Bruce Ratner’s sweetheart deal got a cherry on top last week after a state lawmaker slipped in a last-minute amendment to a housing reform bill that will shave $175 million off the developer’s costs.
The so-called “Ratner carve-out” was slipped into a tax-break bill passed by the Assembly last Friday, in the rush to close the legislative session. The amendment didn’t mention Ratner’s development by name, but referred to it as a “multi-phase project that includes at least 2,500 dwelling units and is being implemented pursuant to a General Project Plan” — a description that fits only one development in the state: Atlantic Yards.
Minutes after the exemption passed, housing advocates — and even some lawmakers who had just voted on it — condemned such a blatant handout to Ratner.
“I cannot support a bill that [treats] the Atlantic Yards project in a more favorable way than any other development,” said Hakeem Jeffries (D–Prospect Heights), who has asked Gov. Spitzer to veto the bill, which is expected to pass the state Senate next month.
The “Ratner carve-out” under fire is a small, but significant, piece of a long-planned reform of a tax incentive that allowed builders in posh neighborhoods to receive 25-year tax breaks on new residential construction without including any affordable units.
The reform bill would require subsidy-seeking developers to set aside 20 percent of a building’s units as affordable for lower-income tenants.
Developers except Ratner, that is.
The Ratner exemption, slipped into the otherwise reform-minded bill by Assemblyman Vito Lopez (D–Bushwick), would allow Ratner to receive the tax break for all 16 of his Frank Gehry–designed buildings — even the ones that include no affordable housing.
The bonus will cost city taxpayers an estimated $175 million in property tax payments on the 6,430-unit project over the next 25 years.
Even allies of the controversial project were enraged by the tailored tax break.
Bertha Lewis of ACORN, who signed a contract with Ratner that bars her from speaking negatively about Atlantic Yards, told the Daily News that the “special carve-out” was “bad public policy.”
Assemblywoman Joan Millman said she was stunned at how a piece of legislation intended to curb the abuse of an outdated development incentive was actually tailored to line the pockets of a single well-connected developer.
“We certainly didn’t [talk] about this because if we had, I would have said, ‘No way. This particular developer has gotten enough of a break,’” said Millman (D–Cobble Hill), referring to the project’s massive subsidy package of $305 million in direct city and state funding, $1.4 billion in low-interest loans and numerous other tax abatements.
Like Millman, Jeffries also voted against the bill, calling it a “poison pill” within the larger, positive reform effort.
Lopez, who has received thousands of dollars in campaign contributions from Ratner’s brother and sister-in-law, did not return numerous phone calls and requests for interviews. He has said that the legislation was the result of compromise between Ratner and lawmakers.
Ratner has been lobbying the legislature for several years, state records show, and has, in fact, been banking on the exemption.
A consultant report commissioned by the developer last year showed that Ratner’s cash flow projections assumed the state would grant him the 25-year tax break on all 16 Yards towers.
The “carve out” will also allow Ratner’s project to charge more for his “affordable” units than other developers who receive the tax credit.
Under the general rule, builders must make the subsidized units affordable to people who earn 60 percent of the city’s area median income of $70,000 for a family of four. But Ratner’s subsidized units will be open to people earning 70 percent or more of the area median income.
Lopez told the Daily News that the developer had asked the Assembly to set the income requirement even higher, but was denied that perk. Lopez’s motivations for slipping in the Ratner-favoring clause are unclear. One source said that the Brooklyn Democratic Party boss might have done it as a favor to Assembly Speaker Shelly Silver. “Silver and [Forest City Ratner lobbyist] Bruce Bender are old friends,” said the source.
Critics said the amendment represents an egregious act of favoritism.
“The taxpayers of New York are giving up more than $175 million in exchange for no additional affordability and no additional public benefit,” said Brad Lander, director of the Pratt Center for Community Development and a member of Mayor Bloomberg’s 421-a reform task force.
That task force helped craft a reform proposal that paved the way for the Assembly bill. But the city bill didn’t give any special treatment to Ratner.
In light of the new state windfall for Ratner, Councilman David Yassky (D–Brooklyn Heights) says he will now demand that Mayor Bloomberg void a separate $205-million city subsidy promised to the project.
“There is no justification for padding out a private company’s bottom line,” said Yassky.
The developer offered a “no comment” for this story. A spokesman for Spitzer said the governor wouldn’t comment on the legislation until it gets to his desk — which would happen after the state Senate’s expected passage of it next month.
With others calling for Spitzer to step in, Borough President Markowitz — the project’s highest-profile booster — refused to comment on the Ratner exemption, saying only that he is “studying the legislation to see the implication on affordable housing in Brooklyn,” said his spokeswoman, Laura Sinagra.
A state Assembly bill sought to expand a requirement that developers build affordable housing in order to receive a tax break called “421–a.” At the last minute, Assemblyman Vito Lopez (D– Bushwick) added an amendment that created an exemption specifically for Atlantic Yards. The exemption allows Ratner to get the tax break on buildings that don’t include affordable housing.
Why did Lopez do this?
Only Lopez knows for sure, and he isn’t talking.
Ratner. Governmental watchdogs say the break will save him an estimated $175 million in property taxes.
Who got played?
Taxpayers, who lose $175 million in revenue.
What’s the big deal?
It comes on top of the $305 million in direct subsidies that the city and state have already allocated to the supposedly privately built project. Ratner is also receiving close to $1.4-billion in low-interest loans, plus hundreds of millions more in indirect subsidies.