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Albany 421-a Reform Bill Hands One-of-a-Kind, Special Favors to Forest City Ratner »

June 21, 2007

Atlantic Yards is the exception in NY State's 421-a reform


This is the big news — late yesterday Atlantic Yards Report and The Real Estate Observer broke the story that NY State's 421-a reform bill had a gigantic exception for Bruce Ratner's controversial 22-acre, arena-and-16-high-rise Atlantic Yards plan.

MoneyTree.jpgWHAT'S IN A NAME?
Only the bill didn't call it "Bruce Ratner's controversial... Atlantic Yards plan." The official designation is:

"a multi-phase project that includes at least 2,500 dwelling units and (i) being implemented pursuant to a General Project Plan adopted by the New York State Urban Development Corporation and approved by Public Authorities Control Board.”

Norman Oder of Atlantic Yards Report concludes, "There’s only one such project that would qualify," and Matthew Schuerman of The Real Estate Observer notes, "to people who have been following the project in central Brooklyn, [that] can mean only one thing: Atlantic Yards."

For a while now, behind the scenes, affordable housing advocates have voiced concerns that Atlantic Yards "affordable housing" would cost more to build than affordable housing created by other groups and developers. In addition, the housing subsidy pool has a volume cap set by the Federal Government. This cap has already been reached for 2007 by projects already in the pipeline. The concern is that Atlantic Yards will suck up the available financing in the future, precluding projects elsewhere in the city.

As if affordable-housing advocates didn't have enough to worry about, Norman Oder uncovers a dirty little secret buried in the 421-a reform bill: "affordable housing" at Atlantic Yards would cost more to the poor.

The bill states that “the rent for such units does not exceed thirty percent of eighty percent of the area median incomes adjusted for family size.”

Translation. If you earn 70 percent of AMI, you might get an apartment, but you'd have to pay rent as if you earned 80 percent of AMI.

One caveat:

Some of those numbers may change before the bill passes Thursday.

The State's reform bill has a loophole that would benefit Ratner. According to Matthew Schuerman's post:

In such “multi-phase projects,” according to the state bill, the whole development can qualify for the tax abatement so long as one-fifth of the apartments in the entire complex are affordable to people who make 80 percent of the area median income. (The AMI is roughly $70,000 for a family of four.) Under the City Council version, only those buildings that had affordable units in them would qualify, while developer Forest City Ratner would have had to pay full taxes on their condominium towers.

Therefore, Forest City may be able to qualify some of its market-rate buildings for the tax break and save itself millions of dollars.

Atlantic Yards Report, The Atlantic Yards gift slipped into the 421-a reform
The Real Estate Observer, 421a Bill Gives Special Treatment to Atlantic Yards

WHO'S RESPONSIBLE (OR NOT RESPONSIBLE, DEPENDING)? And if you're wondering how this happens and how you can get your own special exception to legislation, check out this morning's article on the political process, which include choice quotes from ACORN Director Bertha Lewis and Former Atlantic Yards Development Group President Jim Stuckey: Atlantic Yards Report, Two men in a room, no transparency, and a bonus for Forest City

The final version of the bill apparently came down to two men in a room, Brooklyn Assemblyman Vito Lopez (and surrogates) and Real Estate Board of New York (REBNY) executive Steven Spinola (ditto), each deputized by the two men who control their respective legislative bodies, Assembly Speaker Sheldon Silver and Senate Majority Leader Joseph Bruno.

And in those backroom negotiations emerged a nice plum for Forest City Ratner's Atlantic Yards project. (The lack of an obligation to build affordable housing in AY condo buildings adds to the developer's bottom line in multiple ways.)

You had to know something was brewing when Jim Stuckey protested to much:

And, in a May 2005 City Council hearing, FCR executive Jim Stuckey stated: ...it qualifies for 421A tax abatements for residential projects. So, if anyone else, anybody, not us, any developer, developed on this site as of right, they would be entitled to 25 year tax abatements...

Puhleeze, since when does Forest City get treated as "any developer?"

It remains to be seen if any of the daily newspapers pick up this story as the benefits of Atlantic Yards continue to unravel.

Posted by lumi at June 21, 2007 8:50 AM