City’s Affordable Housing Program Faces Trouble Finding Buyers
The New York Times
By Cara Buckley
18 February 2010
For all the booms and busts he has lived through, Vincent Riso
never thought it would come to this: Offering free 42-inch, flat-screen
televisions to lure buyers into government-subsidized homes.
Historically, such homes have sold quickly. But not at Waters Edge at
Arverne, a stretch of 130 town house condominiums Mr. Riso’s company,
the Briarwood Organization, built between Far Rockaway’s boardwalk and
the A train’s rust-streaked overpass in Queens.
So last spring, Briarwood, which got $12.8 million in city and state
subsidies for Waters Edge, began throwing in as much as seven months’
free maintenance on some units, along with the TV. Still, as of
mid-February, roughly three years after the units began arriving on the
market, 22 of them had yet to sell.
The city has received accolades nationwide for its efforts to provide
housing affordable to middle- and lower-income households. Mayor
Michael R. Bloomberg has pledged to build, save or restore 165,000 such
housing units by 2014. But while the city is still filling up
low-income rentals, the housing program is struggling on the ownership
Sales are sluggish at some projects, particularly ones in poorer
neighborhoods aimed at middle-income buyers. Few units will be built
any time soon: since July 2008, the city has made only two deals with
developers for new home ownership projects, down from two dozen deals
in the 12 months before that.
Last summer, Mr. Bloomberg and the City Council speaker, Christine C.
Quinn, unveiled the city’s Housing Asset Renewal Program, or HARP,
setting aside $20 million for developers who agreed to drop the prices
of unsold market-rate condos. But the program drew far fewer
applications than the city had expected — just five by the Dec. 31
cutoff — so the deadline was extended.
City housing officials and developers said the reasons for the slowdown
were clear. Financing for new buildings has dried up. The HARP program
has yet to catch on because developers and lenders were unwilling to
cut into profits they were expecting to make. Would-be homebuyers
remained hesitant to make the leap, and, crucially, mortgages were
harder to get.
Developers of higher-priced affordable housing were especially hurt by
the housing crash, which caused price differences between their units
and market-rate homes to narrow. In addition, market-rate homes do not
have the resale restrictions that the affordable homes often have.
Rafael E. Cestero, the city’s housing commissioner, said that during
the housing boom, when financing for many projects was lined up,
higher-priced units like those at Waters Edge “were deeply affordable”
compared with what was then on the market. “We had no idea what was
going to happen,” he said.
Denise Scott, managing director for New York’s Local Initiatives
Support Corporation, said her agency’s nonprofit partners were
struggling to sell 95 refurbished houses and condos in
Bedford-Stuyvesant in Brooklyn, Jamaica in Queens, and Morrisania in
the Bronx, all city subsidized and costing $250,000 to $350,000. Some
have been sitting on the market for 18 months, she said, even though
their prices were cut from 15 percent to 30 percent.
Ms. Scott said that demand was down but that the biggest impediment was banks’ unwillingness to issue mortgages.
Samuel G. Gaccione, executive vice president for the TNS Development
Group, said his group planned upgrades at the Shelton, a subsidized
building under construction in Bedford-Stuyvesant — granite
countertops, stainless-steel appliances, hardwood floors — to prepare
for a bad market and buyer trepidation.
But the fact that some homes are standing vacant in struggling
neighborhoods has caused some to question the wisdom of putting them
there in the first place. Waters Edge occupies the highest strata of
what the city defined as affordable: Three-bedroom units are going for
up to $344,000 in a neighborhood where the median income is $45,221,
according to census data.
Javier Valdés, deputy director of the community advocacy group Make the
Road New York, based in Bushwick, Brooklyn, said the city should change
how it calculated affordable income limits. Generally, people eligible
for low-income subsidized units can earn up to 80 percent of what is
known as the region’s “area median income,” which in 2009 was $76,800.
Moderate-income housing is open to people earning from 80 percent to
120 percent, and middle-income housing is open to people earning 120
percent to 175 percent.
But those income figures are based on a broad region that includes Long
Island and Putnam, Rockland and Westchester Counties. Mr. Valdés said
affordability should be determined by neighborhood. In Bushwick, the
median income is $32,328, according to census figures.
“We understand the difficulty and the balancing act the city has to
play, to provide affordable housing to middle and lower income,” Mr.
Valdés said. “But if condos are sitting unsold, we do want them given
to people who are from the community.”
Mr. Cestero, the housing commissioner, said the city had long worked to
create economically diverse neighborhoods and could not have
anticipated the housing bust. He said only a few hundred homes remained
unsold and noted that the foreclosure rate among city-subsidized homes
was just 0.06 percent. “I don’t look back and think our strategy was
wrong,” he said. “I think our strategy was exactly right.”
Units at Waters
Edge, city-subsidized condominiums in Arverne, Queens, have sold much
more slowly than expected. Credit Michael Nagle for The New York Times
Some projects are doing well, especially lower-priced ones. At the
Solara, which Briarwood put up in the South Bronx, 151 of the 160 units
are under contract, after a year and a half on the market. Prices there
range from $108,815 for a one-bedroom apartment to $202,217 for a
Seeing this trend, one development switched midstream. The Atlantic
Terrace, an 80-unit building in Fort Greene, Brooklyn, built by the
Fifth Avenue Committee, a community development group, was originally
going to sell 59 units to families earning up to 165 percent of the
area median income.
After the market collapsed, the group lined up an additional $2 million
in subsidies to make the homes affordable to people earning far less.
The lottery for the units drew 4,881 applicants.
“We read the tea leaves,” said Michelle de la Uz, the group’s executive director.
Despite the troubles, the city said that it was nearing the 100,000
mark in the number of affordable units created or preserved and that it
was having little difficulty creating and filling rentals, which tend
to be aimed at lower-income families and constitute two-thirds of the
Given the market, Mr. Cestero said, the city plans to concentrate on preservation and building mixed-income rentals.
In Arverne, Mr. Riso said he was almost certain that the last 22 condos at Waters Edge would sell by summer.
On a recent day, with an Arctic wind whipping off the Atlantic, a rare
sight came into view: a new buyer. Ronald Fields, 46, his wife, Naomi,
and their 4-year-old son, Taiga, dropped by to see the three-bedroom
home they were expecting to close on this month.
Mr. Fields, who works at the cable channel truTV, could not quite
believe he was about to become a homeowner, after saving for a down
payment for many years.
“Two blocks from the beach, a new development, you can’t beat it!” Mr. Fields said.
And, he added, he was looking forward to that free TV.
Owners of affordable Rockaway condos sue developer, architect for $210M
The Real Deal
23 September 2016
Owners of condominium units at a Rockaway apartment building are suing
developer Briarwood Organization and AIA Architects for a combined $210
million over alleged construction defects.
Water’s Edge in Arverne, completed in 2009, is a city-financed condo
development for low- and middle-income households. Residents allege
that shoddy construction left them with water damage, leaks and $10
million in repair costs. They also claim that boilers were improperly
installed, leaving some rooms cold.
“We want housing that is done with proper construction practices and
meets the goals of New York City — that is what was promised to us,”
condo board president Leonard Yarde told Crain’s. “But we were sold a
product that is defective.”
The complex is made up of 65 two-story buildings, with a condo on each
floor. Average prices range from $188,000 to $300,000. Lawyer Adam
Leitman Bailey is representing the condo board.
The plaintiffs are seeking $150 million from the developer and $60 million from the architect.
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