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Katie Taylor, Senior Planner
Pratt Institute Center for Community and Environmental Development (PICCED)
379 DeKalb Avenue, 2nd Floor, Brooklyn, NY 11205
718-636-3486 x 6453
Tuesday June 25, 2002
NYS Housing Finance Agency (HFA), Public Hearing
Good evening and thank you for this opportunity to comment on the proposed allocation of $215 million in Liberty Bonds for the Battery Park City 19B Project owned by BPC Green, LLC and the Related Companies, L.P. and 10 Liberty Street Apartments in the financial district owned by Liberty Street Realty and Leonard Litwin. I will be addressing both proposals in these remarks.
My name is Katie Taylor, from 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.
We are here to urge the New York State Housing Finance Agency not to approve the use of liberty bonds in assisting the completion of these projects and instead urge the HFA instead to hold public hearings on a plan to make best use of the $800 million in Liberty Bonds within the State’s discretion. Upon review of the materials made available to us prior to this meeting, the public benefits of these projects do not appear to constitute the best use of this extraordinary investment of public resources. The Liberty Bonds were meant to help rebuild and revitalize the city in the wake of the unprecedented disaster of 9-11 and 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.
What is the Public
Benefit?
In the materials prepared for this hearing that we were
able to review only just prior to this meeting, the proposed projects, 10
Liberty Street Apartments and the Battery Park City 19B Project, both claim the
public benefit for which they deserve these triple tax-exempt bonds, accelerated
property depreciation and the 421a and PILOT tax exemptions, are the proposed 5%
of units affordable to 150% of the Area Median Income.
First of all, the proposals claim that these units are
affordable to households earning up to $94,200 (for a family of four) but the
rents are geared specifically to 30% of 150% of median so they are in fact only
affordable to this maximum income. Secondly,
the proposal for 5% of the units in these two projects, some 30 out of 551
units, as so-called “affordable” is outrageously low.
Moreover, the developers are using the PMSA, which includes
Westchester and Rockland counties as their standard. While they may consider
this their market area, 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 is approximately $38,300 and 75% of all households
earn less than 200% of the median or less than $76,500, still considerable less
than the proposed limit for these so called “affordable units.”
In fact 25% of all households earn less than 50% of the
median or less than $19,000 and another 35% earned between 80-120% of median, or
$30,600 to $76,500.
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: many homeless, low-income, moderate-income, and middle-income people cannot find decent, affordable housing. Homelessness is at an all-time high—in the 9 months since 9-11 there are more than 29,000 people including 14,000 children who use the shelter system every night including tonight. The vacancy rate for apartments at all but the very highest rent levels, has decreased dramatically over the past four years—as low as 3.19% in the 1999 Housing and Vacancy Study, down from 4.0% in 1996. More than 500,000 families at all income levels (one-quarter of all renters) pay more than half their income for rent, and 150,000 families live in housing with serious maintenance or repair problems. And yet production levels for affordable housing in the 1990s was at an all-time low since WWII.
Great Need and
Unique Opportunity;
The Pratt Center is concerned about maintaining and
enhancing Lower Manhattan’s vitality and its attractiveness to artists,
working artisans and low and moderate-income populations as part of a viable,
healthy mixed-use, mixed-income community.
The city’s housing crisis clearly demands a much more aggressive and
focused plan for addressing housing needs for the majority of all New Yorkers.
We need to think creatively and utilize the Liberty Bonds to leverage other
federal, state and private resources for housing development that help to retain
and enhance the area' s mixed income population.
It is important to note that these proposed projects
clearly do not meet the NYS HFA’s standing policy and current practice for
multifamily housing of requiring an 80/20 split of market rate and affordable
units with the affordable units set aside for households at 50% or less of the
AMI. This has clearly been a proven and accepted model and should be applied
here at minimum.
As mentioned earlier, our reality within the city calls for
a 25/75 split of market rate and affordable units if it were distributed on a
fair share basis. As such, we recommend an approach that approximates the actual
need within the city limits more approaching this 25/75 than 95/5. We believe
that this can be possible with judicious use of the Liberty Bonds to leverage
additional public and private funds.
We also suggest housing and mixed-use development projects
in Lower Manhattan and elsewhere could be creatively configured to maximize the
public funds, providing affordable rental and even possibly homeownership units
within the same development. With
more time and with priorities in focus, creative solutions can be developed to
make maximal use of the $1.6 billion in Liberty Bonds for the rebuilding of the
city.
We further recommend that the HFA adopt a competitive RFP
process and incorporate minimum requirements for addressing affordability as
well as other dire housing needs such as large family size.
It is clear that we need a publicly reviewed and accepted plan for the use of these funds. This will take time to develop and time to be publicly reviewed. Yet it seems that these multimillion-dollar projects are being pushed through over the summer before the public has had time to fully review the costs and benefits of these investments. We should not be speeding to approve projects simply because they were approved by the HFA board prior to 9-11. It would seem that the timing may have more to do with political expediency in an election year than expeditious and effective use of critical public resources, and this is outrageous. The city is facing extraordinary challenges and needs extraordinary leadership, leadership that puts the city and its residents first and foremost.
In addition to the fact that the projects do not demonstrate meeting sufficient public purpose under any reasonable criteria, it is curious to note that in the materials prepared by HFA staff regarding 10 Liberty Street Apartments, it is stated that the borrower is funding 26.5% of the total Development Costs with equity, an amount “sufficient to pay for project costs typically financed by taxable bonds.” This begs the obvious question of why they are not in fact being financed with taxable bonds or with private financing or why they are not otherwise providing more affordable units.
In the documents, the developers claim the soft real estate market is the major reason for the need for public financing assistance and presumably why they are providing so few “affordable units.” Yet while that was true immediately after 9-11 when occupancy in Battery Park City reportedly fell as low as 60%, this is no longer the case. At the most recent Board meeting of the Lower Manhattan Development Corporation, Chairman John Whitehead announced that Battery Park City had achieved a benchmark success by boasting at least 90% occupancy rates in all buildings surveyed. While certainly these developments must be feasible, from the information available to us it is not clear why they cannot in fact provide greater public benefit.
The Battery Park City project involves 264 units, and with 20 River Terrace, also seeking Liberty Fund appropriations for 291 units, that would make 555 units or 16% of the last of the Battery Park City Development space. Since BPC has never met its original mandate to provide a mixed-income community, offering a very small portion of the total units for affordable housing, this is a unique opportunity to fulfill that promise.
Affordable housing is essential to New York City's recovery. In truth, one of the best living tributes to the victims of September 11th would be creation of new housing affordable to the public servants who have been priced out of the communities they serve, including firefighters, police officers, nurses, teachers and others. This would both address an urgent need and ensure that these heroes will have access to what will ultimately be one of the world’s great communities.