Testimony regarding the allocation of Liberty Bonds for the Front Street Housing Development Project

Monday, March 10, 2003

NYS Housing Finance Agency (HFA), Public Hearing

Opening Remarks

Good evening and thank you for this opportunity to comment on the proposed allocation of $48 million in Liberty Bonds for the “Historic Front Street Apartments,” a multifamily development project near the South Street Seaport in the Lower Manhattan Historic District. The project consists of 14 buildings on and around Front Street, 11 of which will be rehabilitation of existing buildings and three of which will be new development on infill lots and is being developed by the Sciama Family Partnership and Zuberry Associates. I will be addressing this proposal in these remarks.

My name is Katie Taylor. I’m a Senior Planner at the Pratt Institute Center for Community and Environmental Development (PICCED) in Brooklyn. PICCED is a university-based public interest community development, urban planning and architectural office serving the New York Metropolitan area.

Since September 11, PICCED has joined forces with several civic, labor and community groups in a variety of different coalitions focused on the aftermath of this unprecedented disaster and the rebuilding of our great city. This has included the Civic Alliance to Rebuild New York, the Labor and Community Advocacy Network (LCAN), Rebuild Downtown Our Town (R.Dot) and Imagine New York. Through all of these initiatives, we have worked in collaboration with other groups to focus on the issues of social, economic, and environmental justice; and the short- and long-term impacts of the events of September 11^th and the ongoing recession on low-income neighborhoods and communities of color.

I am here to express our strong concerns about the financing assistance provided by the New York State Housing Finance Agency and their use of Liberty Bonds in this, and other projects. The Liberty Bonds were meant to help rebuild and revitalize the city in the wake of the unprecedented disaster of 9-11. They are an important investment of public resources and offer a unique opportunity to create affordable housing units. As such, and in consideration of the City’s financial and housing crisis, it is imperative that they be used to their maximum public benefit.

We urge the HFA to hold public hearings on a plan to make best use of the $460 million in remaining Liberty Bonds within the State’s discretion.

The Project and Affordability

First let me say that we at the Pratt Center applaud the developer’s efforts to work with the Lower Manhattan community and acknowledge that both Councilman Gerson and Community Board1 are in support of this project in large part due to these efforts. It is clear that the developers are trying to do the right thing, and it seems they are in need of HFA’s help to do more.

Yet it is disturbing to us that the HFA and the Governor have still not put forth a plan for the proper use of the Liberty Bonds for the maximum impact on rebuilding efforts for Lower Manhattan and the city as whole. One result of this is that the HFA is, once again, quickly moving to approve the use of these resources without fully leveraging their potential for the financing and support of units affordable to the low- and moderate-income residents and workers who are a critical segment of the Lower Manhattan community and the city overall. Given the extraordinary housing crisis we are facing in the city, it is imperative that the State and the HFA think smartly and strategically to provide a wide array of housing options with limited public resources.

Upon review of the materials made available to the public on this project within just a few days of the hearing and in extremely limited form and fashion, the developers have incorporated only 5 of the 91 units that they are deeming affordable. The lowest priced unit rents at $1,767 per month and would be affordable only for a household making $70,680 per year. Most of the units are priced for the luxury rental market ranging from $1900 to $4300 per month affordable to households earning up to $172,000.

These “affordability” calculations appear to be based, as the other applications to date, on the New York Metropolitan Statistical Area median income which includes Westchester and Rockland counties as their standard. However, as we have pointed out in previous hearings, the reality of the median incomes in the 5 boroughs is a different story. From the 2000 Census data it is clear that in the 5 boroughs of New York City, the median income across all households was approximately $38,300 and 75% of all households earned less than $76,500. This is considerably less than the income required for the lowest priced unit in the proposed development. Yet to make matters worse, the loss of more than 100,000 jobs since 9-11 and a weak economy, have lead to declining incomes over the years since the 2000 Census, further shrinking the pool of households who could benefit from this very limited “public benefit.”

It is clear that the need for affordable housing in New York City far outweighs the need for market rate or luxury housing. In fact, New York City is facing an extraordinary affordable housing crisis, a crisis that affects people at virtually every level of the economic spectrum. Homelessness is at an all-time high and worsening; we continue to have record numbers of homeless families seeking shelter each night. The vacancy rate for apartments, at all but the very highest rent levels, has decreased dramatically over the past four years from a previous record low. Yet according to recently released data from the 2002 Housing and Vacancy Survey it is dropping even further putting low, moderate and middle income households in an ever tightening housing squeeze. In addition, more than 500,000 families at all income levels (one-quarter of all renters) pay more than half their income for rent and approximately 150,000 families live in housing with serious maintenance or repair problems. Yet despite this situation, production levels for affordable housing in the last decade have been at an all-time low since WWII.

While the Mayor’s new housing plan makes a concerted effort to acknowledge and address this crisis, the reality is with a need for more than 225,000 to 400,000 units affordable to low, moderate and middle-income households, the new units proposed in the Mayor’s plan will be a drop in the bucket of that need.  It is critical that we use all of the resources at our disposal to maximize the available affordable units, and the Liberty Bonds are a critical avenue.  We need the State to support the city’s need to rebuild through the strategic use of the Liberty Bonds in its discretion.  The developers in this case, as the developers in the previous applications approved by the HFA, are citing the minimum requirement of 5% of affordable units in the federal statute that established the Liberty Bond program. Yet it has always been clear that this was meant as a minimum standard and that federal resources are and have always been meant to be used to leverage additional public and private investment to provide the most not the least possible public benefit, a promise that remains unfulfilled.