Affordable housing developers and advocates are praising the recent appointment of Goldman Sachs alumnus Alicia Glen as Deputy Mayor for Housing and Economic Development. As the City’s new housing czar, Deputy Mayor Glen is at the helm of crafting and implementing Mayor de Blasio’s bold new housing plan, a crucial component of his progressive vision to attack inequality in New York City.
On Goldman Sachs’s website, Deputy Mayor Glen describes the Bradford (aka the Acacia, 1560 Fulton Street) , a 105-unit Brooklyn building she co-developed in 2010, as work that she is “particularly proud” of. In the short clip, Deputy Mayor Glen notes that 30 percent of Bedford Stuyvesant residents live in poverty and that officially 15 percent are unemployed. She then showcases the Bradford as a transformative project poised to provide needed housing and economic growth for the neighborhood.
Unfortunately, the Bradford represents a particularly poor approach to the creation of affordable housing and raises four fundamental questions that the de Blasio administration must address if it hopes to deliver necessary housing and equitable community development:
Affordable housing for whom? The majority of the Bradford’s rents are out of touch with the needs of Brooklynites. While 20 percent of the units are quite affordable (mainly 1 bedroom apartments renting at $400 per month, set aside for individuals earning less than $18,000/year), 80 percent of the “affordable” units were initially set at rents of $1,900 per month for a 1 bedroom and $2,300 per month for a 2 bedroom. In 2010, half of all Bedford Stuyvesant households earned less than $35,000/year. This means that half of Bed Stuy families would need to pay 80 percent or more of their pre-tax income to live in one of these 2 bedroom apartments. Subsequently, according to filings at the City Register, the owners of the Bradford renegotiated and weakened the terms of their regulatory documents to increase the income limits by over 20 percent on almost half the higher rent “affordable” apartments—a practice usually reserved for projects experiencing difficulties attracting households within the stipulated income brackets. Given the demand, truly affordable housing in New York City should never face issues finding tenants. Subsidizing Goldman Sachs to build essentially market rate housing in Bedford Stuyvesant is a “trickle down” approach to community development, a strategy Glen has long championed. People who can afford almost $2,000 per month for a 1 bedroom apartment already have options in central Brooklyn. When private developers, such as Glen’s Goldman Sachs Urban Investment Group, access both public land and public subsidy to build, they should deliver housing targeted to the broad spectrum of residents struggling to remain in their communities during these tough economic times.
Affordable where? Given the scarcity of public land available for affordable housing production, inclusionary zoning is intended as an incentive for the private market to build permanently affordable housing on private land in exchange for allowing developers to build bigger buildings. Projects receive a 33 percent density bonus in return for creating 20 percent of the building’s floor area as permanently affordable lower income housing (within the same building or offsite in the same neighborhood). The Bradford, however, enjoyed a density bonus even though none of its apartments are permanently affordable. Why? Glen and her development partner, BRP, utilized certificates generated by The Garvey, a nearby publicly subsidized affordable project (also developed by BRP/Goldman) built largely on public land, to satisfy the inclusionary requirements. While legal in New York City, using affordable housing built on public land to generate an offsite development bonus squanders the power of inclusionary zoning. Public development sites should already be earmarked for the production of affordable housing. The practice of allowing City-owned sites to generate an offsite inclusionary bonus fails to provide a net increase in affordable units. Mandatory inclusionary zoning is a central component to Mayor de Blasio’s housing plan, projected to generate 25 percent of his 200,000 unit target. Is Deputy Mayor Glen committed to implementing a stronger, more effective citywide inclusionary zoning policy, or will she perpetuate the current, watered down version that fails to produce sufficient amounts of affordable housing?
Affordable at what cost? The subsidies offered by the City are not commensurate with the Bradford’s public benefit in terms of affordability. The City provided the Bradford with $6.83 million in subsidies through its Housing Development Corporation, as well as with $4.38 million in City Capital funds, $1.9 million in HOME funds and $1 million in Housing Trust Fund subsidies through the Department of Housing Preservation and Development. This amounts to a $14.1 million public investment for 83 higher-rent units and just 21 lower-income apartments. At a public cost of $135,000 per unit, or $670,000 per unit if we only consider the 21 truly affordable units, this project is an inefficient use of taxpayer dollars. These figures do not even take into account the fact that two-thirds of the project’s land was public land donated to the developers, nor do they include either the federal subsidy granted in the form of a 39 percent tax credit on $15 million of qualified investments through the New Markets Tax Credit program, or the value of the project’s 25 year extended 421a property tax exemption. In addition to strengthening housing commitments, the de Blasio administration must make more efficient use of limited housing and economic development incentives.
Affordable for how long? The majority of the Bradford’s land was city owned property given to the developers at no cost. Land is New York City’s most precious resource for the production of affordable housing. The Bloomberg administration required permanent affordability only on select projects, such as Hunters Point South. To maximize public investments, the de Blasio housing plan should go further and require all affordable housing built on public land or receiving generous subsidies to be permanently affordable. When the City gives scarce land away to a private developer, it has the power and the duty to ensure that the housing built will remain for future generations.
While the Mayor has repeatedly indicated that his top staff will be following his lead and vision, in the world of affordable housing policy, the devil is in the details of voluminous regulatory documents—terrain that no mayor has the time to wade into. The role of the Deputy Mayor for Housing is to ensure that these details align with the Mayor’s vision of lasting change and tenant protections. If the de Blasio administration hopes to address the current affordable housing crisis, the Deputy Mayor will have to do more than achieve meaningless development quotas. She will have to tackle the excesses of the ineffective and inefficient development approach that she has championed in the past.
HPD submitted a response to this article.