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December 15, 2005 Edition > Section: New York > Printer-Friendly Version
Test of Mayor's Housing Assumptions Is About To Take Place in Brooklyn

BY JULIA VITULLO-MARTIN - Special to the Sun
December 15, 2005
URL: http://www.nysun.com/article/24490

Will households that have paid $700 a square foot or more for waterfront condos be happy living adjacent to subsidized households paying far less? Mayor Bloomberg's 165,000-unit housing plan, a cornerstone of his re-election campaign, is based on the assumption that the answer is yes.

New Yorkers are about to find out if these assumptions are right. The premiere mixed-income project, Schaefer Landing on the Brooklyn waterfront, is scheduled to open by the end of the year. Thought to be the largest project in the country that combines low-income rentals with high-end condos, Schaefer Landing offers 140 "affordable" rental units in one building and 210 luxury units for sale in two adjacent towers, one 15 stories, the other 25 stories.

Tenants are chosen by lottery from a prequalified pool of households earning less than 60% of the census district's median income, which works out to about $37,000 annually for a family of four. The condos are selling for between $390,000 and $1.9 million, many to households from Manhattan.

A Douglas Elliman broker, Helene Luchnick, who is in charge of sales, said that the south tower, scheduled to open in the first quarter of 2006, is entirely sold. The north tower, scheduled to open in the spring of 2006, has sold 104 of its 134 units, not surprising given the spacious apartments and the appeal of nearby public spaces and the waterfront.

Ms. Luchnik is confident the apartments are a smart investment.

"The neighborhood will keep appreciating in value," she said. "We're selling now at an average of $725 per square foot, which means we're far more reasonably priced than Manhattan, where everything is $1,000 a square foot, even in the East Village."

Outside praise for the project is almost unanimous. In October Mayor Bloomberg called it "the key to a greater New York," as future tenants were offered a first look at Schaefer Landing's low-income rental building. "Thrilling," the chairwoman of the City Planning Commission, Amanda Burden, said. Assemblyman Vito Lopez said it was an "outstanding example" of private-public collaboration.

Indeed, the public contribution to the private-public collaboration has been significant. The site landed in city government hands after being abandoned in 1976. Years of failed proposals followed, including an attempt by Mayor Koch's administration to build an enormous incinerator to burn garbage, which was opposed by both residents and environmentalists. A development lawyer, Ken Fisher, who represented several Brooklyn neighborhoods in the City Council during the 1990s, said once the idea of the incinerator was eliminated, neighborhood leaders started looking at the site for housing. "The Giuliani administration was receptive and committed upwards of $8 million to environmental remediation," he recalls. "The site had been a brownfields, a derelict industrial area that had to be cleaned up. In effect, the city agreed to front the money to make the site buildable."

Or as the commissioner of housing, preservation and development, Shaun Donovan, pointed out last year, "We had every kind of subsidy helping that property. Without the government clean-up, Schaefer Landing couldn't have gone forward. And without the deep subsidies, we couldn't have provided 40% affordable housing."

The Giuliani administration signed the papers with developer Kent Waterfront Associates on its last day in office, December 31, 2001. Kent paid $9 million, or about 60% of the site's market value, in exchange for the promise to reserve a large number of apartments for low-income rentals - long one of the most contentious subjects in Brooklyn.

At the time, relations were strained among Brooklyn's politically active, low-income ethnic groups. In particular, Puerto Rican and Chasidic families were warring over public and other government-assisted housing in Williamsburg, upland of Schaefer Landing. Williamsburg has for several years had the largest and fastest-growing community of Chasidic Jews in the country. Puerto Ricans, who pointed out they had been there first, argued they were being pushed out of their neighborhood. Nonetheless, the Giuliani administration named the United Jewish Organizations as the nonprofit partner in Schaefer Landing, meaning they are paid to oversee the lottery that allocates apartments. After objecting initially, the Puerto Rican organization Los Sures agreed to the arrangement. Mr. Fisher said, "My theory was that until you solved the housing problem you weren't going to be able to solve the racial problems."

A dissenting voice on the social value of mixing subsidized and market rate housing comes from a senior fellow at the Manhattan Institute, Howard Husock, who said, "It's sad and scary for the government to set up these permanent welfare-state systems, which cause people to go for each other's throats to get at the goodies. In a normal market system, ethnic conflicts work their way out. You get tolerance and respect via the market when everyone is paying a market price. Here the government inflates the cost for one group and subsidizes the cost for the lucky few."

And the few are indeed lucky, provided with the same amenities - including a gym, a library, and public gardens - as the tenants paying market rate, developer Don Capoccia, who is the managing principal in the project, said. Perhaps more important, all residents will have access to the project's way of compensating for the lack of public transportation: a shuttle bus to nearby subway lines and water taxi service to downtown Manhattan leaving every 20 minutes during morning and afternoon rush hours.

Mr. Capoccia believes enough in the future of the project to move in himself. He has bought the large, front penthouse at the top of the 25-story north building - at full market price, he emphasizes. Familiar as he is with his project, he still gives a little gasp of awe as he walks onto what will be his wraparound terrace. All of New York can be seen, including its suburban hinterland in the distance and its harbor below. Mr. Capoccia is confident that the views and waterfront location will sell the apartments, which will prove to be one of the city's best investments. "You're going to see residential and some good retail all up the waterfront," he says, gesturing toward the recently rezoned area that starts at the northern border of the site. "In 10 years, it won't look anything like what it looks like now."

He's surely correct, another developer, Paul Travis, said. Brooklyn has seen its building permits more than double over the last 10 years to some 22,000 annually. It is now a "destination borough," Mr. Travis said. "People moving to New York now often move straight to Brooklyn, not because it's a second choice, but because it's the first choice that only Manhattan, of all the boroughs, once was."

December 15, 2005 Edition > Section: New York > Printer-Friendly Version

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This entry was posted on Friday, December 16, 2005 at 10:30.