From the poorhouse to the penthouse…
Assemblyman Hakeem Jeffries wants to bail out luxury apartment developers in his district with new loans that would turn the high-end units into “affordable” residences.
According to Jefferies (D–Clinton Hill), there are dozens of incomplete projects and unsold condos across his central Brooklyn district — and a chronic shortage of below-market rate housing.
A new bill from Jeffries would put this peanut butter and chocolate together — by refinancing loans to troubled residential developments made between 2004 and 2008 for up to $150 million in exchange for charging below-market rates on as many as half of the units, the New York Times reported.
Jeffries says it’s a great chance to salvage stalled projects and stem the flow of gentrification pushing working class people out of his district, which includes parts of Fort Greene, Clinton Hill, Prospect Heights, Crown Heights and Bedford–Stuyvesant.
“The bubble has burst and there is excess inventory,” Jeffries told The Brooklyn Paper last week before he submitted the bill. “Given the high rate of vacancy and the need for affordable housing, it seemed important for government to find a way to transform some of the excess inventory into affordable homes.”
Jeffries identified 65 stalled or empty condo projects in his district, including the totally vacant Isabella condos on Washington Avenue, the Collection condos on nearby Clinton Avenue and the partially filled Forte building on Adelphi Street.
The experience of Fort Greene, Clinton Hill and Prospect Heights are similar to what’s happened in Williamsburg, Greenpoint and other parts of the city that were once bastions of the middle- and working-classes.
But some real-estate analysts say lenders might not want to participate because it will be tough to recoup enough of their investment under a program like this.
Because developers spent so lavishly on acquiring land and constructing units with deluxe details like granite counters, charging below-market rates for the empty apartments might not be worthwhile to lenders, even if the state provides additional subsidies.
“There would have to be a lot of parties at the table to make luxury housing profitable for the developer at below market rates,” said Ken Krosner, managing director at Massey Knakal, a real estate brokerage firm. “Those economics will never work out. It barely works out for market-rate rental.”
The stalled projects pose another problem for local officials as residents are grumbling about the appearance of aborted work, as well as possible security issues.
“The complaints we’re starting to get are about sites that never really got off the ground,” said Rob Perris, the district manager of Community Board 2, which oversees Fort Greene, Clinton Hill, DUMBO, Brooklyn Heights and Downtown Brooklyn. “A lot of them are surrounded by a wall of plywood, which is not meant to be a permanent thing, but who knows for how long they will be up.”