Worries About Whether City is Keeping Tabs on Development in East New York

It’s been almost two years since the City Council approved the rezoning of East New York, the first of the neighborhood rezonings linked to the de Blasio administration’s affordable housing plan.

The Coalition for Community Advancement: Progress for East New York/Cypress Hills, a coalition of neighborhood groups that organized in response to the rezoning, have been closely monitoring the roll-out of the rezoning and accompanying neighborhood investments to ensure the city is held accountable to its promises. When it comes to one of the biggest issues, the future affordability of the neighborhood, coalition members are concerned about whether the city is doing enough to monitor development.

At the time of the rezoning’s passage, the Department of City Planning predicted that about 50 percent of the 6,500 units that the city thought would result from the rezoning over 10 years would be rented at below-market rates.

This prediction was based on three factors.  First, the city’s new mandatory inclusionary housing policy requires a portion of new units in buildings with above 10 apartments (or more than 12,500 square feet of floor area) to be rented at below-market rates; for East New York, this could either be 25 percent of units at an average of $51,540 for a family of three or the “Deep Affordability Option”—20 percent of units at an average of $34,360 for a family of three. If the new development contains between 10 and 25 apartments (or 12,500 and 25,000 square feet), the developer can also opt to pay into an affordable housing fund in lieu of creating rent-restricted units.

Second, the city assumed that in the near term, given that market-rate rents remained relatively low in the neighborhood, property owners would instead choose to work with the city to develop income-targeted housing with city subsidies. All projects subsidized by the city in East New York would need to be 100 percent affordable, with at least 10 percent for families making below $25,770 for a family of three, 30 percent between $25,770 and $42,950, with the rest “primarily” affordable to families making less than $51,540.

Third, the city made an upfront agreement to break ground on 1,200 affordable units in the neighborhood within two years. The city identified a potential for 300 units on public land, another 100-plus units on smaller parcels throughout the neighborhood, and 900 units on a site owned by the nonprofit developer Phipps. The city also committed to even more units reserved for extremely low-income families on public sites.

The city’s East New York Housing Plan further states that “HPD will continue to look for every opportunity to finance affordable housing in East NY – both on its own and through its partnerships with the community.”

There was, of course, much that could go wrong. Developers could choose the 60 percent AMI option rather than the Deep Affordability Option that neighborhood advocates preferred. The neighborhood real-estate market could heat up faster than expected and land prices could rise, such that property owners wouldn’t be attracted by the city’s subsidy programs, with their requirements for units at very low rents.  Perhaps property owners might not know about the city’s subsidy programs to begin with. (And there was one thing that would go wrong that no one expected—that then-candidate Donald Trump would cut the corporate tax rate so low that it would undermine the value of Low Income Housing Tax Credits, diminishing resources for affordable housing.)

The good news for affordability advocates is that there are now a number of 100 percent below-market-rate developments slated for the neighborhood, including the 1200 units that the city originally committed to subsidizing. The city has also concluded that a publicly owned parking lot on Grant Avenue will also be feasible for redevelopment with affordable housing, and this February selected developers to build a total of 142 income-targeted homeownership and rental units on a number of small lots throughout the neighborhood. Additionally, the developer Alan Bell has plans to build 100 below-market units.

However, as City Limits reported in August, some developers and brokers do see the potential for market-rate units in the neighborhood, and on side streets there has been a surge of house flips and rising home sales prices.

Cypress Hills Local Development Corporation, a nonprofit developer and member of the coalition, has followed real-estate news reports to learn about new building permits and land transactions in the neighborhood. They’ve found some permits have been filed for buildings on the rezoning avenues for small to medium-sized multifamily apartment buildings with commercial or community-facility space. Those reports do not indicate the intended affordability of each project—so it’s unclear whether those projects’ apartments will be  mostly market-rate (a few are larger enough that mandatory inclusionary housing units or payment into a fund would be required) or will be 100 percent affordable, and at what rent levels.

Brokers have informed CHLDC that among small sites, which have a greater turnover rate, there’s a trend towards land prices that would seem to only support market-rate housing, including a site on Blake Avenue (right outside the rezoning area) that finished construction last year and will rent at market rate. On larger sites, it’s less clear whether developers think market-rate housing is yet sustainable, though on Atlantic Avenue there was a medium sized site that sold for a price that could indicate market-rate housing.

When the coalition has corresponded with staff at the Department of Housing Preservation and Development (HPD), it’s been unclear whether HPD is tracking development in East New York or following up with property owners to encourage them to use subsidy programs. In some cases, it’s appeared that HPD is learning about projects from coalition members and only following up to find out about affordability at their request, as evidenced by e-mails shared with City Limits.

Asked by City Limits about its efforts to monitor development in the neighborhood, HPD stressed its commitment to creating affordable housing in the neighborhood.

“HPD remains engaged with the East New York community and is always available to discuss how we can help further affordable housing goals in the neighborhood, including through open dialogue with community-based organizations and outreach to property owners and developers,” wrote the agency in a statement. “We look forward to continuing efforts to work with this community to meet our shared goals for this area.” The agency also agreed that its goal was to “maximize the creation of affordable housing whenever possible.”

Asked if HPD was monitoring development in East New York with the intention to reach out to property owners to inform them about subsidy programs, HPD said that “information about our subsidy programs is readily available and we will meet with anyone interested in using our financing,” but that not all property owners will want to work with HPD or receive public financing.

HPD said it attends informational events in the neighborhood and throughout the city to explain HPD’s resources and has launched initiatives to help property owners learn about how to develop affordable housing, including its partnership with the Local Initiatives Support Corporation to help faith-based organizations develop land with affordable housing, and the publication of a list of pre-qualified developers  that can help mission-driven owners develop their properties.

Asked if any of the “informational events” target landlords specifically, HPD said it has “lots of outreach targeting landlords.” It said that in 2017 and 2018 there were robocalls made to property owners in the East New York Community District for four of the monthly Property Owners Clinics. The agency also says it held a landlord resource fair in the neighborhood on March 2016, and that the Landlord Ambassadors Program is “active in this part of the city.”

Such events and the Landlord Ambassador’s Program are described on HPD’s website as focused on giving landlords resources to maintain and stabilize their buildings in exchange for affordability restrictions.

HPD said it has also has tabled at nine community events since 2016, helped the Center for New York City Neighborhoods launch a Homeowner Help Desk to assist owners of 1-4 family buildings, and has included East New York in the Certificate of No Harassment pilot program, which requires the landlords of certain buildings to prove they have not harassed tenants before doing renovations or demolition.

It was unclear whether any of the outreach targeted owners of vacant land or property where owners might be seeking to build new structures.

The agency also noted that it reports on preservation and development activity in East New York in its annual progress report. This report includes information on the units HPD has financed, and in 2018 will include information about the neighborhood from the Housing and Vacancy survey, but it actually doesn’t include a description of all development in the area.

City Limits also asked HPD if it had any additional information about nine properties (including six in the rezoning area and three nearby) identified by advocates where permits have been filed or a transaction has been made. HPD said it had reached out to a couple owners, particularly of larger properties, and referred to one site on Pitkin and one site on Glenmore that coalition members had inquired about last summer and fall. HPD said the agency had tried to reach out to the developer that owns those two sites with an offer to meet, but the developer did not respond, and that the agency “will continue to engage in this manner.”

But Al Scott, a member of the coalition, says he thinks HPD could be doing more. “It is alarming that HPD isn’t tracking development in East New York, especially on the re-zone corridors. They hadn’t heard of the 24-unit development on Liberty. A permit had been filed with DOB, but HPD didn’t know anything about it. How are they tracking MIH and enforcing it? What is HPD’s internal structure and mechanism for enforcing MIH?” he asked.

He added that it seemed HPD wasn’t paying sufficient attention to smaller-sized developments. “They say they’re being transparent. But if they’re not aware of what’s going on, then they have nothing to report. It seems pretty clear there’s no effective tracking mechanism in East New York.”

Michelle Neugebauer, a member of the coalition and director of Cypress Hills LDC, echoes these worries. “We just want clarity on what the process is that HPD is going to be using to track the transfer and development of vacant land in the neighborhood that’s privately owned and what are the good faith efforts that will be made, other than having it on their website…to convince owners and developers of vacant private land to build using HPD Subsidy,” she says.