Community support for Two Trees’ Domino Plan is falling due to the lack of specific, binding commitments to community benefits.
I apologize for not posting this sooner – it’s been a busy few weeks
Two Trees’ Domino ULURP arrived at the City Planning Commission on January 22nd, 2014, the first major rezoning proposal to come before the Commission after the resignation of longtime Bloomberg administration City Planning Chair Amanda Burden. Since Mayor de Blasio had not yet appointed his new Chair, another Bloomberg appointee, Vice Chair Kenneth Knuckles, presided over the hearing.
You can watch the hearing for yourself (http://www.nyc.gov/html/dcp/html/luproc/calbeg.shtml#pmv) thanks to the City’s new law requiring webcasting/video archiving of all public hearings.
WALENTAS GRILLED BY COMMISSIONERS
As always, the hearing began with representatives from the developer, in this case Two Trees, taking the dais first. But absent the calming (or stifling) presence of Amanda Burden, the Commissioners were notably more lively and inquisitive than I’ve seen them in the past.
Vishaan Chakrabarti was the first to speak for Two Trees and very quickly made the point that “Community Board 1 voted 24 to 4 for this plan.” This is yet another illustration of why Community Boards should simply have to vote Yes or No on the project as presented to them rather than have the option of voting “with conditions.” Community Board 1 voted Yes with conditions but as with many ULURP processes I’ve witnessed, the conditions seem to evaporate when supporters speak about the project. The same holds for the Borough President, who in this case also recommended a “Yes” vote but included very strong recommendations for improved, binding community benefits.
After Chakrabarti gave an abbreviated version of the project description we’ve seen numerous times in the past year, Commissioner Angela Battaglia raised major issues about the proposed affordable housing program in the development.
Before I describe the concerns she raised, let me note that Battaglia is somewhat of an odd duck on Commission right now – she is a housing executive for the non-profit Ridgewood Bushwick Senior Citizens Council, the organization founded by disgraced former Assemblyman and Brooklyn County Boss Vito Lopez and constantly under investigation for its political activities. She is also Lopez’ longtime girlfriend. Vito Lopez was very involved in the 2010 rezoning of Domino Sugar, initially opposing it throughout the ULURP for reasons that appeared to be more to do with political strategy that genuine concern. In the end, Lopez and ally Councilman Steve Levin settled their differences with Community Preservation Corporation and gave us the non-binding memorandum of understanding for 30% affordable housing that continues to influence the project to this day.
Battaglia was originally appointed by Rudy Giuliani and was last reappointed to a five-year term by Mayor Bloomberg in 2008 at the height of Lopez’ political influence. She is due to be replaced on the Commission any day now by Mayor de Blasio.
But I digress – despite the odd circumstances of her continued presence on the Commission, Angela Battaglia spoke up for the interests of the local Williamsburg community in pressing a case for the affordable housing to be appropriately targeted to meet their needs. She raised the point that in the 2010 Domino Plan, the vast majority of the units were targeted to 60% AMI or lower and she went on record supporting the Community Board’s requested conditions of affordable units being majority two and three bedroom sizes. She closed her remarks noting “I certainly think that if we are going to approve a development that goes that far above the height limits…that we should accommodate the population that lives there.”
Chakrabarti punted the tough questions on affordable housing to his client Jed Walentas, who took the podium next. Walentas began by delivering his usual explanation of the project, focusing especially on its comparative superiority to prior developments on the Williamsburg waterfront. He closed by stating “What we want to do with you all and the City Council is to make an absolute binding commitment for 660 units of affordable housing…we are creating a huge amount of value with this plan vis a vis the other plan and in my opinion we are giving the overwhelming value back to the public in the form of this increased affordable housing and the much much improved open space”
Surprisingly, Vice Chair Knuckles interjected here with a cutting remark: “You forgot the “if”…the 660 units if…”
Walentas paused and clearly revealed this: “The conditions of our 660 units of affordable housing are that 421a continues, which to be totally honest is a condition of any affordable housing that is going to happen in this city.”
One has to give credit to Jed Walentas for not mincing his words. Unfortunately, as I and others have written many times before, 421a is a horribly inefficient way to produce affordable housing and is mostly a huge giveaway to developers. The program often delivers less than 20 cents of affordable housing for every dollar given away – and there are over $1 billion in such giveaways occurring annually. It is highly unfortunate that Two Trees is choosing to hold Domino’s affordable housing hostage over the 421a tax break.
What would be most helpful in this discussion would be a clear analysis of the proposed development’s financials. As I wrote in a post last year, policy makers should be able to discuss and weigh the relative size of the development’s profit margin with costs of various community benefits as well as the public impacts of additional density. If it’s really true that the project’s economics don’t work out without a subsidy as generous as 421a, Two Trees should prove it by releasing a detailed set of financial projections.
Even with the 421a in place, Walentas continues to oppose incorporating 3 bedroom units into the development: “The truth is the economics of affordable housing from our standpoint is about square footage and how much square footage gets devoted to that. Obviously to build 3 bedrooms as opposed to 1 bedrooms is much more square footage, at some juncture this becomes an economically not viable project and we’re going to go back to the alternative. There’s only so much that we can do…if you’re asking me to fund that privately there’s a limit to what I can do.” Again, without the financials, the public is completely in the dark as to whether or not Two Trees self-imposed “limit” on providing public benefits is actually reasonable.
The issue of the 421a tax break also underlies the controversial amendment to the inclusionary zoning that Two Trees is asking for – the provision that only the residential square footage of the development be counted towards the requirement for 20% of the area to be set aside for affordable housing. As I noted in my testimony to the Community Board and in writing to the City Planning Commission, this would actually result in less required affordable housing than is locked into the current Domino zoning enacted in 2010, because Two Trees is proposing to reduce the overall residential square footage by 160,000 square feet. According to Jed Walentas, the text amendment would only come into play if 421a was not extended in Albany in 2015 – which would then throw the supposed “commitment” to 660 units into question.
Hearing this explanation, Commissioner Anna Levin noted “If that’s the case I’m not really sure that your commitment for 660 is different from the MOU’s commitment.”
Jed Walentas listens intently as he’s questioned by City Planning Commissioners
In response, Walentas further explained his point of view: “We’ve got a billion and a half dollar project…we have a community, we have public servants and city officials looking to us and saying “you need to promise us, you need to guarantee.” But I have no idea what interest rates are going to do, I have no idea what the market is going to do, there are lots of variables…we are happy to have it become part of some sort of declaration that is approved at the council and is truly binding…but the City and State have to conduct themselves from a real estate finance standpoint in a way that we understand the rules of the game are being played now. And the two things we are asking for is for 421a to be continued and for off the shelf HPD and HDC subsidies.”
Translation: “If very generous subsidies for the real estate industry don’t continue, I may not make the amount of money that I want to make on this project so the affordable housing promise (that was responsible for making this project possible in the first place) will have to be broken.” What’s totally unclear here is whether or not the amount of profit that Two Trees wants to secure is in reasonable balance with the tremendous impacts that the redevelopment of Domino will have for the community of Williamsburg and New York City public at large.
Commissioner Chin rightly raised further concerns: “What your asking for is this asymmetrical situation where we lock in the size, the shape, the uses on the development potential… but on the other side the responsibility for providing the affordable housing are not locked in”
Commissioner Irvin Cantor also weighed in, noting “Two Trees is one of the better companies in the City of New York in terms of development. Having said all that…your bottom line includes 200,000 extra square feet. You’re also reducing the residential floor area by 165,000 square feet, most of it, if I’m correct, by diminishing the size of the affordable housing units”
Walentas responded by arguing that developers should not be penalized for wanting to include more commercial space – “Commercial office rents in this neighborhood are about 30 a foot, residential apartment rents in this area are about 55 a foot…we think it’s the right thing to do to create a more valuable, more interesting long term neighborhood…You are right that by reducing the residential square footage by 175,000 square feet, what you’re getting simply by the inclusionary math will yield slightly fewer, slightly fewer guaranteed from the inclusionary text, residential units. We recognize that, we’re saying that we are willing to go above and beyond that. We are saying that this is a more valuable plan that creates more value…we are taking the value of the improvement here and we are giving it back to the public.”
When pressed further by Cantor as to whether or not Two Trees would be able to satisfy the community’s concerns regarding greater affordability and larger unit sizes, Walentas and Cantor had the following exchange:
Jed Walentas: “We have probably a little room to adjust on our own…this is not a normal ULURP where someone has an M zone thing that they can’t do anything with and they’re coming to the public saying “We need a rezoning we want the public to give us $100 million value boost and then there’s some weird negotiation that takes place about how much of it goes to the government and public sector and how much of it goes to the developer. This is not that situation at all…We do have a real alternative that we can and will build and I don’t mean that in a threatening way, it’s not what we want to do…at the same time we’re not in the philanthropy business.”
Irvin Cantor: “We’re being asked to make a firm commitment today while you can’t make a firm commitment until you know what happens tomorrow”
Jed Walentas: “then you really need to evaluate what the real alternatives are…if you vote this plan down and I have to build the old plan, the 421a is still a problem”
Irwin Cantor: “What would you do if you had to build the old project and ran into the 421a problem?”
Jed Walentas: “I don’t know what we would do…we would evaluate, we would probably have to build some market rate condos to get out of the thing, we would probably evaluate building lower density and building no affordable housing…Building rental housing is difficult enough, doing affordable rental housing without 421a…I can’t even imagine.”
After another interchange with Anna Levin about the open space (which I’ll address shortly), Commisioner Del Toro echoed the feelings of Battaglia, Cantor, and Chin, noting “I like to know exactly what I’m voting for and I know right now there’s not enough clarity for me. I know right now what is the best case scenario, 660 units, but I don”t know what the worse case scenario.”
At this point, Commissioner Al Cerullo, a Staten Island Republican appointed by Bloomberg – felt compelled to step in and defend Two Trees – “I have no reason not to believe the commitment that you’ve made with respect to the affordable housing piece of this. I also feel that the condition [that 421a stays in place] on that commitment is not at all unreasonable. And I know that we have approved projects in the past where we have been told that there would be a certain number of affordable housing units but the financing was not yet complete and the developer was talking to HPD and HDC…the hooking into this project as if that condition [the lack of benefits being locked in] is somehow unique and is providing you something that perhaps we have provided or not focused on in the past with applicants..I want to acknowledge that the condition you outline is very real and I don’t know that we should be holding you to a different standard than we’ve been holding other developers over time.”
Cerullo is correct that in the past, City Planning has typically approved projects with lots of promised public benefits but a lack of binding mechanisms to enforce them. Indeed, the current situation with Domino – where Two Trees already has a favorable mixed-use zoning without strong community benefits locked in – is exactly the result of such an approval. Unlike the other Commissioners however, Cerullo doesn’t seem to see this as a problem and a lesson to learn from.
In addition to the heavy questioning over the lack of affordable housing commitments, Anna Levin also raised questions about the private ownership of the open space. Walentas’ explanation for keeping the open space privatized is that he sees “this as a much more densely programmed unique open space that brings a number of unique elements that the parks department is not used to dealing with.” This kind of “dense programming” recalls the renderings of flea markets, cocktail parties, and movie screenings that a Two Trees consultant prepared to illustrate the uses of the space, and again raises my point that there is no clarity on how often “Domino Square” will be occupied by pseudo-private events. Jed also commented that Two Trees prefers to keep control over the open space because its condition and use “has the ability to really affect our asset values.” This comment implies that despite all the rhetoric on wanting the development to be “open to the community,” the programming at Domino Square and the rest of the open space will be geared towards the affluent, and the working class community of the Southside will not feel as welcome there as in a typical public park.
After the Commissioners were finally finished questioning Walentas, acting Chair Knuckles thanked him for “a very long three minutes.” The heavy questioning on the issues of locking in affordable housing and community benefits raises hopes that the Commission is looking to learn from the mistakes made during the Bloomberg era.
REYNOSO AND COMMUNITY GROUPS TURN UP THE HEAT ON TWO TREES
Perhaps even more surprising than the City Commission’s awakening from its decades-long somnambulance was the sharp shift in tone by Councilmember Reynoso and the Southside community coalition (including Churches United for Fair Housing, El Puente, St Nicks Alliance, and Southside United HDFC Los Sures).
While El Puente offered extensive criticism and recommendations for improving the project at the earlier Community Board level, Reynoso and the other organizations were largely approving of the project despite demanding a stronger mix of more affordable housing and larger units. Churches United for Fair Housing’s Rob Solano was especially vocal in his support for Two Trees at the Community Board level, urging the board to approve the “Yes with conditions” resolution. The argument at the time suggested that Two Trees would continue to “work with” the community groups and eventually agree to the community demands.
Yet as the Commission’s dialogue with Walentas shows, Two Trees has thus far refused to guarantee 30% affordable housing, include three bedroom units, or improve affordability. The wider reaching demands by El Puente for meaningful contributions to community open space, cultural activities, and progressive sustainability initiatives have been completely ignored by the developer.
Lacey Tauber, Councilmember Reynoso’s new legislative director and one who has been involved with the Domino development for many years due to her prior work with NAG, spoke first on behalf of the Councilmember: “Until recently this group was pleased with Two Trees proactive efforts towards community engagement. However now, as we come down to the wire, the Coalition is growing concerned that Two Trees commitments to the community, particularly those related to affordable housing, open space, workforce development, and community facilities, lack both the depth and the teeth to truly serve our community’s needs and mitigate the intense impacts that luxury development of this scale is sure to have… I want to encourage you to vote no on the zoning text amendments that will affect the inclusionary housing requirements of this plan… Commercial space is not a public benefit and its inclusion in the project is the developer’s choice based on an analysis of the market. They should not be held to a lower standard of housing development as a result. We believe that Two Trees capacity is such that they can build both commercial space and affordable housing successfully and we believe our requests are reasonable considering the large amount of subsidies this project will receive. Additionally in order to meet the community’s needs, the AMI levels must remain as low a possible.”
Esteban Duran argues for improved community benefits
Esteban Duran of El Puente spoke next and detailed El Puente’s suggestions for improved sustainability in the development: “we’re looking at a baseline renewable energy source on site allowing for solar, wind, or geothermal heating and allowance for positive monetary gains reaped by the generation of said energy to be shared with the community. We’d like to get the provision of on-site recycling sorting facility that can hire local residents to alleviate the waste truck traffic that currently inundates the community. Commitment to establish a working dock capable of marine transfer of waste and recyclables to mitigate already high truck traffic in Community Board 1. This waste transfer system could be a citywide model the first of its kind and would significantly reduce the negative burden on the surrounding neighborhood. And we’d like them to work in coalition with El Puente to seek the removal of the Radiac toxic waste storage and transfer site. Lastly we cannot support the proposal to contract with Asphalt Green to operate a recreational facility under any circumstances, and that’s primarily because Asphalt Green threatens the environmental justice of North Brooklyn by participating in the lawsuit against the East 91st Street municipal waste transfer station…There is currently no enforceable commitment to community oversight and accountability, all agreements reached with Two Trees must be legally enforceable and binding. As much as possible all agreements must be included in the restrictive declaration of the technical memorandum. What cannot be included in the restrictive declaration must be included in a community benefits agreement or strong MOU enforceable by the City as well as by a Community Oversight Board and we’d like that board to reflect the makeup and interests of the Southside community and meet quarterly throughout the construction and annually from that point forward. And again, we’re really thankful and want to see development on this site…I live 9 blocks away from that waterfront, we want to see it developed, we just want to make sure it is done in a way that is really helpful to the entire community.”
Anusha Venkataraman of El Puente spoke next and continued the arguments made by Duran: “While this group has communicated extensively with Two Trees, we’ve received very few indications of commitments to our areas of concern to date…In particular we urge you not to pass the zoning text amendment…Just the residents added is a 17% increase in the population of the Southside community so that’s the scale of our level of interest here… We are happy that Two Trees is committed to funding the construction, operation, and maintenance of the space. While we would prefer the space to be publicly owned…we would be satisfied with a strong operating agreement with the Park department as long as that agreement ensures public access, rules and regulations identical with City Parks, and a direct partnership with community groups to program the space. We, El Puente, is prepared to enter such a partnership since we have done programming such as this in the past and we look forward to hammering out the details including funding…Since the per capita ratio of open space is not significantly changed with this project…we ask that Two Trees pay into a Southside Parks Endowment to fund capital investment in parks in the neighborhood including but not limited to the Williamsburg Bridge Park, the BQE decking project, or other improvements to existing parks. Regarding the community facility space, we cannot support the proposal of a contract with Asphalt Green and ask that the partnership be with a local organization instead…a local partner will ensure local oversight and access. The Southside of Williamsburg is also in great need of a full service theater, performing arts center, and cultural center. The Two Trees proposal currently has unallocated community facility space. El Puente will commit to operating such a center which would be open to the broader community”
As I said of El Puente’s testimony on the community-board level, it is a breath of fresh air to see a local community group taking such a strong stance on improving development and planning practices in New York City. Meaningful sustainability initiatives are almost never part of the conversation around individual developments in New York, and the suggestion for a Community Oversight Board to oversee construction and the fulfillment of community benefits is an especially powerful one.
From both El Puente, Councilmember Reynoso (who was Diana Reyna’s chief of staff) and the other Southside groups, there seems to be a greater awareness of the potential secondary impacts of this enormous, mostly luxury residential project than there was during the 2010 Domino process. After El Puente, two staff members from Los Sures – Deborah Medina and Sula Panagademos – testified in support of stronger affordability, larger units, and for Two Trees’ to contribute to anti-displacement work in the Southside. Bruno Daniel, a staff member for Churches United for Fair Housing, also testified, stating “Despite talks and assurances…we’re at a point where details of the foundation of the project remain a mystery. While the project remains unclear, we are here to ensure that our Coalition does not.” He spoke out against the weakening of affordable housing requirements requested by Two Trees and for the need for the 660 units to be in a binding commitment with 3 bedroom units included. “We have not received any sort of real response on most of these issues and little else beyond vague PR statements on the rest.”
ANHD’s Moses Gates points out that Two Trees would be “triple dipping” in public subsidies
The Southside groups had some strong policy wonk support with the presence of Moses Gates of ANHD (Association for Neighborhood and Housing Development – Los Sures and St Nicks are both members). Gates effectively debunked Two Trees’ argument that they are providing a public benefit concession by building commercial space – “On the commercial issue, while its true in this case that on day 1 you might be taking a financial loss by building community facility or commercial, it is not a public concession to build that, it is a market-based decision, the entire point of the Two Trees Management philosophy is to build a neighborhood, you build the additional commercial and community facility to improve the neighborhood which improves your asset and improves your market-rate rental units so in the long term investment strategy its actually a plus. I happen to think that’s good urban planning I happen to think its good neighborhood development, it’s not a public concession and as a result it should not result in weakening inclusionary zoning rules.”
Gates also pointed out the problematic issue of “triple dipping” – developers receiving triple bonuses for affordable housing through the inclusionary zoning (allowing them to build much higher and larger), the 421a (a state-controlled decade-long property tax break), and additional money from the City through HPD. “Each of those programs is meant to incentivize affordable housing on its own, it’s not meant to be a triple dip where you make all the programs line up, fulfill them with one affordable housing commitment, and then get all three pots of money.” Two Trees’ claims of poverty if they improve their affordable housing lose credibility when one considers the “triple dipping” in public subsidies that’s likely to occur – even without the 421a it’s still a double dip.
Longtime opponent of high-rise luxury development at Domino, Stephanie Eisenberg, again rightly pointed out the relatively low price Two Trees paid for the Domino site – $55 per buildable square foot, less than a third of what other developers have paid. Seemingly this would leave a lot of money leftover for affordable housing and community benefits even after the cost of historical preservation at the Refinery but again, we’ve never seen a developer open their books and lay out their real financial projections of development at Domino.
Finally, Councilman Steve Levin, who’s been largely invisible in this process, finally made some kind of public statement through his Legislative Director Rami Metal who quickly noted that he “shares the concerns” expressed by the community groups and is against the changes to inclusionary zoning proposed by Two Trees.
After the barrage of criticism from influential groups, Two Trees had six staff members/consultants lined up to speak more on behalf of the project, including spokesman Dave Lombino who noted that there was “near universal consensus that our plan is vastly better than what we could build there as-of-right.” This is a point that Two Trees has made throughout the process – “better is better,” no matter if your subject of comparison sets the bar extremely low.
Other later testifiers in support included the Brooklyn Chamber of Commerce, the Metropolitan Waterfront Alliance (which has a fixation with anything that will bring “access to the water”), the Regional Plan Association, Bloomberg’s favorite planner Mitchell Moss, Steve Hindy of Brooklyn Brewery, a representative of Assemblyman Joe Lentol (who has been very supportive throughout), New Yorkers for Parks, the Downtown Brooklyn Partnership, and the folks involved with Two Trees’ pop-up “Havemayer Park.”
The Commission will meet again on Tuesday February 18th to discuss and vote on Two Trees’ Domino proposal, and Mayor De Blasio’s new City Planning Chairman Carl Weisbrod (http://www.nytimes.com/2014/02/08/nyregion/de-blasio-picks-revitalization-veteran-to-lead-planning-commission.html) will be presiding over the meeting this time. Although the Mayor promises “a different approach” to planning and to look at proposals “with fresh eyes” to extract more public benefit, Weisbrod is a real estate industry insider and it’s unclear how much he will push back against developers’ narrow interests.
Will the Commission move more aggressively to secure community benefits or will the Bloomberg pattern of lofty promises with no enforceability prevail? Are Reynoso and the Southside groups serious about securing the binding community benefits they are asking for, or is it all just the theatrical prelude to a lesser deal being worked out in the backrooms of the Council?
It appears to me – and I hope I’m right – that both City officials and community groups are sincere in their efforts to establish a new standard of binding, meaningful community benefits at Domino. Although Southside Williamsburg obviously has the most at stake here, how this all works out will have implications that reverberate far beyond the neighborhood.