How is NYC Dealing With Affordable Housing Issues? It's Complicated

Crain's New York Business picture: David Junkin

Housing in New York City has been a problem for too many years. No plan has been able to bring about the changes needed.

As Matthew Flamm writes in his article below,

"The city has stumbled between rampant growth and well-intended regulation one century after the other—without ever quite succeeding in giving communities a sense of control over their destiny.

The city’s most contentious affordable housing program could be getting a makeover

by Natalie Sachmechi, Crain's New York Business, January 27, 2022

The controversial 421-a program, which uses tax abatements to entice developers to construct affordable housing, will die in its current form June 15. What comes next is very much up for debate.

An outline of a proposed revamp of the program was released earlier this month as part of the state budget proposal. The retooled program would be similar to the current version but ​​eliminate eligibility for higher earners, permanently subject all affordable units to rent stabilization and extend the length of tax benefits for co-ops and condos, among other changes.

The real estate community overall has expressed pleasure that Gov. Kathy Hochul appears committed to replacing the expiring program. Developers maintain that if they don’t have a sufficient financial incentive to construct below-market-rate units, they won’t build them. Still others hope the program will be disbanded altogether and won’t be renewed in any form.

History lesson

When the 421-a tax-incentive program was created in 1971, its purpose was to promote the production of housing. Since then it has been amended several times to mandate that builders include affordable housing units in developments in order to qualify for a rebate.
The tax break ceased for 11 months in 2016, when city and state officials couldn’t agree on its implementation, but a deal between unions, developers and then-Gov. Andrew Cuomo revived it. It was officially renewed in 2017.

The latest rollout of the program has sparked the creation of 9,071 affordable units in the city, according to data from the Department of Housing Preservation and Development. Since 2010 nearly half of all residential units built in the city were created via the program.

But if all the buildings receiving 421-a exemptions in fiscal year 2021 had paid taxes at a non-incentivized rate, the city could have collected $1.7 billion in additional revenue, City Comptroller Brad Lander has said.

Developers across the board have stressed the need to continue some type of affordable housing tax break—whether Hochul’s version or a different one—arguing that without one, there will be fewer affordable housing projects and higher rents.

“Y​ou can’t have it both ways. If we paid full taxes, you’d have developers need to—or be tempted to—bump up rents to help offset that tax,” said Aaron Koffman, managing principal at Hudson Cos.

Another often-cited issue with the 421-a program as it stands now is the income-eligibility level. Companies can include units that are affordable for households earning as much as 130% of the area median income—which is $155,090 for a family of four—under the current program.
At the Astor LIC, a rental building in Long Island City where a portion of the units are affordable at 130% of the AMI, the monthly rent for a two-bedroom apartment is $3,100. At 111 Varick in Tribeca, the building offered ​​three one-bedrooms with a monthly rent of $2,689 for incomes at 130% of the AMI.

“Everyone knows that is not affordable housing,” Lander said.

Under Hochul’s proposal, rental apartments must be affordable for families earning between 40% and 90% of the area median income. She’s also calling for buildings with 30 or more units to keep their affordable apartments permanently affordable, rather than for just the 35-year period they’re required to maintain now.

The path forward

Eli Weiss, principal at Joy Construction, said Hochul’s proposed changes to the program were good news, as amending 421-a seemed to be a much better solution than letting it expire entirely.
“I think, given the overall difficulty of [the city] right now, not making any major changes to policies that could inhibit housing production is an intelligent move,” he said.

Lander, however, suggests eliminating the program and instead focusing on reducing the tax disparity between condominiums and apartment buildings to encourage developers to build rental housing.

“One problem is that our current tax code gives new condos much more favorable tax treatment than new rentals,” he said. “As a result, if you’re a rental developer, it’s harder to be competitive and buy property for development.”

The city has an array of affordable housing programs that offer tax breaks, subsidies and capital, he added, and those are the programs that provide rents at $700, $800 and $1,100 per month.

Judith Goldiner, who heads the Legal Aid Society’s civil law reform unit, said she also would prefer to see 421-a expire altogether, in part because the program is more beneficial to people selling vacant land than to people who need an affordable place to live.

“We have tried and tried and tried to modify it, to change it, to do different things to make it better, and all of those efforts, frankly, have failed,” Goldiner said. “We don’t see a way around just eliminating the program and using the money that you save to create truly affordable housing.”

Failure to plan: New York is alone among major cities in lacking a comprehensive housing strategy

New York lacks a comprehensive development strategy that requires shared sacrifice for community benefit. Having one could help ease a crisis-level shortage of affordable housing.

by Matthew Flamm, Crain's New York Business

Michele Varian, a designer married to a musician, has run her home-goods business out of the couple's rent-stabilized SoHo loft through two decades of gentrification. She has her share of horror stories, starting in 2013 after she and her husband refused buyout offers from a new landlord.

There were the weekends without heat during a record-cold winter and the time a worker in a hazmat suit popped through the couple's rickety living room floor while doing asbestos abatement below them.

Those low points coincided with the building's transformation into luxury housing—with units priced at $12,000 per month—from lofts filled with artists. Varian and her husband, alt-rock songwriter Brad Roberts, are the building's last rent-stabilized tenants and pay in the range of $3,000.

Now Varian has new worries. In the long tradition of New York development battles, she and other SoHo residents spent the past year in a failed effort to block zoning changes they say threaten the historic character of their neighborhood and the future of their homes. They believe the rezoning could lead to redevelopment that eliminates existing rent-stabilized housing.

The local community board joined the fight along with preservationists, neighborhood coalitions, tenant advocacy organizations, the Sierra Club and good-government groups including the Municipal Art Society. There were echoes of the early 1960s, when urban activist Jane Jacobs stopped a plan by Robert Moses, the so-called Master Builder, to run a new Lower Manhattan Expressway through SoHo and Washington Square Park.

The fight left bitter feelings, but they too are in the New York tradition, dating at least to the Civil War. The city has stumbled between rampant growth and well-intended regulation one century after the other—without ever quite succeeding in giving communities a sense of control over their destiny.

Headmaster of St. Bernard's School in NYC Fired, Parents File Class Action Lawsuit

St. Bernard’s boys’ school, where a headmaster’s removal caused backlash from parents.

Credit...Brittainy Newman/The New York Times

The Manhattan Private School That Tore Itself Apart

St. Bernard’s, the renowned boys’ school, removed its beloved headmaster — and a war between very wealthy parents erupted.

By Ginia Bellafante, NY TIMES, 

• Published March 13, 2020

  
  

Six days before Christmas, the headmaster of St. Bernard’s, the 116-year-old boys’ school on the Upper East Side, sent a letter to parents announcing that he would retire in the spring of 2021. For an institution profoundly rooted in its own traditions and protocols and rarely trafficking in the unexpected, the news had a jolting effect.

“After 40 years here,” he wrote, “I’d like to try something different. (Suggestions welcome.)”

It was those last two words that struck many parents — who at St. Bernard’s belong roughly to the demographic subsets of the have mores and the have everythings — as cryptic. Headmaster Stuart Johnson III was known as a man of purpose and passion, and if he were leaving on his own volition, the thinking went, he would have a plan — to study Virgil, to recreate Regency gardens.

Parents and alumni (who are in many cases the same people) quickly surmised that the decision to leave was not entirely the headmaster’s own, and this made them very angry. Mr. Johnson stood for something beyond the ruthless pursuit of scores, metrics and marketable achievements. He stood for the intrinsic value of erudition. What would happen if he were gone?

As the universe spun ever more furiously, St. Bernard’s under his guidance had kept to its own metabolism. While schools around the country were conforming to new ideologies and evolving ideas about class and gender, for example, St. Bernard’s remained steeped in mandatory Latin and French, blue blazers and penmanship — not Mandarin and coding and self-reflection. This was the territory it had staked among the incubators of the meritocracy, the many schools in which a child could be educated in New York for the approximate sum of $50,000 a year.

This, too, was why so many parents had selected St. Bernard’s for their boys. So often it seemed like the last refuge from our crass technocracy, from the deadening ambition that had come to characterize a certain kind of Manhattan life, spent in front of Bloomberg terminals and animated largely by a series of upgraded real estate acquisitions.

From a particular light, it was not just the future of a school that appeared to be in jeopardy; it was a means of approaching the world that had all but vanished. The executive committee of the school’s board of trustees seemed to have a vision for St. Bernard’s that did not include Mr. Johnson, and perhaps, someday, parents feared, might not include the principles he embodied.

That committee was made up of hedge-fund and private-equity types, who many parents felt were treating a precious institution like a distressed asset — something to be overhauled and mined for greater value.

The exceedingly well-off have long left an outsize imprint on the city, but during the past two decades, New York has been even more aggressively reshaped in their image. By now, the merely wealthy were long weary of the vanities and self-certainty of the very rich, and if the narrative that was playing out at St. Bernard’s seemed provincial, it spoke to broader frustrations with entitlement shared even among the immensely privileged. You came to St. Bernard’s for what it was, not for what you decided it ought to be.

For so long, the school had managed to inoculate itself from some of the more distasteful aspects of Wall Street culture. Wasn’t it worth going to war in the name of preservation?

Since its early days, St. Bernard’s set out to produce a singular kind of man — one both successful and surpassingly learned, a supplicant to rigor and good will. Traditionally, St. Bernard’s, which goes through ninth grade, has been a first step on the path to the best boarding and day schools, to the Ivy League and then, as surely as sunset, to the most venerable investment houses, law firms, cultural institutions, public-sector work.

“Old Boys,” as the school’s alumni are called — not half-jokingly but as a matter of institutional vernacular — are reciters of poetry; they are givers of toasts and eulogies that are remembered — tomorrow, 20 years from now — for their eloquence and self-effacement. By the time a child graduates from St. Bernard’s, the school’s literature informs, “he will have practiced the skill of a good handshake several hundred times.”

After the news of Mr. Johnson’s departure settled in, emails and petitions began circulating in his name as a group of parents coalesced around the goal of extending his tenure — or at the very least, holding the board accountable for its lack of transparency. Mr. Johnson remained in the background; he had signed a nondisclosure agreement. (And, as a result, he did not respond to my efforts to reach him.)

“I am deeply troubled by what I am hearing about Stuart Johnson’s dismissal,’’ wrote one parent who identified herself as a graduate of Yale Law School. Her letter typified a prevailing mood.

She had addressed it to the board’s president, Craig Huff, one of the chief executives of Reservoir Capital Management. She chose St. Bernard’s for its “old fashioned values,” she wrote, for “the teachers’ ability to refuse smart boards, the classic books, the poetry, the Bible stories, the hymns and prayers (and I am an agnostic).”

The board of trustees tried to address the worries of the aggrieved with a listening tour, gathering together groups of parents. At one such meeting, the hostess, Margo Nederlander, of the theatrical dynasty, began to cry as she talked about how much she used to love walking into St. Bernard’s and how upsetting it was now.

The session, which was recorded with the permission of those in the room, revealed how ill-equipped the three board members present were to handle the emotion and anger directed at them.

Parents argued that the board could not be trusted. In fact, the board ought to be replaced with members from a universe beyond elite finance; it needed more educators, more diversity of profession and viewpoint. The trustee in charge of the school’s strategic planning — the individual tasked with helping to develop St. Bernard’s vision — was a broker of Park Avenue co-ops.

One mother wondered why members of the board, realizing how upset so many parents were, hadn’t simply resigned. “Leave,’’ she advised.

Things got personal. Intellectual snobberies were revealed. One parent who supported Mr. Johnson confronted another who did not: “Are you fluent in Latin? What is your favorite Shakespearean sonnet? Who is your favorite Pre-Raphaelite artist?” The parent on the receiving end of this interrogation shrugged in response.

To manage the fallout, the board hired a strategic communications firm, and this in turn spurred further rancor. “Should we really have a board that is working on damage control rather than responding to the broad and profound discontent with its decision?’’ the writer Andrew Solomon, a St. Bernard’s parent, wrote in a letter to the community last month. Should tuition money, he wondered, be subverted to pay for public relations?

This being the context of New York City private schools, those opposing the power structure were hardly pulled from the ranks of the meek and the marginal. In addition to Mr. Solomon, the group of outraged parents included Philip Bobbit, the legal scholar, presidential adviser and nephew of Lyndon B. Johnson. Scott Bessent, one of the most prominent investors on Wall Street, called for parents to cease making charitable gifts to the school until Mr. Johnson was reinstated.

A compromise proposal was born at a meeting brokered by a former St. Bernard’s parent, Mary Jo White, the former United States Attorney for the Southern District of New York, who also served as chairman of the Securities and Exchange Commission.

Part of the compromise would allow the school to review its approach to math and science to see if there were ways for those departments to improve. At its heart, this is what terrified many parents all along — the expansion of STEM at the expense of Ovid and “Twelfth Night.”

In addition to the math and science provisions, the proposal submitted to the board called for a replacement of six board members and an extension of Mr. Johnson’s stay by five years. The board has not responded to the proposal yet.

The school’s perceived academic fustiness was not, in fact, the whole story. The compromise document also agreed to the appointment of an “exmissions coordinator.’’ For the past few years, St. Bernard’s had not been maintaining its record of sending its boys to the most coveted schools. This rankled certain parents both on and off the board.

To his credit, or detriment, depending on your vantage, Mr. Johnson was not one to network and make calls to get his boys into ongoing schools. St. Bernard’s students were meant to stand on their own merits.

In the past, Mr. Johnson had maintained good relationships with the headmasters of boarding schools, but now fewer and fewer parents had wanted to send their children away. This was another way that the world had evolved.

Although Mr. Johnson had managed to keep so much about St. Bernard’s unchanged since he was named headmaster in 1985, he could not keep parents behaving as they did decades ago. They were a different species now, unable to look from a distance at their children and trust that they would succeed.

They were embedded in their notebooks and extracurriculars, in their SATs. While Stuart Johnson was high-mindedly not picking up the phone to persuade Trinity to admit young Coleman, parents across the country were paying consultants to cast their children as water polo champions to get them into the University of Southern California.

Mr. Johnson had selected the members of his board, presuming that their loyalty might be assured.

That idea, too, turned out to belong to another time.

Ginia Bellafante has served as a reporter, critic and, since 2011, as the Big City columnist. She began her career at The Times as a fashion critic, and has also been a television critic. She previously worked at Time magazine. @GiniaNYT

Parents of St. Bernard's School File Class Action Lawsuit Against School Board Members for Firing of Headmaster and Financial Malfeasance 

 

New York, NY, March 18, 2020 — A group of concerned parents of St. Bernard’s school has filed a class action lawsuit against the members of the Executive Committee of the school’s Board of Trustees over the removal of the school’s Headmaster of 35-years. In the complaint, the parents detail how a small group of board members pursued a personal agenda to advance the interests of their own children at the expense of the larger student body, and then sought to cover their misconduct by hiring teams of lawyers and public relations spin doctors to mislead other parents and the community.
 

The purpose of this announcement is to ensure St. Bernard’s parents, faculty and alumni are aware that a class action has been filed on their behalf and encourage them to contact Class Counsel, Jim Walden, at StBernardsLegal@gmail.com, to be advised of their rights. Any communications between parents and the lawyers will be treated as privileged and confidential in anticipation of potential participation in the litigation.

Jim Walden, the founder and Managing Partner of Walden Macht & Haran, represents the families. He states, “Our complaint alleges that certain members of the St. Bernard’s Board of Trustees have sadly abused their powerful positions. These trustees are alleged to have violated the law, the school’s own bylaws, and the school’s norms and practices with their arbitrary and capricious actions, which include removal of a beloved Headmaster, placing pressure on St. Bernard’s to admit unqualified students and various financial improprieties. With this claim, St. Bernard’s parents are standing up in a unified and singular mission to support the healthy academic and social development of all children at their school. Their wish is simply to restore the integrity of their community so that students and families can focus on learning in an environment that is fair and just to every child.”

The Headmaster

Since 1985, Stuart H. Johnson III has served the St. Bernard’s community with integrity, academic vision and grace. He has presided over two generations of students, during which time he diversified and modernized the school, expanded its commitment to social consciousness and diversity, all while maintaining rich traditions of rigorous instruction, hard work and citizenship. Parents chose the school because of the healthy academic and social environment it offered under Mr. Johnson’s leadership. They enrolled their children at St. Bernard’s with the understanding that he would oversee their development and the curriculum.

The Executive Committee of the Board of Trustees

In May 2019, the Executive Committee of the St. Bernard’s Board of Trustees unilaterally removed the Headmaster from his position without cause or explanation. They forced him to announce his “departure,” leading the Board of Trustees and the parent community to believe he was voluntarily retiring. He was not. Instead, the Executive Committee acted — without the necessary consent of the full board — because, our clients believe, they wanted preferential treatment for certain children in the post-Bernard’s placement process, they sought to admit the children of their friends, and they wanted control over the St. Bernard’s substantial endowment and investments, all of which Johnson had steadfastly fought against.

After news of the termination broke, parents revolted en masse, with more than 600 parents signing a letter asking Mr. Johnson to stay on as Headmaster. Immediately following these events, the Executive Committee is further alleged to have breached its fiduciary duties by using school funds (estimated at more than $1 million) to hire an army of lawyers and public relations consultants to obfuscate its misconduct.

The current expense of lawyers and public relations firms engaged by the Executive Committee for the purpose of masking the crisis is estimated at between $30,000 to $50,000 per day, equal to the cost of a full tuition scholarship for a single student for one year, or to substantial raises for teachers. The parent plaintiffs seek to stem this unconscionable outpouring of funds, which predates the filing of their claim.

Various intermediaries attempted to broker a resolution of the impasse between the Executive Committee and every other part of the St. Bernard’s community. However, the Executive Committee refused to compromise. Without any further recourse available to them, the parents of St. Bernard’s engaged Walden’s firm to represent them in this action.

Remedy

The plaintiff parents are seeking to restore Mr. Johnson as Headmaster of St. Bernard’s. They also ask the court for removal of the Executive Committee members from the school’s Board of Trustees.

Parents and school staff have also filed complaints with the New York Attorney General’s Office, asking for a thorough and complete investigation.

— — —

 Media contact: Julia Pacetti, julia@jmpverdant.com, (917) 584-7846
 

Walden Macht & Haran, 1 Battery Park Plaza, New York, NY 10004