Affordable Housing Property Leads Revitalization of Brooklyn Waterfront

Published by Jennifer Dockery on Friday, January 1, 2010
Journal thumb January 2010

Palmer’s Dock, an affordable housing development on Brooklyn’s Greenpoint-Williamsburg waterfront, can claim many firsts. It was the first affordable housing property developed in Williamsburg under New York City’s Inclusionary Housing Program (IHP). It was the first affordable housing development to receive a loan from the New York City Department of Housing Preservation and Development (HPD) City Council Mixed-Income Initiative. It was one of the first affordable housing developments in the area to welcome residents who found it increasingly difficult to find affordable rents in the waterfront area after New York City rezoned it for residential development.

All of those firsts helped Palmer’s Dock achieve another first. The affordable housing property was the winner of the first annual Novogradac Journal of Tax Credit Housing Developments of Distinction Award for a low-income housing tax credits (LIHTC) project that best exemplifies major community impact.

“[The property] gave a lot of families a chance to stay in the neighborhood,” said Martin Dunn, president of Dunn Development Corporation  and co-developer of Palmer’s Dock. Palmer’s Dock has brought or kept an estimated 280 residents in the formerly industrial area.

Brooklyn-based Dunn Development Corporation and L+M Development Partners Inc., a developer of market-rate and affordable housing, developed Palmer’s Dock on the site of a former trash transfer station. The affordable housing development takes its name from the waterfront railway terminal that originally stood on the site. Palmer’s Dock was the first affordable housing property to be developed after New York City rezoned the former industrial neighborhood in 2005.

Construction of the building began shortly after the city finalized the rezoning laws. L+M co-developed the Palmer’s Dock property to generate zoning bonuses for Northside Piers, a condominium property that L+M, R&D Management and Toll Brothers City Living developed on an adjacent parcel. Under New York City’s IHP, the market rate development could receive bonus floor area by providing affordable housing for lower-income families. The city requires that the developer complete the affordable units before it will grant the density bonus to the market rate units. The developers broke ground on the building in 2006 and lease up began in August 2008.

The newly constructed Palmer’s Dock is a 179,000-square-foot building on Brooklyn’s Greenpoint-Williamsburg waterfront. The six-story development contains 113 studio and one-, two- and three-bedroom apartments. It includes five tiers of rents for the four apartment sizes: 30 percent, 40 percent, 50 percent, 60 percent and 80 percent of area median income (AMI). Rents start at $398 for a studio, $424 for a one-bedroom, $511 for a two-bedroom and $593 for a three-bedroom.

“Everyone’s doing tax credit housing serving the 50 to 60 percent of AMI. What about people making 40 percent or 70 percent?” said Ron Moelis, chief executive officer of L+M Development Partners Inc. The city’s first mixed-income initiative provided a $5.9 million loan to subsidize the various rent-levels at Palmer’s Dock.

In addition to the HPD loan, the $30.6 million Palmer’s Dock benefited from a number of capital sources. Funding came from HPD in the form of a $2 million HOME loan and an inclusionary housing bonus. The bonus allowed the developers of adjacent, market rate Northside Piers to offer the land for Palmer’s Dock, valued at $20 million, to the developers free of charge. HPD and the New York State Division of Housing and Community Renewal provided LIHTCs. Richman Housing Resources LLC syndicated the LIHTCs, providing approximately $17.95 million in equity. Citibank provided a $3.73 million loan. A $9.3 million attached parking garage and retail space were funded separately with private equity and loans from Citibank.

Creating Community

Four of Palmer’s Dock’s one-bedroom units and four of its two-bedroom units are set aside for developmentally disabled adults with incomes of less than 30 percent of AMI. Three three-bedroom units house formerly homeless families with incomes of less than 30 percent of AMI. The disabled adults are referred by the New York State Office of Mental Retardation and Developmental Disabilities. Program Development Services Inc. (PDS) provides services for the developmentally disabled residents. The New York Department of Homeless Services and local Brooklyn shelters refer the formerly homeless families. Both populations pay rents equal to 30 percent of their income. The formerly homeless families receive U.S. Department of Housing and Urban Development Section 8 vouchers from HPD to make up the difference.

In addition to the units set aside for disabled adults and formerly homeless families, 50 percent of the units at Palmer’s Dock are set aside for families who lived in the area at the time of its rezoning. To qualify for affordable units in a rezoned area, families must have resided in the neighborhood on the date the application was made. Because many residents moved out of the area soon after it was rezoned in 2005, the city allowed anyone living in Greenpoint-Williamsburg on the initial date of the rezoning in 2005 to qualify for the affordable units.
The community played a large part in having the area rezoned, and the developers wanted to work with residents to achieve a common vision, according to Dunn.

Dunn, a resident of Williamsburg for 12 years, saw Palmer’s Dock as a way to give back to his community. When he moved into the neighborhood, the land that Palmer’s Dock now occupies was a garbage transfer station, and New York City planned to add more garbage transfer stations to the area. As a result, the Williamsburg neighborhood, including Palmer’s Dock, had high rates of air and noise pollution due to transfer station operations. The development team worked with community groups to draft a new vision for the area that included mixed use developments that incorporated more open spaces and preserved jobs in the neighborhood.

“I’d spent years working with the neighborhood to achieve a vision for the waterfront,” Dunn said. He saw Palmer’s Dock as the first step in reviving the area. The wide range of rents reflects the wishes of the community, Dunn said.

Palmer’s Dock, along with other affordable and market-rate multifamily units will create a public promenade along the waterfront that will connect the Greenpoint-Williamsburg area to West Brooklyn.

Increasing Economic Activity

In addition to the affordable housing units, Palmer’s Dock includes 17,246 square feet of retail space. A drug store, dry cleaners and restaurant have leased space in the building. The marketing and sales office for Northside Piers also occupies space in the building. As of late October, more than 70 percent of the commercial space in the building had been leased and negotiations were under way for a wine bar and deli to move into the building. A 35,000-square-foot parking garage provides parking for the retail space as well as Palmer’s Dock and Northside Piers residents.

“Duane Reade is great,” Max Cohen, a resident at Palmer’s Dock since August 2008, said of the drug store that occupies commercial space in the building.

Construction of Palmer’s Dock added 300 construction jobs to the area and PDS employs one full-time worker and as many as five part-time workers. Additionally, the development employs a full-time porter and on-site superintendent. In late August, existing retail tenants employed 40 full- and part-time workers and the garage employed five people.

Since Palmer’s Dock broke ground three years ago, developers have added millions of dollars in residential and mixed-use developments in the area. By late October 2009, more than 700 affordable housing units had been built along the waterfront. Eventually, the Greenpoint-Williamsburg area will feature 12,000 to 14,000 affordable and market rate units within view of Manhattan.

Palmer’s Dock

In Summary
Financing

  • $5.9 million City Council Mixed-Income Initiative loan from the New York City Department of Housing Preservation and Development (HPD).
  • $2 million HOME loan from HPD.
  • $20 million piece of land provided free of charge under an Inclusionary Housing Bonus.
  • $17.95 million in low-income housing tax credit equity from Richman Housing Resources LLC.
  • $3.73 million loan from Citibank.

About the Property

  • Palmer’s Dock won the 2009 Novogradac Journal of Tax Credit Housing Development of Distinction Award in the Community Impact category for its significant contributions to its community.
  • Palmer’s Dock features 113 studio, one-bedroom, two-bedroom and three-bedroom apartments along Brooklyn’s Greenpoint-Williamsburg waterfront.
  • The property was developed by Dunn Development Corporation and L+M Development Partners Inc. under New York City’s Inclusionary Housing program.
  • The developers set aside 50 percent of the units for long-time residents of the Greenpoint-Williamsburg area.