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John Petro

No More Promises

Eager to gain the support of the local community and under pressure from local elected officials, the developer of the massive New Domino development on the Williamsburg waterfront agreed to a number of provisions, including the construction of 660 below market-rate apartments and a shuttle bus to nearby subway stations, to ensure the project's approval by the New York City Council.

The agreement made by CPC Resources, the developer of the New Domino project, was considered a great success for the community. The developer upped the percentage of affordable units from 20 percent to 30 percent, a new high water mark for private housing developments.

The provision of community benefits from new developments is an increasingly common practice in New York and in cities across the country. When a developer proposes a new project, especially if the project requires any action on the part of the city council like a zoning change, they often enter into negotiations with community organizations and agree to provide a number of community benefits. In exchange, the developer receives the support needed to move the project forward.

But these provisions are often not enforceable by law; they are simply agreements made between the developer and the community. As the Post reports today, the New Domino developer, CPC Resources, will not be legally bound to the affordable housing targets that were promised during negotiations.

In fact, the Memorandum of Understanding signed by the developer that promises the affordable units specifically states, "This MOU is not a legally binding instrument and is only intended to set forth the understandings of the parties without creating any legally enforceable rights or obligations."

The MOU also makes it clear that the developer expects public subsidies in order to construct the affordable housing. Otherwise, only 20 percent of the units will be required to be affordable, not 30 percent. In exchange for including 20 percent affordable units, the developer will receive 25-year property tax abatements under the city's 421-a program (see page 5 of this PDF).

This isn't a case of a developer trying to pull a fast one on community residents. Rather, this is the status quo of development in New York City.

There is every indication that CPC Resources intends to live up to its side of the bargain, but these developments make clear that the city must have a formal process to meet community needs when new development impacts neighborhood residents.

Right now, if a new development is approved in a neighborhood, there is no mechanism to ensure that new classrooms, mass transit options, or affordable housing will also be built to mitigate the impact of the new development. Without these assurances, it is little wonder that neighborhood opposition arises against even the best project proposals.

But we can do better. Other cities link new development to new infrastructure through "development impact fees" that go to construct schools, green space, transportation, and affordable housing. These fees are designed to ensure that projects remain profitable for developers. In San Francisco, for example, the city studied the cost of construction for residential buildings and determined exactly how much the market could bear in terms of development fees.

These fees set clear expectations for developers and community residents and eliminate the uncertainty that plagues so many developments in New York City. This uncertainly costs developers a money and time--CPC Resources has spent three million dollars on lobbying to build support for the project, and any more delay is certain to cost the developer much more.

City Comptroller has assembled a commission to study the issue of community benefits agreements and is set to release its recommendations in the fall. Hopefully the commission will look closely at establishing clear, uniform standards for new developments that address community concerns and eliminate uncertainty for developers. Without legally enforceable standards, all we have is a promise.

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Posted at 9:32 AM, Jul 28, 2010 in Urban Affairs
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