http://www.nytimes.com/2015/03/06/ny...s&emc=rss&_r=0
De Blasio and Developer Are Close, but Not on Lower-Cost Housing
Mayor Bill de Blasio, left, and Rob Speyer at the 2015 gala of the Real Estate Board of New York.
A residential project with three towers and 1,800 units in Long Island City, Queens, is being rushed toward completion by Tishman Speyer Properties. Credit
By CHARLES V. BAGLI
MARCH 5, 2015
Quote:
Unlike many of his more wary real estate brethren, Rob Speyer moved quickly to build a strong relationship with New York’s liberal mayor, Bill de Blasio, after his election in 2013.
The relationship flowered, and Mr. Speyer, whose company owns Rockefeller Center and operates on four continents, was a host at Mayor de Blasio’s birthday party at Gracie Mansion last May. At a real estate gathering five months later, Mr. de Blasio singled out Mr. Speyer, telling the 6,200 attendees that the developer was “tremendously civically oriented.”
While enjoying a close relationship, however, the two men do not seem to be on the same page when it comes to the pressing need for affordable housing in a city where rents are soaring beyond the grasp of the poor and middle class.
Mr. Speyer is racing to start work on an $875 million residential complex with three high-rises and nearly 1,800 apartments in Long Island City, a suddenly hot Queens neighborhood a short subway ride from Manhattan. He must begin the foundations by June 15 to qualify for a 15-year tax abatement worth about $200 million under a tax program known as 421-a that is intended to stimulate construction and generate affordable housing.
After mid-June, the program expires or could be renewed with regulations requiring developers to include a higher concentration of affordable housing. But under current rules, Mr. Speyer is one of six developers eligible for the subsidy without having to build a single low-cost unit, because of where their projects are. None of the other projects, though, is as big as Mr. Speyer’s.
If Mr. Speyer’s project, on Jackson Avenue near Queens Plaza, were in Manhattan or along stretches of the East River waterfront in Brooklyn and Queens, he would have to set aside 20 percent of the units for poor and moderate-income tenants.
“It’s a huge missed opportunity to create affordable housing,” said Benjamin Dulchin, executive director of the Association for Neighborhood and Housing Development, an advocacy group. “They’re getting an extra tax break for free. It’s unfortunate that the city hasn’t explored whatever leverage it has to get a public benefit.”
Mr. de Blasio has made the creation of 80,000 units of affordable housing a hallmark of his administration and has repeatedly said that developers must build low-cost apartments if they expect any help from the city.
Mr. Speyer, the chief executive of Tishman Speyer Properties, declined to comment, but Stephen Rubenstein, a spokesman for the developer, said the company was turning a largely vacant site into a vibrant neighborhood. “We believe this project will greatly add to the Long Island City community,” he said.
No one is suggesting that Mr. Speyer is doing anything underhanded or illegal, and city officials say they have little leverage because he needs no public approvals or reviews. Mr. Speyer, one official suggested, is doing what developers do: making as much money as they can.
Mr. de Blasio declined to comment, but Deputy Mayor Alicia Glen expressed disappointment over the situation.
“This isn’t our vision for the city,” she said. “This is, in fact, a great example of why we need to change the status quo. In many ways, it’s the most overt example of the need to think through the public benefits we get when the city and the state offer tax breaks.”
At least 30 developers, including major builders such as Bruce C. Ratner, Gary Barnett and Stephen M. Ross, are trying to meet the June 15 deadline to qualify for the tax abatement, though many of them would have to set aside 20 percent of their units and make them affordable to certain renters.
Housing advocates consider the 421-a program a boondoggle that gives generous tax breaks to developers and apartment owners for too little in return. The Real Estate Board of New York, the lobbying arm for the industry, says the program is necessary because New York has the country’s highest construction and land costs and taxes.
The program will end in June, unless it is renewed by the State Legislature, and the de Blasio administration has been meeting with developers, including Mr. Speyer, as chairman of the Real Estate Board, and housing advocates over plans to extend and overhaul the 44-year-old program.
The mayor has yet to reveal his intentions, but according to officials and real estate executives, the de Blasio administration would provide generous tax abatements only to developers who include a substantial block of affordable apartments in their projects.
“We are committed to supporting his mission of growing affordable housing,” Mr. Rubenstein said of the mayor, adding that Tishman Speyer was working on a number of potential projects that would include “significant affordable housing components.”
Mr. Speyer and his father, Jerry I. Speyer, the company chairman, are known in New York as civic leaders, art collectors and, mostly, commercial developers with a portfolio that includes the Chrysler and MetLife Buildings.
The Long Island City project would be the company’s first move into residential development in New York since 2010, when it lost control of Manhattan’s largest apartment complex, Stuyvesant Town-Peter Cooper Village.
Rob Speyer’s job as chairman of the Real Estate Board necessarily involves cultivating relationships with the mayor, the governor and lawmakers, all of whom govern land use, property taxes and subsidy programs for developers.
Mr. de Blasio reappointed Mr. Speyer chairman of the Mayor’s Fund to Advance New York City, the same position he held under Mayor Michael R. Bloomberg. Mr. Speyer was also co-chairman of a benefit for the Gracie Mansion Conservancy and was among the 10 co-chairmen of the host committee for the administration’s unsuccessful bid to bring the 2016 Democratic National Convention to Brooklyn.
But the relationship between the two men strengthened last March, according to executives who know them, after Mr. Speyer and the Real Estate Board quickly offered 40 apartments for tenants displaced from their East Harlem homes after a gas explosion leveled two buildings. As a result, the mayor was able to announce an ambitious recovery plan two days after the explosion.
The Speyers have owned land for over 10 years in Long Island City, a once-industrial neighborhood where the real-estate boom arrived only recently, despite the efforts of several mayors.
There are nearly 4,000 apartments under construction or in the planning stages, with an additional 11,527 units on the way in nearby Hunters Point, said Nancy Packes, a real estate consultant. Tishman Speyer plans to erect three towers on its Long Island City site, ranging from 33 to 53 stories, with a total of 1,789 apartments.
Tishman Speyer is also negotiating to buy air rights from the Metropolitan Transportation Authority for $9 million, which would enable the company to build an additional 75 apartments.
“We’ve had a huge population influx,” said Pat O’Brien, chairman of Community Board 2, which covers the area. “The infrastructure has yet to catch up. If all these things get built, we could wind up with 25 pounds of people in a five pound bag.”
Though city officials say they cannot compel Tishman Speyer to build affordable housing, critics say they do have some sway because of an agreement that the city and the developer have at a nearby site where Tishman Speyer built an office building for the health department.
Tishman Speyer was supposed to begin a second office tower there by January 2011, and has been paying an annual $1 million penalty for failure to do so.
The developer met recently with city officials to discuss incorporating far more profitable apartments, along with affordable units, into the office proposal. Housing advocates said the city could allow Tishman Speyer to do so, but only if the developer included affordable units in its plan for the three towers.
Ms. Glen, the deputy mayor, said, “No decisions have been made yet.
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