C.B. 1 debates Liberty Bond extension
By Josh Rogers
Community Board 1 is backing an extension of the tax-free Liberty Bond program but opposes using more of the money on residential buildings because members say it is encouraging too many small, luxury-rent apartments.
The board passed a resolution on the post-9/11 federal tax program at its December meeting, although a few members felt the measure did not go far enough to encourage the construction of affordable units in Lower Manhattan.
Richard Kennedy, chairperson of the boards World Trade Center redevelopment committee and a real estate executive, said extending the program from the end of 2004 until 2009 is essential to insure that development continues at the W.T.C. site.
We need to be sure we dont end up with a hole in the ground 10 years from now, he said at the meeting.
Supporters of the $8-billion-bond program, as well as many critics, favor an extension, although they do disagree on the way it should be extended.
The current bill, recently introduced to Congress, extends the deadline to 2009 and includes a provision allowing for $3 billion of the bonds to be used for residential buildings rather than the $1.6 billion under the current law. The boards resolution favors the extension, but opposes the residential money increase.
Ray OKeefe, also a board member and a real estate executive, said the problem with the original 2002 law is that it did not require affordable units like the 80-20 program, so developers who otherwise might have constructed buildings in which 20 percent of the apartments were set aside for moderate-income people, are now being encouraged to build market-rate housing with the more attractive Liberty Bond incentives. He said it would be foolish to add more residential money to the pot since it would only lead to more luxury housing.
Not everyone accepts that argument.
Bettina Damiani, part of the Liberty Bond Housing Coalition, a group formed to advocate using more of the money for moderate and low-income housing, said the community board should be working to amend the bill further with affordable apartment requirements.
Its not going to be easy, but you cant give up the fight, she said. Its disappointing that they are not willing to take on the fight.
Damiani said Liberty Bonds should be used for residential buildings all over the city rather than just in Lower Manhattan. Under the current law, which is part of the federal $21.4-billion, 9/11-aid package, $2 billion of the $8 billion in the separate bond money can be used for commercial development outside of Lower Manhattan, but the residential bonds must be spent on Downtown projects south of Canal St. An estimated $1.2 billion in lost federal tax revenues was budgeted to cover the bond program.
The Community Board 1 resolution also opposed using any additional bond money on development outside of the Downtown area. Over half the $2 billion available to Midtown developers has already been allocated.
Midtown Liberty Bond money is also opposed by the Lower Manhattan Development Corp., which argues that the money was intended to help Downtown recover from the economic devastation of the Sept. 11 attacks. However Midtown Liberty projects are not opposed by the two men who control the L.M.D.C., Gov. George Pataki and Mayor Mike Bloomberg.
The mayor has spoken the most enthusiastically about using the bonds all over the city, arguing that office development benefits employees living in each borough. Pataki, who created the L.M.D.C. at the end of 2001, has said he is inclined to support the mayors ideas for the money.
The governor came closest to any sort of opposition to using bonds for Midtown during a speech at the end of October when he said: Should we need Liberty Bonds in the rebuilding effort, we must ensure they are available when we need them and that Lower Manhattan remains the first priority, just as Congress intended.
Developer Larry Silverstein, who owns the rights to rebuild at the W.T.C., will not have enough money to build five towers planned for the area if he loses his insurance lawsuit asserting he is entitled to twice the value of the W.T.C. ($7 billion) because the terrorist attack was two occurrences rather than one.
John Whitehead, L.M.D.C. chairperson, said several months ago that Liberty Bonds will be needed for the W.T.C. site, which is one of the reasons he thinks that money should not be diverted away from Downtown.
Although Damiani has been critical about the way the bond program has been administered, she agreed that an extension is necessary to avoid a rush to use them before they are lost. She said she is hopeful the New York Congressional delegation will push to add affordable housing requirements to the bill. Theyve got to know these bonds are not benefiting their constituents, she said.
Margaret Fung, a member of C.B. 1 and the executive director of the Asian-American Legal Defense and Education Fund, said she voted against the C.B. 1 resolution because it did not go far enough in support of affordable housing. After she and others objected, the board added language calling on more 80-20 type housing to be built Downtown.
The new language was enough to persuade some housing advocates on the board to vote for the resolution, but not Fung. She said there should have been a recommendation for using residential bonds only for buildings with some low and moderate-income apartments. The state and city have discretion before approving bond projects, and Fung said just because they are not obligated to approve below-market rate bond projects, doesnt mean that they cant add requirements.
The real issue is Liberty Bonds would be better used on affordable housing, Fung said later. The resolution totally tilted toward commercial development. The point is there is not enough money for real, affordable housing.
The resolution passed overwhelmingly.