Bad Grandpa: The Ugly Forefather Of New York’s Affordable Housing Debacles

Bad Grandpa: The Ugly Forefather Of New York’s Affordable Housing Debacles

by Joe Sexton ProPublica, Jan. 26, 2016, 2:53 p.m.

“Twenty-five years ago, Battery Park City was little more than a barren riverside landfill and a dream. Today, its copper-roofed office towers, 25 upscale condominium and apartment buildings and finely manicured riverfront parks have become some of the most valuable real estate in New York City.”

“But one central ingredient in the formula devised and refined by a succession of New York governors and mayors is missing: the roughly 60,000 low- and moderate-income housing units promised either within Battery Park City or elsewhere in the city.

Thus began a 2001 article by Eric Lipton in The New York Times. It must come as no surprise to the reader that almost 15 years later, ProPublica detailed how New York City failed to police expensive tax subsidies it gave out to developers in exchange for limiting rent increases and including a modest number of affordable apartments in projects.

The plan, conceived in the mid- 1960’s by Gov. Nelson A. Rockefeller and Mayor John V. Lindsay, was to avoid building just a “Riviera on the Hudson” by using the money that this government-backed project would generate to benefit the city’s poor and middle class.

But while Battery Park City has flourished, generating tens of millions of dollars each year in revenues from leases and other sources, the low-cost housing plan has nearly disappeared, producing from 1,557 to 4,350 units of low- or moderate-cost housing in the last decade, depending on how it is counted.”

Lipton, who won a Pulitzer Prize last year for investigative reporting, went on to detail the array of explanations and excuses that accounted for the years of failure to make good on the full commitment to financing affordable housing: Neglect; confusion; the outright inability or refusal on the part of local and state government to hold themselves or the real estate developers they regulate true to their commitments.

We wrote to Lipton, now based in Washington, to share notes on our mutual journalistic interests.

ProPublica: How did you get on to the story?

Lipton: A former New York City official told me that he remained frustrated and angry that the city and state had never honored their commitments at Battery Park City. I checked it out, and he was right. But I wanted to learn why.

ProPublica: Broken promises on affordable housing can sometimes seem to reporters like unsexy stories. That said, there were many millions involved here. Were you in any way shocked?

Lipton: I was surprised that a commitment that had been so central to the birth of Battery Park City had been so completely ignored. It demonstrated how when no one is watching, governments often ignore past commitments made, waiting until the spotlight fades to go about spending money as they want, instead of how they had agreed.

It may help our readers, both in New York and beyond its borders, to understand a bit more about the birth of Battery Park City.

Back to Lipton’s article:

“The notion of replacing 20 rotting Hudson River piers with a virtual new city first surfaced in 1962, the same year architectural work on the adjacent World Trade Center began. Land dug up to make way for the twin towers was deposited along the Hudson shore, and on it would be built Battery Park City.

In a 1968 joint statement, Governor Rockefeller and Mayor Lindsay pledged that “the city would earmark funds it would normally receive from new commercial and luxury developments to underwrite land costs for new low- and middle-income housing.” By 1969, Mr. Lindsay reached an agreement with other city officials that two-thirds of the 15,000 apartments set to rise at Battery Park City would be for people with low or moderate incomes, which in today’s terms mean annual incomes up to about $45,000 for a family of four.

“With the climate of division coming out of the riots and civil rights struggle, this was the right thing to do,” Percy E. Sutton, the former Manhattan borough president, said in an interview last month. “If you are going to use public land and public money, you have an obligation to be sure that it is racially and economically integrated or at least benefits people of all classes.”

The construction of the 92-acre landfill was completed in 1976, when the city had slumped into a fiscal crisis, and the idea of developing Battery Park City as a mixed- income community was abandoned as quaintly utopian.

But after city finances stabilized and construction of housing and offices at Battery Park City had begun in the mid20131980’s, a new vision for Battery Park was embraced: allow an exclusive community to be developed, but use money generated by it to finance affordable housing elsewhere in the city.

The idea seemed particularly apt, for the city was facing a drastic cut in the federal government grants aimed at low- and moderate-income housing. And the state’s Mitchell-Lama program, which had created about 135,000 units of middle-income city housing since 1955, was no longer producing new units.

Battery Park City could never generate enough money to replace these programs. But Mr. Frucher, then the head of the Battery Park authority, suggested in a letter in October 1984 to Gov. Mario M. Cuomo that the authority’s surpluses should be used to finance what they could in the way of new housing and the rehabilitation of existing housing for low-income residents.

That concept ultimately translated into two separate agreements between the city and the authority. First, the state would issue bonds, to be paid off with Battery Park City revenues, that would provide a total of $400 million to renovate 24,000 units of low-cost housing. After that, Battery Park City would give the city an additional $600 million in direct payments for low-cost housing in other parts of the city. Under that formula, 60,000 such units were expected by the end of the 1990’s.

The agreement, signed by Mayor Edward I. Koch in December 1989, stated that the city should not use any of the $600 million in payments to substitute for city spending.”

Lipton tracked down the former head of the Battery Park City Authority, Meyer S. Fruchter. Fruchter had been a true believer in the promise to build meaningful amounts of housing for the financially disadvantaged. He had one response to how things had in fact played out.

“An abomination,” Fruchter said.

In 2001, Lipton was covering the final year of former Mayor Rudolph W. Giuliani’s second term. The Giuliani administration’s position was, perhaps predictably, defiant.

From the article:

But the Giuliani administration has not felt compelled to spend the money on housing programs, asserting that the commitment made years ago is neither legally binding nor fiscally smart. And Giuliani administration officials say former administrations felt and acted the same way.”

And:

“The only time the Giuliani administration has ever claimed to have invested the Battery Park City payments directly into housing construction involved the renovation of 2,471 apartments, largely in the South Bronx, an effort that had been paid for with city money and almost entirely completed during the Dinkins administration, according to city documents provided in response to Freedom of Information Act requests.”

And:

“If all you are talking about is money, I

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