New city housing policy faces test amidst affordability debate

Politico New York
By Sally Goldenberg
April 6, 2017

The most controversial part of Mayor Bill de Blasio’s new housing policy, a provision that benefits middle-class tenants, is facing its first test in a city debating just how affordable affordable housing should be.

Riverside Developers is seeking a rezoning from the City Council to build a mixed-use development with 296 apartments on manufacturing land in Bedford-Stuyvesant, Brooklyn. In exchange, 88 units would be rent regulated, but available to residents who almost all earn more than the area median income.

In seeking to use the part of the year-old Mandatory Inclusionary Housing policy known as the “workforce option,” the proposal has become a flashpoint in a city grappling with a sharp increase in homelessness, a rental housing shortage and long wait lists for public housing.

The provision was written into the housing policy to allow for moderately-priced homes in certain neighborhoods. Other options applied to some of the poorest parts of the city call for cheaper apartments, which are partly funded by public subsidies.

Riverside would not receive any city money for the project and would have to devote 30 percent of the new units to tenants earning, on average, 115 percent of the area median income — $89,355 for a three-person household. The rest would be rented at market-rate.

“In going for a project that is not relying on subsidy, I think what’s being put forward is creating some traditionally middle-income [housing],” said City Councilman Steve Levin, who represents the area. “I don’t think that the project in and of itself would be then the cure-all for affordable housing needs in the neighborhood, and there’s going to continue to be a need for more lower-income housing.”

Levin said he expects to decide on the project by week’s end. Because the Council typically defers to local members on land use matters, his support is critical for Riverside.

“I voted for Mandatory Inclusionary Housing with the workforce option as part of the legislation, so it would be hard for me to come back and say it could never apply in any circumstance after voting for it last year,” Levin said.

Several of his colleagues argued the proposal fails to satisfy the needs of lower-income New Yorkers.

“I believe that people who have higher [incomes] also need assistance, but if they need assistance, we certainly know that people of lower [incomes] also need assistance, and this doesn’t include any of them,” Councilman Jumaane Williams, a Brooklyn Democrat, said during a recent Council hearing.

Riverside is proposing to rent 10 percent of the units to tenants earning 70 to 90 percent of the area median income, while others would command rents as high as 130 percent to reach the required average. Williams said the fact that the proposal wouldn’t go below 70 percent of the area median income is “reprehensible.”

He recommended the Council entirely retool the citywide policy, which he voted against it last March.

“We’re in a crisis now,” Williams said.

Councilman Antonio Reynoso, who represents a neighboring Brooklyn district, called Riverside’s affordability plans “unacceptable.”

“There’s a need for affordable housing, especially considering how many homeless families we have right now,” he said in an interview last week.

“I have a different vision as to how this Mandatory Inclusionary Housing stuff should work. In neighborhoods that are poor, we’re seeing 100 percent affordable housing, 50 percent affordable housing. We’re seeing these very aggressive attempts at achieve the maximum affordable housing,” he said.

But in more affluent areas, he said, “they do the bare minimum.”

This project is planned for parcels bound by Flushing and Franklin avenues, at the intersection of South Williamsburg and Bedford Stuyvesant in an industrial area with some homes. According to a report by the Furman Center, median rents in the community were $1,050 from 2010 through 2014, up 13.2 percent from 2005 through 2009.

“The idea here would be that this building would be self-sustaining and provide affordable housing for middle-income families,” Richard Lobel, a lobbyist for the developer, said at the Council hearing. He said the city’s housing agency “was a strong proponent of the workforce option.”

Asked about the administration’s view of the workforce option, mayoral spokeswoman Melissa Grace said, “Any project approved under Mandatory Inclusionary Housing must adhere to the program’s clear rules.”

The City Planning Commission deemed the Riverside project “appropriate” in its report on the proposal, and acknowledged “that the project is in the type of moderate market area where the concerns underlying the creation of the workforce option exist.”

The development would include one eight-story, 176,670-square-foot, building with 168 apartments and retail space. A second building would occupy 126,839 square feet and would include 128 apartments.

But the report added that “the great need for affordable housing to low-income New Yorkers that either [of the other options] would be able to provide in greater numbers than the workforce option and therefore strongly encourages the applicant to work with the Department of Housing Preservation and Development to identify potential opportunities for financing that would enable deeper affordability … on at least one of the two development sites.”

The local community board, which has an advisory role in land use issues, initially voted 18-17 in favor of the project, with two abstentions. It then passed it 24-4 with one abstention in January.

Despite its approval, the board recommended the developer offer lower-cost housing, saying the proposal “far exceeds the Community Board 3 median income of $36,535.

Brooklyn Borough President Eric Adams also recommended more affordable housing in the project, “in order to better accommodate local community area median income levels.”

A former city housing commissioner, Rafael Cestero, president of the Community Preservation Corporation, argued that locking in housing at middle-income levels creates affordable housing in the future, when prices go up. The city’s policy requires developers to permanently rent these units at the given percentage of area median income.

“In a few short years, there’s a benefit to capping rents at a level that may seem like a market rate today,” he said. “Within two, three, four, five years they will be substantially below market and affordable [as] the market pressures are just pushing rents up in all these neighborhoods.”