960 Franklin Ave "Affordable" Plan - Will Cause Displacement and Gentrification
This is a slightly different version of a letter that was sent to Department of City Planning, who is the "lead agency" on the rezoning application. It is in reference to the environmental consequences of the proposed development that allows comments and suggestions to be given to the city. It can also be the basis for a lawsuit if the City fails to consider and explore the negative consequences of a development.
It is our belief that the City can not simply ignore or even state that because a developer is building "affordable"' units that they will not have adverse effects upon the community, especially since the developer has such a range of options that he can choose from, as this paper will explore. In fact some of these options could actually help gentrification and displacement as the "affordable" income bands can be way above market rent.
Please Note: Use the Table of Contents to explore this paper and simply click on "back up the top" to return to the Table of Contents.
Table of Contents
- Misrepresenting Affordable Units.
- What the Developer Plans on Building
- Affordable Income Bands
- Rent Burden Definitions
- Mandatory Inclusionary Housing (MIH) Requirements
- One Income Band
- Two Income Band
- Three Income Band
- Lawful Dipping of MIH and HUD/HPD affordable apartments.
- Double Dipping
- Affordable Units will Cause Displacement and Gentrification
- Need More Detailed Information From the Developer
Misrepresenting Affordable Units.
It is common for the news media and other communications to make the claim that when the word "Affordable" housing is stated that it means "below market value". However, this is so untrue that "Affordable" can actually mean luxury apartments depending upon where they are being built and who they are for (targeting).
This is the case with the 960 Franklin Ave Development where 100% of the "affordable" units which is 50% of the total amount of the entire development being built in Crown Height South, will be rent burden and severe rent burden (above market value/luxury apartments).
This paper explores why.
What the Developer Plans on Building
Bruce Enicher, the developer has stated on his application that he plans on applying for the Mandatory Inclusionary Housing (MIH) program - Option 2 and **HPD/HUD funding . He wants to build almost 1600 residential units where currently he can build only 500. He states half will be built under the "affordable" of the two programs sited above.
Affordable Income Bands
Average Medium Income (AMI) - this is the Average income of a community.
Crown Height South *** AMI is $40,000 income.
Affordable income bands target a specific population to create apartments that are not rent burden or severe rent burden to that targeted group.
It does not mean it is "affordable" to everyone.
***All the AMIs used in this paper is for a family of four.
Rent Burden Definition.
According to HUD regulations, if a family is paying over 30% of their household income then they are rent burdened and over 50% they are severe burdened.
Rent burden and severe burden creates displacement in communities as families struggle to pay their rent, landlords engage in legal and illegal tactics to remove low to moderate income renters and a higher level of income renters come into the community.
“Affordable” housing centers around housing not being rent burden, but affordable to the income band that is being targeted.
The developer plans on providing 50% of the residential apartments under the" Affordable" catogory with, 60% of the affordable units will be $83,400 (severe burden) *at or below; 20% will be *at or below $104,300 (severe burden); and 20% will be *at or below .. $125,160 (severe burden).
Despite the developer stating he will be doing "at or below", this can also be above as well, as long he chooses an "affordable" income band he will be acting legally. Also these statements are not legally binding so he can change them at any point in time.
MIH Option 2 Parameters/Requirements.
Below are the requirements for Mandatory Inclusionary Housing Program (MIH). The developer has chosen "Option 2" and below are those requirements.
- The average income of all of the apartments must be at 80% AMI ($83,440) income (severe rent burden)
- Maximum of three income bands maybe used.
- The highest income band that may be used is 130% of AMI ($135,590) income band.
- 30% of the all the apartments being created must fall under the category of “affordable”.
We have created three different types of scenarios that would conform to MIH requirements which would create 100% rent burden and severe burden apartments for the existing community. Please note the developer can choose a whole array of options as long as he conforms to the four rules above. The options are just to show you want he can do.
One Income Band
- Income Band: 80% of AMI ($83,440) - 473 apartments – Severe Rent Burden
Purple area is 30% of all apartments
Light Grey area is 70% of all apartments
In this scenario, 100% (473 apartments) of MIH category will be severe rent burden apartments for the Crown Heights South Community.
Two Income Band Scenario
- 50% of AMI ($52,150) - 271 apartments – Rent Burden
- 120% AMI ($125,1600) - 202 apartments – Severe Burden
Blue area is 17% of all apartments.
Orange area is 13% of all apartment.
Light grey is 70% of all apartments.
In this scenario, 100% (473 apartments) of MIH category will be rent burden or severe rent burden apartments.
Three Income Band Scenario
- 50% of the AMI ($52,150– 180 apartments) – Rent burden
- 80% of the AMI ($83,440 – 160 apartments) – Severe burden
- 130% of AMI ($135,590 – 133 apartments) – Severe burden
Blue area is 12% of all apartments.
Purple area is 10% of all apartments.
Orange area is 8% of all apartment.
Light Grey is 70% of all apartments.
In this scenario, 100% (473 apartments) of MIH category will be rent burden or severe rent burden apartments.
This information shows that it is imperative for us to see what income bands and scenarios the developer will be choosing in order to assess if any of the housing created will not be rent burden, rent burden and/or severe rent burden, in order to determine the effects of this housing upon the existing population.
Lawful Double Dipping HUD/HPD and Mandatory Inclusionary Housing “MIH”
**HPD and HUD Funding
HUD states that 20% of the apartments must at least 50% AMI ($52,120).
Double Dipping
MIH guidelines allows developers to use the same units to get money from other funding sources, called double, triple, quadruple etc…dipping.
For example, if the developer chooses the two income bands scenario sited in the image to the left he can use the same apartments under the income band of 50% of AMI ($52,120 – 316 apartments), which is 20% of the total housing being created, to get funds from HUD/HPD and 30% housing under MIH. Together these programs make up the 30% Affordable category, leaving 20% to be just "affordable".
Affordable Units will lead to Gentrification and Displacement
The above scenario means the entire additional 20% can be at 165% AMI ($172,095) the largest income band, which falls under the “affordable” category. As long as the developer selects an income band under the “affordable” category he will be in compliance with the law. Not only will all of these apartments be severe rent burden apartments for the existing population, but everyone will be able to agree they are above market rate for the existing population, leading to Gentrification and Displacement.
More Detailed Description is Needed
When we looked at the developers numbers, it appears that he is actually using the HUD/MIH scenario we sited above for his 50% affordable. Using terms like, "target population", "Work Force population" and "affordable".
These scenarios show why it would be imperative to get a more detailed description of how many apartments, their exact target income, the sizes of these apartments along with the income options the developer is proposing under the MIH and their exact percentages etc...
Then additional scenarios need to be explored by the lead agency to recalculate what can be legally done to ensure the “Affordable” apartments being created in the community will not cause displacement and rent burden and/or severe burden scenarios to the community.
Developers Current Statements are Not Legally Binding
Please note that the developer’s statements are not legally binding agreements, thus he can pick and choose between any of the scenarios listed here or choose other ones. This means the lead agency must explore all worst case scenarios and present alternative ones that would actually create apartments affordable to the current residents living in the community.
Additionally these scenarios need to be incorporated into the rezoning agreements and make it binding upon the developer, to ensure compliance and provide the public with way to challenge, in a court of law, the breaking of the agreement.
Also no apartments have been earmarked for homeless people nor has the developer stated that any will be targeted for that population. If however, this is being proposed, then it should be stated and again a detailed description of these apartments, their incomes, and number of units should be disclosed.
*These are non-binding agreements and can indicate either above, below or at.
**HPD gets 87% of their funding from HUD.
***All average medium incomes (AMI) used in this paper are based upon a family of four.