State-controlled WTC Board overrides zoning rules to build larger tower

Sanctions 25 percent of units in the tower as affordable housing. Local activists call for 100 percent affordable, officials say it costs $900M.

July 20, 2022 Gabriel Poblete, THE CITY
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The state-controlled board in charge of the World Trade Center site on Tuesday approved an override of city zoning rules in order to build a tower bigger than local regulations allow, including a proposed 1,200 apartments.

But as it formally embarks on a public review process for 5WTC, the Lower Manhattan Development Corporation’s board of directors is sticking with an earlier commitment it made to set aside 25% of apartments as affordable — despite demands from local activists and candidates for Congress to make the project 100% affordable.

The state’s current plan for 5WTC would include units reserved for families earning between 40% and 80% of the area median income, or AMI, a federal affordable housing guideline. That means a three-person household earning between $48,040 and $96,080 could apply for future rental apartments in the Lower Manhattan tower.

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State officials at the hearing chilled the climate for the affordability activists by putting a price tag on the 100%-affordable proposal: more than $900 million in public subsidy, far higher than previous projections.

The LMDC, a subsidiary of the state agency Empire State Development Corporation (ESD), proposes to lease the 5WTC site — formerly home to the Deutsche Bank building — to Brookfield Properties and Silverstein Properties, for the construction of 1.345 million square feet of office, retail, housing and community space.

The development site is the last major piece of land in the World Trade Center area to be redeveloped since the Sept. 11 attacks. And 5WTC is the very last item of business for the LMDC, which will cease operations once the real estate deal is done, a representative said Tuesday.

The ESD directors must also approve the amendments, which are on their agenda for Thursday — along with a proposal to spur new towers ringing Penn Station in Midtown. Under the 1968 Urban Development Corporation Act, the state agency has the power to move ahead with projects like Penn and 5WTC without going through typical city reviews.

The 5 World Trade Center site in Lower Manhattan, July 14, 2021.
The 5WTC site is where the former Deutsche Bank Building once stood at 130 Liberty St. Photo: Ben Fractenberg/THE CITY

ESD representative Tobi Jaiyesimi said at Tuesday’s meeting that the 5WTC site is valued at $249 million and total development for the 900-foot tower would cost $1.2 billion.

She said that to make 40% of the housing affordable would require $415 million in tax subsidies, and more than $900 million for a 100% affordable project.

Locals and advocates, some still suffering from 9/11 health-related issues, have been pushing for the project at 130 Liberty St. to be completely affordable and for some of the units to be allocated to survivors of the attack and their families. Last fall, advocates formed the Coalition for a 100% Affordable 5WTC to push for the tower to be affordable.

The coalition has since gained attention from candidates running for Congress in the newly drawn 10th District, which includes the World Trade Center — including ex-prosecutor Daniel Goldman, Rep. Mondaire Jones (D-Westchester/Rockland) and Assemblymembers Yuh-Line Niou and Jo Anne Simon, Gothamist reported.

The next representative of the 10th District could push for a larger federal subsidy toward the project, which could result in a larger share of affordable housing units.

”I think everybody knows this is wrong,” Todd Fine, one of the coalition’s committee members, told THE CITY of the 25% affordable housing commitment. “It’s just a question of whether the governor will have the moxie, the courage, to do the right thing.”

A spokesperson for Gov. Kathy Hochul said in a statement to THE CITY that the governor “is committed to continuing to take bold action to protect tenants and help solve the housing affordability crisis – not just in one neighborhood or one building, but across the state, and we are monitoring the development of this project in that context.”

The 300 subsidized units at 5WTC would significantly boost affordable housing construction in the neighborhood, where just 149 units of income-restricted housing have been built since 2014, according to a map from the city’s housing agency that tracks the production of affordable housing.

‘Nobody Wants Luxury Housing on Public Land’

LMDC purchased Site 5, the former location of the Deutsche Bank Building, with HUD funds back in 2004, taking on the demolition that lasted a decade, led to the death of two firefighters and cost $160 million.

Since then, LMDC and the Port Authority of New York and New Jersey came to an agreement in which the PANYNJ provided parcels at the center of the World Trade Center campus, including the original towers’ footprints, to the 9/11 Memorial & Museum and Performing Arts Center in exchange for 5WTC and adjacent parcels. After the site is built out, most of the revenue from the property will go to the Port Authority.

ESD will pay rent to the Authority, $1.345 million annually during construction and a minimum of $12.5 million a year after that. Excess revenue will be shared, with 75% going to ESD and the remainder going to Port Authority.

The affordable housing coalition has argued that because it’s public land — especially in a desirable location where there is virtually no real estate up for grabs — the state should prioritize a full-on affordable project.

”We don’t believe this agreement is appropriate. We believe there should still be contemplation about this project,” Fine said. ”Nobody wants luxury housing on public land.”

Mariama James, a member of the coalition steering committee, said that since the 9/11 attacks, the area has only gotten more inaccessible for working-class New Yorkers and people of color, saying that “75% luxury means more rich and more white.”

Sept 11 survivor and lower Manhattan resident Mariama James spoke about a lack of affordable housing around the World Trade Center, July 14, 2021.
Mariama James is a member of a coalition of New Yorkers who have pushed for more affordable housing at 5WTC. Photo: Ben Fractenberg/THE CITY

She said a Pratt Institute professor is conducting a feasibility study on the possibility of fully affordable 5WTC, funded by a grant from ​​the New York Community Trust.

Building a project with a larger share of affordable housing without more public subsidies could be a nonstarter for developers. The current affordable housing allocation offered at 5WTC is similar to the city’s mandatory inclusionary housing program, which requires between 20% and 30% of a new development’s units to be restricted to households earning certain incomes.

The developers told the New York Times last October that to pull off a 100% affordable building would require an additional $500 million in government subsidy, saying that with that money about four times as many affordable units could be built in a less expensive market.

At a Manhattan Community Board 1 Land Use Committee meeting last week and again at Tuesday’s LMDC meeting, Jaiyesimi of ESD said that the affordable housing commitment could still increase in the coming months as the state agency embarks on a public hearing in the fall followed by a 30-day public comment period.

“It’s important to reiterate that this action is the start of the process for the proposed project, which provides a minimum of 25% affordable units, but does not preclude increasing the affordability threshold at the project,” she said at Tuesday’s meeting.

James countered that Tuesday’s zoning override and other approvals amount to a working agreement between the developers and LMDC, making it harder for an alternative option to be truly considered.

”Yes, it says there is room for affordability to be increased, but it also says they’re entering into an agreement with the developer, so you’re limiting,” she said.

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