Changes Announced in Essex Crossing Affordable Housing Plan

Essex Crossing construction site as seen from Hotel on Rivington, February 2017.

Essex Crossing construction site as seen from Hotel on Rivington, February 2017.

The developers of Essex Crossing last night announced changes in their plan for the large Lower East Side project, including the addition of 61 affordable apartments and more units for low-income seniors. The adjustments, forced by the expiration of the state’s 421-a tax break program, will also mean fewer affordable condo units, fewer affordable apartments for larger families and the elimination of mixed-income diversity in three buildings.

The changes were outlined at a meeting of Community Board 3’s land use committee by Isaac Henderson, project manager of Delancey Street Associates. That’s the consortium responsible for building the residential and commercial complex in the former Seward Park Urban Renewal Area. The original plan was heavily influenced by CB3, which spent years reaching a community-wide consensus for the sites.

Essex Crossing was meant to include 1,000 apartments, 50% of them set aside for low- and middle-income residents. 157 of the units were supposed to be condos available for purchase (including 32 affordable condo units). But the plan was dependent on 421-a, a state program that offered generous property tax breaks in buildings which include blocks of affordable housing.  421-a expired more than a year ago and the mayor, governor and State Legislature have been haggling ever since about a new version of the program.

The developers say they’re revamping the housing plan to make sure the project stays on track while the Legislature weighs the latest proposal from the governor (approval in Albany is expected in the not-too-distant future, perhaps by the end of March).

essex crossing overview

The changes do not impact phase one of the construction project on sites 1, 2, 5 and 6. When the first four buildings open next year, more than half of the apartments planned in Essex Crossing will have been delivered, including 311 affordable units.  But the second and third phases of the project will be impacted. Here’s an overview from Henderson’s presentation last night and from an interview with The Lo-Down earlier in the week.

Site 3, located at Delancey and Norfolk streets, was originally planned as a rental building split evenly between market rate and affordable apartments (98 total residential units). Now that project will be 100% market rate condos.

Site 8 (where one of the Essex Street Market buildings now sits) was intended as an 80/20 condo project, including 19 market rate and 5 affordable apartments. It will now consist of 92 studio apartments for low-income seniors.  As senior housing, it’s available for a zoning increase of about 10,000 square feet.

Site 9 (the current home of the Essex Street Market) was meant to be another 80/20 condo building. The developers are now hoping to make it a mixed-income rental project with half of the units designated as affordable. The plan assumes that a version of the 421-a program will be enacted in time to utilize tax incentives on this site. [The Essex Street Market, by the way, is moving to a new building within Essex Crossing and the current facility will remain open until the move occurs.]

Site 10, formerly an 80/20 condo building, is now being refashioned as a market-rate condo project.  A health care clinic has a lease on this parcel until the year 2021, so construction is not expected to begin for a few years.

Rendering: Essex Crossing. ShoP Architects.

Rendering: Essex Crossing. ShoP Architects.

In total, the changes mean there will now be 1.078 apartments in Essex Crossing, as opposed to 1,000. There will be an increase in low-and middle-income units of 61, making the project 52% affordable. The developers are adding 17 additional market-rate apartments.

One goal in revising the housing plan is to add more affordable units for very low-income households. In the new configuration, some apartments are set aside for families earning as little as 30% of Area Median Income (AMI). The city’s Department of Housing Preservation and Development encouraged the developers the add new income bands, which were not part of the initial Seward Park plan. Under the new plan, 343 apartments will be available to people earning 60% of AMI or below.

One downside in the revised plan is that 20 affordable condo units are being sacrificed. When a new version of 421-a is enacted, it is not expected to include a home ownership program. “Without a tax abatement,” said Henderson, “it’s virtually impossible to do affordable home ownership.” Delancey Street Associates is making up for this loss by creating a larger number of affordable units and by doubling the number of senior units in the project.  The developers are relying on new tax breaks for the senior housing not impacted by the expiration of 421-a.

[In a related conversation last night, board members expressed serious concerns about the 421-a application for site 1, where 55 condo units are under construction. While 11 of those units are designated as permanently affordable, it has come to light that the tax abatement for those apartments will expire in 15 years. The unit owners will then be responsible for thousands of dollars each month in property taxes. We’ll have more about this situation in a separate story.]

When affordable housing lotteries begin in a few weeks, former tenants of the urban renewal area (displaced in 1967) will have priority status. But Henderson explained, “A lot of people are really concerned that the former site tenants, who will receive a 25% preference in each of these projects, won’t have an opportunity to live in these projects.”

“Most of them are going to be senior and most of them are going to be very low-income,” he added.

During last night’s meeting another concern was raised. The changes are forcing the elimination of 30 affordable apartments for larger families. Board member Lisa Kaplan said, “I get, 100%, that there is a real need for very low-income senior apartments.” But she added, “I think a lot of the seniors who are former site tenants and a lot of seniors in our neighborhood live with extended families. And I think the need for affordable units is not restricted to studio apartments (for seniors). There’s an overwhelming need for affordable housing at every apartment size. I regret that we weren’t able to find a solution here that allowed for deeper subsidies.”

Henderson said he understood Kaplan’s concern, which she has apparently voiced repeatedly during private meetings of a Seward Park community task force. But he argued that it’s important to evaluate Essex Crossing as a whole. “If you look at the overall project,” he said, “there are apartments available for a range of incomes (from 40-155% of AMI)” He said 40% of Essex Crossing’s affordable apartments are larger units.

One issue that did not generate much conversation last night concerns the mixed-income makeup of Essex Crossing’s buildings. The community board’s original guidelines placed a high priority on income diversity. Plans called for an equal number of affordable and market rate apartments throughout the project and in each building. This priority has been maintained in most of the buildings. But sites 3 and 10 will now be purely market rate, while site 8 will be all affordable.

Under the new plan, Henderson pointed out, 3 out of 5 parcels in the second and third phases will not require 421-a (or whatever replaces it). Essex Crossing is still dependent, however, on the tax abatement program for site 4 (located at Delancey and Suffolk streets) and for site 9. Delancey Street Associates and city officials are in conversations about a contingency plan should Albany fail to act on a 421-a replacement.

Delancey Street Associates is a partnership among Taconic Investment Partners, L+M Development Partners and BFC Partners.