Last year, the de Blasio administration rolled out a program to encourage developers to build one- to four-family homes on small city-owned lots, mostly in eastern Brooklyn. And just as the city is pushing through a contentious rezoning in East New York, it has filed plans to develop townhouses on 16 vacant properties in East New York, Ocean Hill and Brownsville.
The Department of Housing Preservation and Development (HPD) told YIMBY that the city is resurrecting the New Foundations program, a Bloomberg-era policy reborn under the current mayor as the New Infill Homeownership Opportunities Program (NIHOP). Spokeswoman Libby Rohlfing wrote in an email, “We currently are looking at these sites to determine whether they can still meet the goals of our old New Foundations program, an affordable, mixed-income homeownership program, through one of our current programs.”
Both programs require builders to set aside a third of their units as affordable housing. The below-market units must be affordable to households making up to 80 percent of the Area Median Income, or $69,050 for a family of four, according to HPD’s website.
In exchange, the city transfers the property to the developer for a dollar. Under New Foundations, developers had to pay the city $1,000 in cash for each planned apartment, but it’s unclear whether that still applies.
The remaining units can be market rate. Alternatively, they can go to households earning between 80 and 100 percent AMI (a max of $86,300 for four people), or between 100 and 130 percent AMI ($112,190 for a family of four). If the homes include rental units, those apartments can rent to people making up to 165% AMI, or $142,395 for a four-person household.
In general, HPD and the developer sell the homes through a lottery, and buyers’ incomes are capped at the high end of the affordable spectrum—130 or 165 percent AMI.
Not surprisingly, all these income levels are much higher than what working class families in eastern Brooklyn can typically afford. Ocean Hill and Brownsville’s community district has a median household income of just $27,166. Families next door in Community District 5, which covers Cypress Hills and East New York, have a median income of $36,829.
The city will offer up to $70,000 worth of subsidies for each apartment in a new building. Most of the homes filed in the past two weeks are three-family buildings, meaning that they city would give each project as much as $210,000.
Essentially, the city is offering developers subsidies to build market-rate housing on less-than-desirable lots. Affordable housing developers prefer to build at least 20 units, because it’s difficult to finance anything smaller. But the vacant lots we’re talking about are 20 or 25 feet wide—just big enough for a pre-war row house, with five or six apartments at most.
The New Foundations program hasn’t been active since the recession, but back in 2009, three-family homes built under the program in Ocean Hill were asking between $576,500 and $696,500. Another New Foundations development in East New York, Glenmore Gardens, offered two-family homes for $329,000 when it opened in 2007. Although the city rarely sponsors new construction, affordable condo developments, Glenmore Gardens included some condos geared toward middle income families.
New building applications reveal that the houses will range from 2,800 to 4,500 square feet and rise three or four stories. While most will have three or four units, two projects located in the New Lots section of East New York will have two apartments each. HPD hasn’t explained how a two-family home would be divided into thirds to accommodate affordable units.
And it’s worth noting that all of these lots fall outside of the blocks set to be rezoned in East New York and Ocean Hill. So they wouldn’t be subject to the administration’s new mandatory inclusionary housing (MIH) policy, which requires that a quarter of all units built remain permanently affordable.
Hackensack, N.J.-based architect Jose Carballo applied for the permits, and HPD is listed as the developer.
And this isn’t the first time the city has tried to develop these empty plots. Dabar Development Partners, a small firm that’s worked on a few projects in Harlem, was originally going to develop 22 townhouses on these properties in Ocean Hill and East New York. But HPD pulled funding for the project when the market took a dive in 2009. Back then, Dabar founder Dawanna Williams told The Real Deal that the development would cost $9 million, to which the city would contribute 15 percent. Williams wasn’t able to find additional financing, and her townhouses never materialized.
While YIMBY supports small development in these neighborhoods, this seems like an unpopular time for the city to build housing that most residents in the area can’t afford. City Planning’s proposal for East New York promises that the rezoning will produce 6,300 new units in the next 15 years. Half of those will be affordable to local residents, and a quarter of all the new units will be permanently affordable, thanks to inclusionary zoning. That’s a huge sticking point for activists, neighbors, and some local politicians, who demand more below-market units.
After DCP officials presented the East New York rezoning plan to the local community board last month, state Assemblymember Charles Barron offered harsh criticism. “They’re going to tell you, we need a diversity of income,” he said. “Without a diversity of income, we’re not going to be able to build our economy. That translates to, we need to have white folks in here. If you want transit stuff, you need white folks in here. If you want a new school, you need white folks in here.”
Coincidentally, one of the new townhouses is planned across the street from Barron’s district office, on an empty lot at 668 Vermont Street in the New Lots area of East New York.