How de Blasio toughened an affordability formula
When, earlier this month, the city’s new planning commissioner announced that his face-off with Brooklyn developer Jed Walentas had yielded 40 more units of affordable housing at the Domino development site in Williamsburg, he was doing more than declaring an early real estate victory.
He was elucidating a principle, one he applied again yesterday when his commission approved a mega-development for Manhattan's far west side.
Unlike in the era of his predecessor, de Blasio administration planning head Carl Weisbrod will no longer allow developers to exempt commercial space above the ground floor (office space, community facilities like gyms, etc.) when applying for inclusionary housing bonuses that reward developers for building affordable housing in their otherwise market-rate developments. This means in effect that developers will have to create a greater proportion of "affordable" units in a given building than they currently do in order to get permission to make that building bigger.
In the Bloomberg era, "It was housing for housing," said John Alschuler, chairman of HR&A Advisors, the real estate advisory firm where Weisbrod once worked.
So let's say a developer asked the city to allow him to build a building that was taller than normally allowed, in exchange for devoting 20 percent of his building to affordable housing. And his proposed development included not only residential units, but a gym on the second and third floors.
In the Bloomberg era, chances are the city would have excluded the gym when calculating how much square footage comprised 20 percent of the whole.
In the de Blasio era, the gym is included in the overall calculation, so 20 percent amounts to a greater amount of square footage.
Weisbrod described the new principle this week, albeit using dense planner jargon, when announcing his approval of a 1,189-unit TF Cornerstone project for West 57th Street and 11th Avenue.
From his remarks at a meeting of the City Planning Commission:
I note that the applicant had proposed a text amendment that potentially would have reduced its requirement for affordable housing, by excluding up to 4 FAR of commercial or community facility floor area from the calculation for affordable housing. Although the applicant has indicated it is not likely to include such a significant amount of community facility or commercial space in this project, as I said at the time we approved the Domino project, the inclusion of commercial and/or community facility space in mixed use projects should not be a means of decreasing the affordable housing requirement. For this reason, we have removed this provision.
The planning commission's spokeswoman, Rachaele Raynoff, put it in plainer English for me.
"In mixed-use developments that are primarily residential, the basis for the affordable housing calculation should generally include all uses, except ground floor non-residential uses, as part of our view that the public should share in the increased value of a development through the provision of affordable housing," she emailed.
(Ground floor retail is explicitly exempted by the city's inclusionary-zoning rules.)
And so, at Domino, Weisbrod resisted Two Trees' efforts to exclude its office space and recreation center from the the total amount of square footage that would be used to determine how much affordable housing comprised 20 percent, the amount it needed to to get those development bonuses.
That's why the end result, 537,000 square feet of affordable housing, equaled 20 percent of the bigger project (including the commercial), just as in Two Trees' initial proposal (excluding commercial space), 427,000 square feet also equaled 20 percent of the project.
The net result is that 25 percent of the housing is affordable.
Similarly, on the west side, TF Cornerstone is building a project with 80 percent market rate housing, and 20 percent affordable, thereby accessing the city's inclusionary-housing bonsuses.
That means that, should TF Cornerstone decide to include more commercial space in its project, or to sell the upzoned development site to someone else with grander commercial real estate goals, it will have to include a proportionally greater amount of affordable housing.
"Both Domino and TF Cornerstone had proposed text amendments that potentially would have reduced their requirement for affordable housing, by excluding commercial or community facility floor area above the ground floor from the calculation for affordable housing," said Raynoff. "As Chairman Weisbrod said at the time the City Planning Commission approved the Domino project, the inclusion of income producing commercial and/or community facility space in mixed use projects should not be a means of decreasing the affordable housing requirement. For this reason, we removed this provision from both applications."
Raynoff said this new principle would apply to condo and coop developments that take advantage of inclusionary housing bonuses, and that, going forward, "This is a good rule of thumb for mixed-use projects that are primarily residential."