City Reopens Affordable Housing Lottery for Luxury Building on Fulton Street
The City’s Department of Housing Preservation and Development (HPD) is accepting applications for its waiting list to lease apartments (including studios, one-bedroom, and two-bedroom units) in the Exhibit, a luxury rental building at 60 Fulton Street (between Cliff and Gold Streets), which have been set aside at less-than–market rents for low- and moderate-income tenants.
Opened in 2017, the 23-story Exhibit contains 120 apartments. Three quarters of these dwellings are rented at market rates, but 30 units are set aside for tenants earning between 40 and 130 percent of the Area Median Income (AMI), which allows for annual salaries as low as $24,378 (for one person, living in a studio) and as high as $187,330 (for a household of five people, living in a two-bedroom unit). For such tenants, rents would range from $613 (for the individual occupying a studio) up to $2,733 (for the five-person family in a two-bedroom apartment). Applicants who are approved by HPD for a unit at the Exhibit will be protected by limits on future rent increases mandated by the City’s Rent Guidelines Board for stabilized apartments. For comparison, recent market-rate listings at the Exhibit, posted to StreetEasy, offered a studio apartment at $3,695 per month, and a one-bedroom at $5,450, with no limits on future rent increases.
According to HPD’s website, four of the 30 affordable units at the Exhibit are currently vacant. In the likely event that the number of legally qualified applicants is greater than the number of available apartments, winners will be selected by lottery. The names of those not selected will be added to a waiting list.
When HPD first opened the lottery for affordable units at the Exhibit in 2018, the agency also noted that half of those dwellings would be reserved for residents of Community Board 1, roughly meaning people who lived south of a line connecting Canal Street, Pearl Street, and the Brooklyn Bridge. Information about that set-aside has now disappeared from the HPD website, as has a similar caveat giving preference to municipal employees. Quotas for persons suffering from disabilities (including mobility and hearing/vision impairments) appear still to be in effect.
Applications must be postmarked or submitted online no later than Monday, January 23, 2022. For more information, click here. To request an application by mail, send a self-addressed envelope to 54-56 Fulton Street Apartments c/o Reside Affordable, 349 Keap Street, Brooklyn, NY 11211.
The 30 affordable apartments at 60 Fulton Street were created under the State’s 421a program, which allowed New York City developers to claim tax exemptions in exchange for adding below-market-rate units to their projects. (That program expired in 2022, but remains in effect for buildings erected while it was still current.) A review of data from the City’s Department of Finance for 60 Fulton Street indicates that in the most recent tax year, the assessed value of the Exhibit was reduced by $11,123,100. Given the current City property tax rate of 12.267 percent on Class 2 buildings (a category that includes rental apartment towers), this translates into an annual benefit of $1,364,470 for the building as a whole, or an average yearly benefit of $45,482 for each of the affordable units. That amount breaks down to an average monthly benefit of $3,790 for each of the 30 affordable apartments.
In this context, the tax benefits of the affordable units appear to surpass the rental income generated by actually leasing those apartments to tenants of moderate means. Additionally, the total financial upside (calculated by combining the tax exemption with the rental income) appears to make the affordable units as lucrative as the market-rate apartments in the Exhibit, and perhaps more so. (This may cease to be the case in years ahead, when rising market-rate rents could widen the price gap between unrestricted and affordable units, causing a deficit that even generous tax benefits might not bridge.)
This arcane financial math contributed that the City forgoing more than $1.7 billion per year in tax revenue under the 421-a program, which made it controversial among advocates for affordable housing, who lobbied for the law to be allowed to expire. City and State lawmakers are now negotiating to formulate a successor law to 421-a, which (housing advocates hope) will contain more potent incentives to spur the creation of additional affordable dwellings.