Social Justice Bait-and-Switch

City Hall suggests that Mayor Bill de Blasio’s plan to rezone SoHo, NoHo and a chunk of Chinatown is a courageous act of racial and social justice. Deputy Mayor Vicki Been said that the killing of George Floyd motivated the effort, and The New York Times and several mayoral candidates have called it a model for urban “desegregation.” Yet, several tenants’ rights groups and neighborhood activists argue that the plan would produce little to no new affordable housing, and might actually reduce racial diversity by displacing working-class residents of Chinatown.

The plan relies on Mandatory Inclusionary Housing (MIH), the de Blasio administration’s chief mechanism for trying to create “affordable” apartments. It would upzone the area to let developers build taller buildings than would normally be allowed, ostensibly in exchange for making 25% to 30% of residential units below market rate. The Department of City Planning projects that the rezoning would lead to about 3,200 new apartments, with 600 to 900 of them “affordable.”

The rezoning would be the Mayor’s first in a predominantly white and relatively affluent area. Previous rezonings largely occurred in poor and working-class black/Latino neighborhoods such as East New York, the west Bronx, Inwood and East Harlem. Thus, the SoHo action is being sold as the “anti-rezoning” in a “rich, white” neighborhood. That has some liberal urbanists excited. Artists’ loft conversions transformed SoHo from a declining manufacturing zone into a posh arts and shopping district that has good schools and convenient transportation, making it a prime target for advocates of greater density.

The plan’s opponents say the rezoning is likely to produce little, if any, of the promised affordable housing.

The main criticism of previous rezonings is that the “affordable” apartments they produced were too expensive for neighborhood residents. The luxury development they depend on set off waves of speculation that displaced current tenants, and City Planning has had no effective mechanism to address displacement. Displacement is extremely likely here, as developers are given an incentive to tear down lower-rise buildings. The SoHo and NoHo zoning districts are dotted with rent-regulated apartments, especially on the Bowery and Thompson Street, and the plan’s most aggressive upzoning is reserved for a section of Chinatown along Canal Street that is significantly Asian and low-income.

In addition, plan opponents like Village Preservation, TenantsPAC, and the Chinatown Working Group say their analysis shows that the rezoning “is likely to produce little, if any, of the promised affordable housing.” A report released May 14 by Village Preservation said the plan is “structured to make it more profitable for developers to build entirely without affordable housing.” The report concludes that on 76 of the 84 sites where the City projects affordable housing will be built, “developers could actually construct 100% market-rate buildings with no affordable housing” that would be just as large as options that include affordable housing, and that on the other eight sites, buildings with no affordable housing would have to be only slightly smaller.

One loophole is that the MIH requirement is triggered only if a particular development includes more than 25,000 square feet of residential space. If developers decline to build affordable housing in new projects above 12,500 square feet of residential, yet below 25,000, they are supposed to contribute to a fund for affordable housing, yet such mechanisms are historically abused and may not meaningfully influence developer decision-making.

In the plan’s prime development areas, on a smaller lot of 2,000 to 2,500 square feet, a developer could legally construct a 10-to-12-story residential building with zero affordable housing. In the zoning districts in the so-called “historic cores” of SoHo and NoHo, City Planning asserts that developers will actively choose to participate in MIH and donate 20% to 30% of their square footage, even though they could fulfill their entire allotted square footage with market-rate units.

All retail, commercial, office, and community-facility usages are exempt from affordable-housing requirements, and the plan does not prevent developers from mixing residential with other functions. Therefore, on many of the lots projected for MIH construction, developers have an entire menu of options to adjust the percentages between to avoid triggering the MIH rules. Building 25,000 square feet of market-rate residential on top of a commercial and retail base is not a bad choice, given that the higher floors are more valuable with their views and are quieter on busy arteries like Canal Street or Broadway.

On the largest potential sites, City Planning predicts that developers will merge zoning lots and build sizable, new residential complexes with significant amounts of affordable housing. However, there is nothing stopping them from constructing several buildings next to each other, none of which would pass the 25,000 square-foot threshold on their own. This possibility includes the parking lots at 174 Centre St. and 375 Lafayette St. owned by Edison Properties, a donor to de Blasio’s political campaigns that also holds several other properties in the area slated for rezoning.

The plan also gives owners incentives to build new luxury residential additions on top of landmarked buildings. Such penthouses, perhaps the tackiest violation of the historic buildings of SoHo, could be the crowning jewels of a real-estate giveaway. No affordable housing would be required, and the construction could be used to harass loft-law and rent-regulated tenants.

The pro-developer group Open New York, which campaigns for any and all types of residential construction, is worried that the plan would encourage pure commercial development rather than residential. Articles in the real-estate press also suggest that the hypothetical residential zoning benefits may not be enough to sweeten the deal.

The uncertain result is juxtaposed against the 5 World Trade Center site down the street, where the City and State are voluntarily declining an affordable development on public land that could easily exceed the entire projected units of the SoHo rezoning.

“The affordable-housing loopholes in this plan are so big you can drive all 84 sites where the mayor claims affordable housing will be built through them, and that’s no accident. This plan was designed as a giveaway to the developers who have lobbied and donated generously for it for years,” Village Preservation executive director Andrew Berman said in a statement May 14. “If this plan is approved in the final hours of the de Blasio administration, its impact won’t be seen until long after the mayor’s out of office, leaving New Yorkers holding the bag. The mayor may wrap his plan in a veneer of social-justice rhetoric, but it’s nothing more than a cynical scheme to line the pockets of his developer donor friends.”

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