By Julie Shapiro
Facing a dire budget season, the state and city agreed this week to dip into a Battery Park City fund once intended for affordable housing.
Under the deal, announced Monday, the state and city will each take $200 million from the B.P.C. fund to fill their budget gaps. The city will also borrow an additional $200 million to build and preserve affordable housing and will eventually use another $200 million from the fund for general capital projects.
Any use of the B.P.C. money requires the signoff of Mayor Bloomberg, City Comptroller John Liu and the Battery Park City Authority board. Gov. Paterson negotiated the agreement with Bloomberg and Liu, and Monday morning the authority board unanimously approved it.
Bill Thompson, the former city comptroller and new chairperson of the authority board, advocated for the agreement on Monday.
“The intent of this money going to affordable housing is still met,” Thompson said shortly after he was unanimously elected chairperson.
As comptroller, Thompson opposed Paterson’s grab for the B.P.C. funds, saying “Keep your hands off this money” at a rally last year. On Monday, Thompson said that if he were still the city comptroller, “This would have been a tough thing to say yes to.”
However, in his new role as the authority chairperson, Thompson said he was glad to see that the city and state reached an agreement to unlock the B.P.C. money, since the city and state’s budget situations have worsened since last year.
“It’s an extraordinary time, where both [the city and the state] are under great stress,” Thompson said during Monday’s meeting. Thompson, who was appointed by Paterson, lost the mayor’s race to Mike Bloomberg last year, and his decision to endorse the deal will help the mayor close the city deficit.
The deal covers a total of $861 million in B.P.C. money, which will take 15 to 20 years to accumulate. By this fall, the fund will have over $400 million, and that is the money that the state and city will split for their budgets. After that, the authority estimates that the fund will accrue $20 million to $30 million a year, based on the ground rents all neighborhood property owners pay.
A second part of the deal is that the city will borrow $200 million to build affordable housing in the five boroughs. The B.P.C. fund will then be used to pay back that $200 million and the accompanying $61 million in interest, the authority said. In addition, the city will match the $200 million in B.P.C. money, dedicating a total of $400 million to affordable housing between now and 2017, according to the deal.
Finally, once the affordable housing has been paid off, the city will use the next $200 million that accumulates for capital projects.
Liu released a statement to Downtown Express saying he approved the deal because it included “a fiscally responsible and airtight mechanism” for building affordable housing. Spokespersons for Paterson and Bloomberg did not respond to requests for comment.
One B.P.C.A. board member, Robert Mueller, expressed reservations about the deal before the vote, though he ultimately supported it.
“Deep down inside, I think this is not a good decision,” said Mueller, who lives in Battery Park City.
The $400 million that is going to fill state and city budget gaps could build 7,000 or more units of affordable housing instead, Mueller said. In addition to creating much-needed affordable units, the construction would provide hundreds of jobs to New Yorkers, he said. Mueller also disapproved of the $61 million that the city will have to pay in interest in order to borrow the $200 million for affordable housing.
Thompson told Downtown Express after the B.P.C. meeting that he was glad the B.P.C. fund would cover the $61 million for debt service, because he would not want the city to be burdened with it in the future.
The $400 million in total that will go toward affordable housing will be focused on areas of the city that are below the poverty line. At least 25 percent of the funding has to go toward preserving existing affordable units, according to the authority. The city plans to start spending the money this year.
David Muchnick, coordinator for Housing First!, a statewide advocacy group, said he was glad the governor, mayor and comptroller found a way to unlock the money for affordable housing, even though a large chunk was diverted to fill budget gaps. Muchnick said the city would need hundreds of thousands more units of affordable housing in the next 20 years, beyond what the current allocation will build.
“This is an important short-term commitment,” Muchnick said, “but in the longer term we need to commit significantly more capital, both for affordable housing and the jobs [its construction] creates. This does not signal the end of the problem by any means.”
Julie@DowntownExpress.com
