The developer of the 3.3-million-square-foot apartment project at the former Domino Sugar refinery in Brooklyn is threatening to sell if the de Blasio administration keeps pushing for larger affordable housing space than originally proposed.
This could result in fewer — perhaps not any — affordable units being built in the 11-acre development, a setback for a mayor’s office hellbent on boosting the city’s affordable housing count by 200,000 new units in the next decade.
Two Trees Management bought the derelict industrial site in Williamsburg, Brooklyn, for $185 million in 2012 and unveiled a vastly reconfigured plan from one previously approved by the city in 2010. The original proposal included 2,200 apartments in blocky 30- and 40-story towers.
In exchange for building taller, more slender towers, increasing the amount of office and park space and creating a dynamic design, Two Trees would make 30% of the units within the project, 660 of them, affordable. That is compared with 20%, or 440 units, officially agreed to by the previous owner, CPC Resources, in 2010.
The de Blasio administration is not asking for more affordable units. It simply wants bigger ones — with fewer studios and one-bedrooms and more two- and three-bedroom units.
But these larger apartments would take up more space and eliminate market-rate units that Two Trees needs to offset the price of affordable units.
Two Trees believes the project has become financially unfeasible.
“We very much intend to build it,” said David Lombino, director of special projects for Two Trees. “But in the event it isn’t approved, we will be compelled to build the inferior as-of-right plan or sell it to another developer.”
The Two Trees proposal won overwhelming support from the community board and the borough president last year. Bloomberg planning chief Amanda Burden was also supportive.
But now that it is coming up for a vote Wednesday at the City Planning Commission, the de Blasio administration is asserting its disastisfaction with the current plan.
“This proposal on the table offers a lot of opportunity for the developer, and we think it’s important that it also offer a lot back for the people,” Mayor de Blasio said when asked about the negotiations at a Friday press conference.
With real estate prices skyrocketing over the past two years, Two Trees could easily sell some or all of the parcels for two to three times what it paid, according to brokers.
“There are a lot of people kicking themselves for missing out on Brooklyn, and you can’t ask for a better site than this — especially for high-end condo development,” said Doug Harmon, a senior managing director at Eastidl Secured.
The Walentas family, which runs Two Trees, is among the city’s most successful, and proud, real estate shops, having transformed Dumbo and other corners of the city in recent decades. The clan would not likely take a rebuke from the administration lightly.
But some real estate executives worry that is exactly the point, that the administration is trying to send a message that even the best developers must bow before City Hall.
This strategy could backfire, though
David Maundrell, president of aptsandlofts.com, which specializes in the Williamsburg market, speculated that the buyer of the Domino site could forgo building any affordable units at all.
“Developers ditched the inclusionary bonus all the time during the last boom, and prices what they are now, it might not be worth the hassle of building affordable for a few extra units,” Maundrell said.
Community groups have also been blindsided by the de Blasio administration opposition to Two Trees’ proposal.
“It’s still a flawed plan, but it’s superior in almost every way to what came before,” said Evan Thies, a board member of Neighbors Allied for Good Growth. “It creates a neighborhood of its own that’s not walled off from the rest of the neighborhood, like so many of these other projects.”
He applauded Two Trees for crafting its plan in close consultation with the community over the past 18 months — a partnership City Hall seems to be ignoring.
“We want to ensure that the community-based process that happened is respected by City Hall,” Thies said.
The mayor maintains he is simply pursuing the best deal possible for taxpayers.
“We believe it’s a standard that we’re going to attain in this instance and many others thereafter,” de Blasio said Friday.
