It’s been almost two years since a rezoning of Brooklyn’s East New York neighborhood jump-started a wave of speculation and, to a lesser degree, development throughout the area and sent a shudder of gentrification worry down the backs of those already living there. Last summer, Brooklyn Borough President Eric Adams called for next-door Brownsville to be similarly rezoned to attract new affordable housing to that neighborhood. So, how’s it all working?
The initial rezoning of East New York came out of a plan by Mayor Bill De Blasio to rezone about fifteen neighborhoods throughout the city, also including Bushwick and Gowanus in Brooklyn. To rezone any neighborhood, the NYC Economic Development Corporation (EDC) is charged with studying each neighborhood and submitting proposals to the city council for approval. So far in Brooklyn, only the East New York proposal has been approved. Elsewhere around the city, plans have been approved for East Harlem and Far Rockaway.
As a part of the rezoning plans, the mayor and city council included a mandatory inclusion housing rule (MIH), requiring all residential development in each zone have a certain percentage of rental units be offered at below market rates, based on several formulas that can be imposed by the city council. A few developers that specialize in what is considered affordable housing by those for whom affordable is not an issue have taken advantage of as many of the city’s available subsidies as possible. Those that accept the subsidies must set aside many of the units for affordable housing units. How much the rents will be will depend on which subsidy the developer takes.
Since the rezoning, for-sale prices in East Brooklyn (East New York, Brownsville, and Cypress Hills) have risen sharply, and several developments are underway. According to an article months ago at citylimits.org, prices had risen from about $35 per square foot before the rezoning to over $40 per square foot by July 2017. And, mortgages have become harder to get for low-income buyers since the rezoning.
There has been a small rash of speculation, with investors buying property in the hopes of making redevelopment moves in the future. Much of that activity has taken place peripherally to the rezoned area, with the speculators hoping to avoid the MIH restrictions should the area really take off. But many owners have overpriced their properties, and those are sitting on the market with no nibbles.
So, two years into the rezoning, the amount of actual development is meager. Despite the activity just described, the overall jump-in rate is small. East Brooklyn, it seems, isn’t quite ready for a wholesale boom like downtown or even the low-rise efforts burgeoning on the Fort Greene/Clinton Hill corridor along Lafayette and Dekalb Avenues.
But what about current residences? According to the real estate Web site Trulia, the average income in East New York is $32,165. Based on the standard income qualification of 40x the rent, an affordable housing price for current residents is $804.13, How many of the new affordable rents will be under $1,000? Under $1,200? According to the MIH rules, there should be some, but how many investors will drop multi-millions into a development to collect those rents?
New development is a good thing, but for those who are in the crosshairs, it’s never comfortable. New York City has plenty of luxury housing. The fact is, developers are running out of low-buy-in areas to develop. East Brooklyn seems to be the current target area, thanks to the EDC’s rezoning plans. We applaud Mayor De Blasio’s efforts to create and maintain affordable housing. In East Brooklyn, we just don’t see it happening in earnest overnight, or any time soon.