Bertha Lewis Defends ACORN’s Deal with FCR

lewisACORN director Bertha Lewis penned a defense of the rationale behind the deal her group cut with Forest City Ratner in yesterday’s City Limits paper. Here are some outtakes:

Let’s not beat around the bush. Forest City Ratner is not the United Way. They are looking to make a profit. You can make money building affordable housing only two ways: through direct subsidy to reduce the extraordinary cost of this project, to any developer who chose to undertake it, or cross-subsidy from the market-rate rentals and condominiums.

Any developer who built on this site would need both subsidy and cross-subsidy to make the amount of affordable housing units included in the project financially viable. None of the so-called alternative plans advanced for the site adequately address this fundamental economic reality.

That also leads to the other bogeyman of the Atlantic Yards debate: density. In order to make the cross-subsidy between market rate and affordable units work in this project, you either need to allow the developer to build more, which means taller buildings, or to replace the cross-subsidy from market-rate units with more direct subsidy from government. Currently there is no other existing model for building affordable housing in New York City.

Let’s get real. All around Atlantic Yards developers are building luxury condominiums without a lick of affordable housing. In March, ACORN examined 87 new development projects in various stages of development in downtown Brooklyn, containing 5,934 housing units. Our report found that only 201 units, or 3 percent of the total, are affordable to moderate-income people. Only 266 units, or 4 percent of the total, are affordable to low-income families. In almost all of those projects, city tax dollars are being used to subsidize luxury development in the form of 421a and J-51 tax abatements for purchasers of luxury housing. The result: between 1990 and 2000, the African-American population of Community Board 2 (including downtown, Fort Greene, Brooklyn Heights and Boerum Hill) decreased by 17.2 percent.

Advocates and activists who oppose the project will point to its flaws, but present only false solutions. They have the luxury to demand the impossible, to oppose something because, in an ideal world, it’s not how things should be.

Supporting Atlantic Yards [City Limits]

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  • It’s difficult for me to read Bertha Lewis’ comments without remembering she signed an agreement with FCR about public statements also. In fact she sounds so much like a developer that I have to think FCR wrote much of what she says.

    I’m the last one to be against affordable housing, but the question is, will FCR actually carry through on their promise? They seem to have made sure they built in a few loopholes, and the apartments set aside for low income families is about half the number of subsidized spaces they are setting aside for families making up to 100,000+. Somehow I ddin’t think Acorn’s constituency was in that income bracket.So she got a pittance for people who really need help in housing and a big plus for people who can’t make ends meet on up to @100,000$ a year. Big whoop. If you’re making that much money in a job you should be smart enough to budget your money.

    While I agree with her about the very low percentages of low income housing being built, and that developers are taking advantage of the laws to subsidize building luxury housing, I disagree that FCR will do any better. In fact Ratner willl make out like…er…a fat rat.

    For the amount of public money and incentives he is going to get, he should be putting in a lot more housing for low/moderate income housing, and the income levels should be adjusted downward.

  • a pretty apologetic and half-hearted justification…again how much funding did ACORN get from Ratner?
    In any event, building more luxury condos and creating more congestion is only going to bring prices higher, especially when those luxury condos are subsidized.
    She claims there are no other realistic solutions…I think that is non-sense. On the contrary I think there are many other more reasonable solutions out there.

    one think she touched on that was interesting:
    “In almost all of those projects, city tax dollars are being used to subsidize luxury development in the form of 421a and J-51 tax abatements for purchasers of luxury housing.”
    So why the hell is the city doing this? this sort of go-go quick buck thinking doesn’t build long term economic growth or community.
    At the end of the day Ratner isn’t stupid – he’s playing the race card, and palming off his project as affordable housing, but at the end of the day its just a big fat boondoggle for him.
    I have a hard time believing that any reasonable- that is reasonable – project needs government assistance in this market.

  • Apologist Bertha Lewis’s statements are quite astounding. Let’s analyse:

    Yes, developers need to make a profit. This does not need to be stated. However, the scale of the Ratner project is so over-the-top that it clearly goes way beyond that need. Is it reasonable to believe that only such a gigantic project makes a profit? If the entire project were designed as, say, 6-storey buildings, would he not make a profit? It’s ridiculous to imply that only at Ratner’s scale is it possible to profit. If that were so, there’d be no small or mid-scale development in this city.

    More importantly, if that’s so, why does he need 1) a substantial public subsidy 2) tax abatements for 30 years and 3) the might of the Empire Development Corp. to reduce city requirements on environmental and other issues? Three points not make it clear that either Ratner’s proposal is unrealistic and unprofitable on its own (hard to believe, but possible) or that he has successfully snowed the powers-that-be into increasing his profit, an unconscionable dereliction of responsibility on their part.

    The bottom line is that if AY in its current format were viable, none of the above would be needed.

    Pointing, as Ms Lewis does to other developments that do not have an affordable component is presenting a false positive. It has nothing to do with the objections to AY. She could equally well point to projects that do have affordable housing to prove AY is not viable, and there are some of those, maybe not enough. The point is, that the way to improve the affordable housing stock is to give *all* developers either an incentive, or make it a requirement, to build in a affordable component.

    Density: I doubt that anyone in opposition to Ratner believes in low density. But it’s a big difference between the type of “high density” prevalent in our brownstone neighnorhoods and what AY will be. So for Ms. Lewis to imply that it’s a “bogeyman” does a great disservice to the many planners, urban designers and just plain concerned citizens who claim, justifiably, that AY’s density is inappropriate, out-of-scale and will cause tremendous problems. These have been documented. But it does not take a rocket scientist, or an urban planner to recognize the disruption that this level of development will cause.

    Her final paragraph is another desperate spin. There *is* (was) a viable alternative plan proposed, and Extell afaik, offered *more money* to buy the development rights than Ratner did. That development plan had all the positives implied by Ms Lewis insofar as affordable housing as well as more open space, and, importantly, less overwhelming towers (although still too much in my personal view).

    Let us take her statements for what they are: a spin on facts to justify her selling out for the, possibly futile, hope that AY will actually do what Ratner says it will.

  • CMU and Brook, great points….
    CMU you said:
    “1) a substantial public subsidy 2) tax abatements for 30 years and 3) the might of the Empire Development Corp.”
    That subsidy is to the tune of : 100 million from the city, 100 million from the state, 100 million from the MTA (by virtue of selling the property below market value. 2-4 billion in low interest state backed loans. it’s the ‘classic’ new york boondoggle. It’s also interesting to see how ratner is cuddled by the daily news – we know the connection with the New York Times – but what about the news? and why the unwillingness to investigate what is pretty obviously soft corruption (Developers buying politicians)?

  • Let me just start out by saying I think Bertha Lewis and ACORN made a horrendous mistake when they allowed themselves to be bought out by FCR. Having said that, I really feel for her. ACORN and organizations like it serve a tremendous need by being an advocate for affordable housing and a constant thorn in the side of residential developers. We, as a city, need people who are always there to be voices for the voiceless. Let’s face it, the needs of people who can’t afford market rate anything in this city are usually forgotten unless there are organizations or people who make noise. With the vast amounts of money to be made in real estate development, especially given the (mis)use of city, state and federal tax abatements and other programs, there is no excuse for the way money is spent and how the housing market works. Bertha Lewis is a canny, smart organizer and a highly intelligent woman, and I can only think that she thought siding with FCR would be to the best interest of the cause.

    Maybe she didn’t do enough due diligence on FCR and Bruce Ratner’s public record, or maybe she just really believed them when they made their inititial promises, or maybe they really needed the money to pay their rent, I don’t pretend to know. Personally, I would have gotten a hint from the way that the Atlantic Center Malls are very lower income bracket unfriendly, that perhaps the presence of the lower classes was not figured highly into plans of any of the dealings of FCR. So now she is in the unenviable position of being legally obligated to shore up the party line, and back the Man, even though he has now started to show his true face. Sad.

  • I agree with you, CHP- Bertha Lewis, despite everything she’s done before, made a huge mistake. And I think it’s hurt Acorn’s credibility. Now I think her economic arguments are classic business sense- and very obviously laid out for her by Ratner. And that’s tied into the agreement she signed with FCR.

    Where she really begins to worry me is her saying that all of the subsidized and moderate income apartments will be mixed throughout the project.She’s in fantasyland here. Not because I don’t think its a good idea (I do think so) but it is so unrealistic on anyone’s part to think that someone who can afford a market rate luxury apartment will want to live on the same floor or in the same building with those who live in subsidized apartments. People with money pay big bucks to live among other rich people in hi-end communities, insulated from the rest of us. What makes Bertha Lewis or Ratner think they’re going to plunk down big bucks to “mingle” with us common folk? The first time there is a problem, you know who will be blamed.

    My guess is as the project gets underway, Ratner will fall back on his loophole about building affordable housing “elsewhere.” If he sees that the luxury spaces are not getting taken, he’ll assume it’s because of the subsidized groups, and act accordingly. Personally I believe Bertha Lewis did it for the interests of Acorn, but Ratner did it in a cynical ploy to manipulate neighborhood groups and make his job easier.

  • I’m confused. The implication appears to be that moving the low-income housing off-site would be a bad thing. On the other hand, most opponents have painted the future AY site as a hellhole: traffic, smog, congestion, density, overcrowded schools, sewage problems, even terrorism. By that logic, wouldn’t residents of the low-income housing be better off elsewhere?

  • just an FYI on affordable housing – this scam’s been done before:

    ” Read about the promise & failure of Battery Park City and how 20,000 low-income apartments turned in 1,500.
    The low-income housing “bait and switch” scam has happened before in NYC.”
    http://www.southoxford.com/index.html

  • They may very well be better off elsewhere, Prowd, but that’s not the point. The point is that ACORN’s endorsement was contingent, in part, upon the AY site being developed with low income and affordable housing as a major part of the complex. Not in East New York, or wherever else it ends up being, if it ends up being at all. ACORN is correct that most new developments in the city, especially in Brooklyn, should be a mixture of affordability levels, most especially when tax abatement and give back programs specifically set up to encourage middle to lower income projects are used. I also agree that the best way for a rising tide to lift all boats, housing wise, is for mixed income developments to be built. Now that causes all kinds of other issues to come up, but the point remains is that this is what was promised to ACORN by FCR. Huge loopholes were built into that by FCR, and unfortunately it seems that ACORN and Bertha Lewis really weren’t aware of who they were getting involved with. Highly successful and rich developers like Ratner have highly paid law firms that write this stuff for breakfast. Unless ACORN has similar people they can consult with, and unfortunately, they don’t, they let themselves get took, pure and simple.

    The original CHP

  • CHP- your comments were dead-on. And lets not forget that Acorn was only one of a group of community organizations that signed on with Ratner. I always felt that their decision was based more on the mistaken notion that they were actually necessary for Ratner to be successful. Acorn got a nice “donation” from Ratner, too after all- and their first press conference after the signing was a wonder of chest thumping back patting.

    Ratner is one of those highly successful, rich developers who is also ruthless. What other kind would have the chutzpah to factor in eminent domain as necessary to the fulfillment of his project? Like he didn’t own enough land in the area already?