The ongoing challenge of incentivizing affordable housing construction was on full view last week at the City Council.
A proposal to construct a ten-unit, four-story residential development in the Columbia Street Waterfront District was denied by the City Council on Thursday (12/15), as first reported by CityLand. The proposal would have required rezoning three vacant lots at 14–18 Carroll Street from manufacturing to residential.
The project developer, Rothkrug, Rothkrug & Spector LLP, sought to use the City’s Mandatory Inclusionary Housing (MIH) program as a way to achieve the rezoning. The MIH program requires that when medium- and high-density areas are rezoned to promote housing production, a share of the new housing must be “permanently affordable.” But to the great frustration of Councilmember Brad Lander, Rothkrug presented a project that actually provided no affordable housing, despite a lengthy public review process where affordable housing had allegedly been repeatedly discussed.
The Council’s Subcommittee on Zoning and Franchises voted unanimously to disapprove Rothkrug’s application on December 12th, as did the Land Use committee two days later. Lander argued at the December 12th subcommittee hearing that the rezoning did not make sense without significant public benefit, such as new affordable housing, and that the Carroll Street site’s manufacturing status should be retained in order to encourage economic activity in the area.
“We don’t need a few new market rate condos,” Lander stated at the sometimes contentious hearing. Watch video of the hearing here.
“There are good light manufacturing and commercial uses nearby that the community needs and relies on, but have been displaced in this area because of rising rents and speculation over the last few years,” Lander added.
The Councilmember criticized Rothkrug for seeking a rezoning via an affordable housing program, and then ultimately choosing not to meet the program’s affordability goals. Lander said he stressed the goals throughout the public review process.
When the MIH program is used to upzone a site, residential developments over 12,500 square feet (or 10 units) must include thirty percent affordable housing. Rothkrug’s proposed building is just below the MIH limit, at 12,459 square feet, which Lander raised as a strange coincidence.
A representative of the developer, Adam Rothkrug, said that the size of the project had been determined before the MIH program came into existence. Rothkrug said the company bought the property four years ago. He added that the most of the buildings on the Carroll Street block are residential, and that the 1961 zoning of the block as “manufacturing” was an error on the City’s part.
The developer had been clearly anticipating a rezoning. Rothkrug told the Council he paid roughly $240 a square foot for the Carroll Street property, a price which Councilmember Antonio Reynoso observed was at least ten times the site’s value under the existing manufacturing zoning.
Refusal to Pay $2.2 Million
Rothkrug chose not to include three affordable units in its development but the developer had a second way to meet the MIH program’s affordability goals.
Developments between 12,500 and 25,000 square feet (or between 10 and 25 units) have the option of paying a fee instead of providing affordable units directly. The City, operating under the assumption that Rothkrug would build a project that took full advantage of the size of the lot, requested a payment of over $2.2 million — $1,800 a square foot for the additional floor area they said was above the MIH threshold.
Rothkrug said that he had not been aware of the $2.2 million amount until two weeks ago, and called the sum a “project killer.” He said he was willing to work with the Council to decide upon a “fair and equitable contribution” (in the “six figures”) to a local affordable housing organization, but that the developer would not pay into a City-managed fund.
Lander claimed that Rothkrug knew a significant fee was coming for months. The Councilmember also raised the issue of the size of the increase in floor area ratio (FAR) that Rothkrug was seeking as part of the rezoning. (FAR is the ratio of total building floor area to the area of its zoning lot.) Lander stated that the $2.2 million payment requested by the City accounted for the difference between the site’s current zoning of 1.0 FAR for manufacturing and 2.2 FAR for residential.
In exchange for a significant increase in the value of the Carroll Street property, Lander pointed out, the developer was offering “nothing” of public value in return.
At one point during the hearing, Rothkrug stated that “historically rezonings were not dollar and cents projects. It’s not, ‘pay us this money and you’ll get your rezoning.’ Unfortunately, maybe that’s where it’s heading with the money going to a good cause.”
The implications of the comment displeased Lander, who threatened to leave the hearing and requested that Rothkrug retract the statement, which he did.
Affordable Housing Discussed Throughout the Project
Before going to the City Council, Rothkrug’s project was evaluated by the local community board, Brooklyn Borough President and City Planning Commission as part of the City’s Uniform Land Use Review Procedure (ULURP).
All three entities approved the rezoning, CityLand reports, and an affordable housing component was actively discussed. Community Board 6 added a requirement that money paid to the affordable housing fund be used within Board 6, and that the funds be “proportional to the building size even if it fell below the threshold requiring a payment.”
Borough President Eric Adams suggested that the size of Rothkrug’s affordable housing payment be “reflective of the most recent residential sales prices in the Waterfront District.” This recommendation was supported by both the City’s Department of Housing Preservation and Development and the City Planning Commission, CityLand notes.
The Borough President also requested that Rothkrug’s payment be applied to a fund which supports affordable housing construction on infill sites. There are several such sites near Carroll Street, but they “still lack the appropriate funding and proper zoning to move forward,” CityLand observed.
The City Planning Commission noted in its approval, however, that Board 6’s request for an affordable housing contribution, even if Rothkrug’s building was below the MIH threshold, was problematic. The request could “undermine the validity of the [Mandatory Inclusionary Housing program’s] parameters,” the Commission reportedly stated, and “expose the…program to legal risk.” Rothkrug raised a similar point that while he was not meeting the goals of the MIH program, his actions were still “legal” under its guidelines.
The Council disagreed. After the City Planning Commission approved the project, the Carroll Street rezoning went before the City Council, which ultimately rejected it.