Affordable housing snag
BY KEVIN DUGGAN
Developer Two Trees and a
couple of north Brooklyn nonprofi
ts are urging state lawmakers
to address a quirk in
last year’s rent laws that may
result in unaffordable housing
at sites like the old Domino
Sugar Factory, where builders
say they can’t remove their
market-rate units from rent
stabilization without also upping
the price tag on affordable
housing units.
“We’ve been waving our
arms in front of policymakers
and legislators for months,
trying to correct the oversight
in the current law,” said
Two Trees spokesman David
Lombino in a statement.
The Dumbo-based company
behind the Domino Park megadevelopment
is currently offering
20 percent of their units
there rent-stabilized and affordable,
targeting tenants earning
at up to 80 percent of the socalled
“area median income”
to avail of a 1970s tax break
known as 421-a, which grants
developers steep property tax
abatements for up to 25 years.
Your Dream Home
Is Within Reach.
Receive Up to $14,500 Toward the Purchase of Your First Home.
!"
!!# %!
the Homebuyer Dream Program.
This program is available through a partnership between Ridgewood Savings Bank and the Federal Home Loan
&
'(
!)
Yvon Ponce De Leon*+-/363783
(347) 834-2265 | yponcedeleon@ridgewoodbank.com
Barbara Mongiello*+-/3;33;8
(347) 527-3696 | bmongiel@ridgewoodbank.com
Michael O’Leary*+-/39:;99
(347) 563-1046 | moleary@ridgewoodbank.com
COURIER L 10 IFE, JUNE 5-11, 2020
But after a 2019 change from
the Albany legislature, the law
also made the remaining fourfi
fths of the units rent-stabilized,
thereby removing them
from the open market.
Builders also have the option
to offer 30 percent of their
units at up to 130 percent of the
area’s median income under a
new version of 421-a introduced
in 2017 under the moniker “Affordable
New York.”
Under this option, the remaining
market-rate units
would not become rent-stabilized,
making this the more attractive
choice for developers,
who generally want to avoid
caps on raising rents for their
market-rate units.
But while developers would
prefer that option, and despite
the 10 percent increase in the total
number of affordable units,
the ceiling for those below-market
rate units would also rise
substantially — more than doubling
the rent for a two-bedroom
affordable unit, from $1,550 per
month to $3,063 per month, according
to Two Trees.
Under the newer 421-a program,
a family of four could
earn up to $147,810 a year and
still qualify, while the tax abatement
period also increased to
between 35-40 years total.
In 2019, two years after that
upgrade, the Democratic-controlled
state legislature passed
a slew of other rent bills, including
one that stabilized all market
rate units buildings receiving
tax abatements under both
421-a tax programs — old and
new. Previously only the affordable
units were rent-stabilized.
After uproar from developers,
who claimed that no one
would build affordable housing
under those conditions, state
pols undid the rent stabilization
law, allowing landlords to
once again raise market-rate
unit rents at their discretion —
but only under the newer 421-a
option, while leaving out the
older 80-20 split tax abatement
program.
As a result, Two Trees cannot
go ahead with their plan to
rent out 66 affordable units in
their recently-completed mixeduse
tower One South First at the
lower AMI rates, while keeping
the remaining 264 units on the
open market.
The same change affects the
two future developments they
still plan to erect at the site,
which would bring some 2,200
new units on the market including
500 affordable.
If legislators don’t get rid of
the rent-stabilization mandate
for the market rate units, Two
Trees says they will enroll in
the new plan that would see
the affordable units go from up
to 80 percent of AMI to 130 percent,
according to Lombino.
Still, while Two Trees
claims they’re pushing for the
change for the sake of lower affordable
rents, staying in the
older 80-20 framework also has
other benefi ts, according to one
property tax expert.
“It is a win-win, because
Williamsburg will preserve
a lot more housing units that
are truly affordable at 80 percent
AMI,” said Yuri Geylik,
the chief operating offi cer of
the Dumbo property tax consulting
fi rm MGNY. “If Two
Trees have no caps on the market
rate units, then it might not
immediately benefi t them, but
over the decades absolutely that
would be their best bet to maximize
value.”
Geylik also noted the new
tax break imposes labor requirements
on developers, including
paying construction
workers prevailing wages averaging,
which is $45 an hour in
Brooklyn.
Lombino said Two Trees
already complies with that requirement,
making it a nonfactor.
“That’s not part of our consideration
here,” Lombino said.
Two Trees’ One South First building
at Domino Park. Daniel Levin
Two Trees, nonprofi ts push state pols to address loophole
www.ridgewoodbank.com/home/borrowing/affordable-mortgages#dream
Eligible borrowers can receive up to $14,500. Products and services subject to change. © 2020 Ridgewood Savings Bank I Member FDIC
/affordable-mortgages#dream
link
link
/affordable-mortgages#dream
link
link
link
link