On a vacant lot in a sparsely populated area of Brooklyn, construction has begun on a 30-unit apartment building intended for low- to moderate-income families. You might think the project would be welcomed by the community, where housing is hard to find. Instead, the building has been a source of considerable resentment for many residents in the northwest corner of Bedford-Stuyvesant. It’s also the subject of a lawsuit.

“There’s a lot of noise, a lot of confusion,” says Annette Figueroa, president of the Kent Avenue Block Association and a plaintiff in the suit. She has lived on the block for 33 years. “We have problems with parking, problems with water.”

But Figueroa’s objections go far beyond quality-of-life worries. The housing on Taaffe Place is being built primarily, if not exclusively, for Hasidic tenants coming from Williamsburg, which suffers from a serious housing shortage. And it is hardly an isolated project: Some 800 units of housing are scheduled to be built in the area in the near future. Most are in the planning stage; a few are up and running, including a massive complex on Flushing Avenue. If the developers reach their goal–18 buildings are on the docket, and counting–the neighborhood’s population could triple, from roughly 1,500 today to more than 4,500.

To many residents of this African-American and Latino neighborhood, the sudden and rapid influx of Hasidim into their community has been transformative. Some tenants have claimed that landlords are harassing them, trying to empty their apartment buildings in order to sell them. Others fear that their homes will soon become unaffordable as demand for apartments in the area increases–already, rents are rising rapidly.

The developments, planners and activists fear, also threaten the local industrial economy that supports a third of the jobs in the neighborhood. Businesses are being thrown out of loft buildings, as their landlords move to sell the spaces for residential use.

Most of the sweeping changes to the area have been made possible by city officials who approved housing construction in areas reserved for manufacturing. But the approvals happened without public review or planning, and residents charge that city officials bend the rules unfairly to favor the Hasidim, a group politically allied with Mayor Rudolph Giuliani.

The fight over space for housing has divided nearby Williamsburg for years, causing hostility between the area’s Latino and Hasidic populations and pitting residents who want more apartments against those who are worried about their jobs. Now, the same problems are emerging in Bed-Stuy–and this battle may be Williamsburg all over again, with conflicts over land use winding up as racially charged tugs-of-war.

“The city should not be in the business of sanctioning segregated housing,” says Lewis Watkins, district manager of Community Board 3, which has repeatedly voted to block these new developments. “It’s not fair,” adds Figueroa. “They only build for their own kind. What about the rest of the community? We need affordable housing, too.”

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For decades, the Satmar sect of Hasidim has been confined to Williamsburg’s South Side, an area bordered by the East River, Broadway and Flushing Avenue. But the religious group’s burgeoning population–pushed along by gentrification and successful efforts by Latino residents to stake out space for housing–has forced it to seek shelter in the remote northwestern corner of Bedford-Stuyvesant.

“The need for housing in the Hasidic community is extremely high,” says Rabbi David Neiderman, executive director of the United Jewish Organizations of Williamsburg, the group spearheading the development. “And every day it’s getting greater. We have 500 weddings a year and hundreds of families bearing every year.”

In this largely industrial part of Bed-Stuy, massive 19th-century warehouses sit near streets dotted with wood-frame homes. Neiderman says his organization’s work is improving the neighborhood. The area is “blighted,” he says. “There is prostitution, drug-dealing. We’re bringing back life to the neighborhood.”

Indeed, there are enough graffiti-strewn buildings and vacant lots to give the impression of urban decay. But planners from the Pratt Institute Center for Community and Environmental Development, who have studied the area in- depth, say appearances aren’t the whole story. “Even the vacant land stores materials and parks trucks,” says Brian Sullivan, associate director at Pratt. “Manufacturing areas may not be the most aesthetic, but they serve a vital function.”

According to Pratt, nearly 60 percent of the land area is used for manufacturing, with only 10 percent residential. These companies also provide a vital jobs base: In area census tracts, the rate of industrial employment is three times that of New York City as a whole. One in three people works in manufacturing.

Indeed, the property on Taaffe Place is surrounded by industrial and commercial establishments: a sheet-metal manufacturer, a dye company, a garment factory, a commercial garage, a construction firm. An office for the city’s Department of Environmental Protection is on Flushing Avenue nearby.

“This is not some bombed-out area. It is very safe–that’s why people are moving here,” responds Melvin Foster, president of the Neighborhood Stablization Task Force, a community group opposed to the housing. Foster says that according to a study his group conducted with the 79th Precinct, there were only a handful of drug arrests in the past four years, and prostitution is nonexistent.

Industrial boosters say that the new developments could threaten many of the area’s jobs. “It leads to increases in the cost of doing business: higher land prices, higher property taxes,” says Adam Friedman, director of the Industrial Retention Network, an advocacy group for manufacturing businesses. “There’s ticketing, and trucking becomes a problem.” For businesses on the margins, says Friedman, such factors can be the deciding factor in whether or not to move away.

More immediately, the new interest in the neighborhood gives industrial landowners an incentive to sell off their property for housing, transforming the neighborhood into a residential one. Already, the owners of a three-building complex on Taaffe Place will be evicting 16 blue-collar businesses employing 250 people to make way for residential lofts. A few businesses are already gone; others are expected to leave soon.

The trend worries activists like Foster. “We want to keep the neighborhood economically diverse,” he says. “We want light manufacturing to stay here. We need these jobs.”

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All of these changes are made possible by a real-estate loophole known as a zoning variance. Because this area is zoned for manufacturing, residential uses are forbidden unless a developer can get a variance–a waiver, in effect. But under city zoning laws, variances are supposed to be awarded only when a developer can prove economic hardship–specifically, that the property has unique physical characterisitics that make it a financial burden under regular zoning guidelines.

Development variances are awarded by the city’s Board of Standards and Appeals, a quasi-judicial agency whose members are appointed by the mayor. The BSA does not consider the environmental impacts of variances, and its decisions are not subject to public review. Critics charge that in Bedford-Stuyvesant, the board grants these variances too readily, allowing local developers to do an end run around city planning rules. Since 1996, BSA has awarded 10 variances to developers in Bed-Stuy and its environs; eight others are pending.

So last year, South Brooklyn Legal Services and a gaggle of community activists sued BSA, claiming that the agency’s laissez-faire practices violated city and state environmental-review procedures. The lawsuit also charges that the intended uses of the new buildings flout civil rights laws.

“It’s illegal to develop housing for one group,” explains Raun Rasmussen, director of litigation for South Brooklyn Legal Services. “Nobody can say that [they are building for Hasidim only], even though everybody knows it is.”

Indeed, a report by a consultant for the project notes that the “developer intends to target marketing efforts…to the Chassidic Jewish community, which has a unique set of housing needs.” Another indication that the buildings are geared for Hasidic families is that they will have anywhere from three to seven bedrooms, to accommodate large families, and two sinks and two refrigerators, in keeping with kosher laws. Although Hasidic leaders say that housing will be designed for those of modest means, starting prices on many of the condominiums are $200,000.

The case is currently being heard in Manhattan Supreme Court, with a decision expected in mid February.

“It really hurts,” says David Neiderman, referring to the lawsuit. “Instead of working together and developing a better place for both communities, they are fighting. It means depriving families and children who live in unbelievable and undesirable conditions an opportunity to have decent housing.”

Bed-Stuy activists, for their part, say they’ve been rebuffed when they’ve tried to set up meetings with UJO. In the past, Neiderman’s organization has been able to work out carefully engineered compromises–in 1995, UJO and Los Sures, a Williamsburg nonprofit long at odds with Hasidim over housing and services, built a housing complex on Driggs Avenue for both Latinos and Hasidim.

But with distrust still dominating Bed-Stuy, the city has been taking its own measures to ease tensions. Last September, the Department of City Planning proposed the creation of a special mixed-use industrial and residential district in the area. The zone is intended to allow the rational planning of housing for all segments of the community, without the use of variances. The planned zone, however, includes only 15 blocks, and it fails to protect some industrial areas where variances are in play, including Taaffe Place and Kent Avenue.

What many Bed-Stuy leaders are calling for now is a comprehensive rezoning plan that allows some form of mixed use, maintaining the industrial base while allowing residential development that meets everyone’s needs. “What must come under test,” says Rex Curry, a planner at Pratt, “is whether zoning changes are reactive to development interests, or proactive for a community’s well-being.”