Adding Bargains to the Housing Mix
May 20, 2007; As originally appeared in
The New York Times by Lisa Prevost
STAMFORD-FOUR
years after this city, Connecticut’s fourth-largest,
mandated that developers include below-market-rate units
in all new housing developments, the regulations are finally
delivering.
Developers
have added at least 45 condominiums to the city’s “affordable
housing” stock in the last year. Those units are among
about 200 to be priced below market rates in approved residential
projects, some of which have yet to get under way, said Robin
Stein, the city’s land use bureau chief.
The 45 new units, which are at five separate developments,
are extraordinary bargains for the buyers. Far from austere,
they feature the same granite counters, crown molding and
amenities as other units, but at a fraction of the cost for
qualifying first-time buyers.
“These are needle-in-a-haystack type of opportunities,” said
Joan Carty, president and chief executive of the Stamford-based
Housing Development Fund, a nonprofit bank that provides
counseling and financial assistance to first-time home buyers.
In
2003, Stamford adopted zoning regulations that require
developers
of any project with 10 or more residential units
to offer at least 10 percent of the units at lower prices.
The initiative was driven in large part by concerns that
high housing costs are driving out the city’s labor
force.
Prices
on the affordable units are to be set within reach of families
earning no more than 50 percent of the Stamford
area’s median income (currently $116,000), although
in certain areas of the city some units must be set aside
for people earning no more than 25 percent of the median.
Developers initially feared that mingling affordable and
market-rate units throughout a project would have a chilling
effect on sales. Some have opted to make a cash contribution
to the city for affordable-housing initiatives in lieu of
building units on-site, an option allowed under the regulations.
The
concept has had no adverse impact on sales at the projects
completed
so far, the developers say. The first project to
include below-market-rate units under the new regulations,
Mill River House, was totally presold before opening last
year, according to Seth G. Weinstein of Hannah Real Estate
Investors, who developed the property with Paxton Kinol and
Ray Kinol of Stillwater Investment Management. Situated in
the city’s west end opposite a grassy park, the 92-unit
condominium building has 11 affordable units.
Mr.
Weinstein, a local developer who was born in Brooklyn and
grew up
in Manhattan and Long Island, said he had no
qualms about the regulations. “I’m a New York
City boy,” he said. “I’m used to housing
that has a diverse variety of people. Growing up in a rich,
segregated ghetto is bad for rich people, not just bad for
poor people.”
His
development’s second phase, Adams Mill River,
is about to open with 60 more units, seven priced below market
rates. He is beginning construction of two projects in the
east end — a 146-unit rental apartment complex and
a 112-unit condominium development — that will include
a total of 25 affordable units.
Applicants for cut-rate units at both Mill River buildings
underwent a thorough screening process, conducted through
Housing Development Fund, to ensure that they met the income
guidelines and were credit-ready for a mortgage.
There was little competition for the affordable units at
Mill River, Mr. Weinstein said, but when word got out that
the deal was for real, inquiries flooded in for the Adams
units. Most of the candidates who ultimately qualified were
matched with specific units; a lottery was used to select
the winner in cases involving more than one qualified applicant.
While two- and three-bedroom market-rate units at Mill River
sold for $324,000 to $571,000, the 11 affordable condominiums
went for $80,000 to $260,000.
Buyers
of the reduced-price units are limited to a gain of 3 or
4 percent upon resale in order to preserve the units’ affordability,
Ms. Carty said.
Nikita Johnson, 27, a single mother who has lived in public
housing for six years, was among the buyers who qualified
for an affordable unit at Adams Mill River. A junior accountant
at a media group in Norwalk, Ms. Johnson took her 10-year-old
daughter, Nyla Delgado, to see their new two-bedroom, two-bath
condominium for the first time a couple of weeks ago.
“I had no idea what to expect really, because all
I had was a floor plan,” Ms. Johnson said. “But
it’s everything I could ask for and more. They have
all the appliances in there and wall-to-wall carpeting — it’s
gorgeous.”
Ms.
Johnson is among more than 3,000 Stamford-area residents
who have
gone through the Housing Development Fund’s
home-buyer counseling programs in the last nine years. The
agency offers developers a “deep pool of applicants” looking
for homes, Ms. Carty said, because “the hardest thing
in Fairfield County is matching people up with appropriately
priced product.”
Building
below-market-rate units into high-end developments reduces
developers’ returns, but the city allows them
to build a few more units than might otherwise be approved,
said Randy Salvatore, owner of RMS Construction.
His
company opened the Village at Maple Pointe, in the city’s
Glenbrook section, last year with 63 town house units, 7
of them affordable. It is currently building the Village
at River’s Edge, with 170 units, of which 18 are being
offered at lower rates.
“It’s worked well, and I think the reason why
is that this is for-sale housing,” Mr. Salvatore said. “It’s
not like just anyone can qualify. We built and closed on
63 units in a year at Maple Pointe. We have 140 contracts
at River’s Edge.”
The
inclusionary zoning, he said, “hasn’t hurt
us at all, and this is in a market that’s been declining.”
Market-rate units at the two developments start in the mid-$400,000
range and go as high as about $650,000.
Developers
of high-rise housing, which is concentrated in the city’s
downtown, have so far without exception opted to meet the
regulatory requirement by either paying
the buyout fee or building the lower-priced units elsewhere,
which is another option under the regulation, according to
Mr. Stein. The recently approved Trump Parc tower, for example,
will yield the city some $3 million for affordable housing,
in lieu of 17 on-site units.
Last
year, the city raised the buyout fees to better reflect
real estate values. The cash contribution in lieu of building
a two-bedroom affordable unit, for example, is $279,120 at
the 25-percent-of-median level, $168,635 at the 50-percent-of-median
level, and $127,930 at the 60-percent-of-median level. Because
the intent of the regulation is to produce more inclusionary
housing, Mr. Stein said, “we didn’t want to have
the buyout so low it would encourage everybody to do that.”
Mr.
Salvatore said he was convinced that the inclusionary concept
was
the better way to go. “It’s just
become now a cost of doing business,” he said.
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