of City Project, wants to avoid a repeat performance. “We've had 20 years of broken promises. We shouldn't have another 20,” she said, adding that either Congress or City Hall should lay out specific requirements as soon as possible.

Ronald Shiffman, director of the Pratt Institute Center for Community and Environmental Development, has his own recommendations. To ensure that 45 percent of new housing downtown is affordable, he has advised the mayor and governor to include a 4 percent Low Income Housing Tax Credit on top of charging commercial, retail and residential developers fees. After all, said Shiffman, “How are we going to talk about rebuilding Lower Manhattan when the heroes in the days after the attacks can't afford to live there?”