Who knew low-income wage earners are subsidizing the developers?

The New New Domino:Déjà vu All Over Again

As I predicted, CPC Resources, the original developer for the Domino Sugar Refinery, flipped the property to a new developer, Two Trees Management, for a huge $120 million profit. So there’s a new plan afoot for the refinery, one the new developer has made even larger than CPC Resources’ massive plan, and one that is much larger than what is currently on the Williamsburg waterfront.

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The new Domino plan, created by SHoP Architects, would take 15 years to build, according to the developer. But remember that Bruce Ratner initially said the entire Atlantic Yards project would be built in 10 years. Now that number has been revised to 25 years.

The new proposed plan is said to offer increased open space, and maybe the same amount of affordable housing (660 units). At a recent meeting at The Woods, in Brooklyn, the developer claimed that the affordable housing would be offered to residents earning 60% ($45,000) to 80% ($65,000) of the citywide area median income (AMI). However, the AMI for Community Board #1 is $41,000, with most of the residents who are facing displacement earning $17,000 to $29,000 per year. A current lottery for affordable units at 1560 Fulton Street in Brooklyn at 80% of AMI is offering one-bedroom apartments at $1,887 per month. According to the National Low Income Housing Coalition, the fair market rent (FMR) for a two-bedroom apartment in New York State is $1,313.

In order to afford this level of rent and utilities without paying more than 30% of one’s income on housing, a household must earn $4,376 monthly, or $52,513 annually. Assuming a 40-hour workweek, 52 weeks per year, this level of income translates into a housing wage of $25.25 per hour.

In New York, a minimum wage worker earns an hourly wage of $7.25. In order to afford the FMR for a two-bedroom apartment, a minimum wage earner must work 139 hours per week, 52 weeks per year. Or, a household must include 3.5 minimum wage earners working 40 hours per week, year-round, to make the two-bedroom FMR affordable.

In New York, the estimated average wage for a renter is $21.59 per hour. To afford the FMR for a two-bedroom apartment at this wage, a renter must work 47 hours per week, 52 weeks per year. Or, working 40 hours per week year-round, a household must include 1.2 workers earning the mean renter wage to make the two-bedroom FMR affordable. So at higher rents this so-called affordable housing becomes out-of-reach housing. And believe me, affordable housing is a cash bonanza. In exchange for 660 units of affordable housing, Two Trees can get $100 million in federal Section 8 subsidies and low income housing tax credits, direct funding and low interest loans from New York City HPD/HDC, and 421a property tax breaks from the city. In other words, tax dollars, some of which come from low income working residents who will be priced out of the new Domino!

The new Domino plan calls for a 598-foot tower (an almost 60-story building), much taller than the previous 40-story limit, and two 590-foot towers. The inland property is reported to also include a tower that would be 270 feet, also much larger than what CPC Resources was going to build. There will be 2,284 apartments, up from 2,200, and 630,000 square feet of office space, up from 100,000. The new office space will add up to 4,000 people to the community.

Below is the comparison chart produced by Two Trees. The original plan called for up to 2,400 units, but CPC Resources planned to build 2,200 units:

Two Trees head Jed Walentas was quoted at a community meeting at The Woods as saying, “We spent $185 million on the site and we are going to make a return.” In reality, Two Trees paid $55 per buildable square foot based on the request for 3.37 million square feet. Two Trees is also saying they are increasing the project’s open space by 60%, to 5.3 acres, and plan to include a floating pool, kayak launch, esplanade, and seasonal ice-skating rink. But with thousands more office workers, how much open space is really added?

Two Trees has leverage and has already flexed its muscle by telling community leaders that if their new vision is not approved, they will build CPC Resources’ original plan, which, due to a failure by City Council Speaker Christine Quinn, made the “guaranteed claims” of CPC Resources for 30% affordability housing non-binding for Two Trees. Two Trees will begin the land use review in the next few months, so the community begins another chapter in the Domino Sugar saga. Stay tuned.