RAFA Report Slams City’s ‘Goldman Sachs Development Model’

RAFA Report Slams City’s ‘Goldman Sachs Development Model’

 

Published: 
May 2017

On May 2, the Real Affordability For All coalition (RAFA), which includes Met Council, released a report charging that Deputy Mayor Alicia Glen’s housing policies have promoted luxury development in gentrifying neighborhoods while producing only a small amount of supposedly affordable housing—with much of that too expensive for most residents of those neighborhoods.

Many housing advocates, the report notes, were “perplexed” when Mayor Bill de Blasio appointed Glen as his deputy mayor for housing and economic development in 2014. She had spent 12 years as head of urban investment at Goldman Sachs, the powerful investment banker central to the financial crisis of 2008, and they worried she would continue the Bloomberg administration’s policies that shut low-income New Yorkers out of affordable housing. 

The report confirms those suspicions. At City Hall, it notes, Glen has awarded over $1 billion in subsidies to the same three groups she partnered with at Goldman Sachs on similar projects—L+M Development, BFC Partners, and BRP Development—to create luxury housing in Hunters Point in Queens, Harlem and East Harlem, Fort Greene, and Arverne, in Far Rockaway.

Glen’s first joint venture with L+M and BFC at Goldman Sachs was The Aspen in East Harlem, a so-called “50/30/20 mixed income” model in which half the apartments were full market-rate, and 30 percent were affordable to households at 130 percent of the metropolitan area median income, or AMI (as AMI is currently $95,400 a year for a family of four, these would rent for more than $3,000 a month). The remaining 20 percent were reserved for “low income” households at 50 percent of AMI. But as more than half of the neighborhood’s residents had incomes below 40 percent of AMI, most could not afford even the less than 50 “low income” apartments included. Predictably, the 186 new units of housing for more affluent households contributed to the gentrification and displacement already underway in East Harlem. 

Glen partnered with L+M on 12 more projects before leaving Goldman Sachs for City Hall, and also worked with BFC Partners and BRP Development. At BRP’s Bradford project in Bedford-Stuyvesant, the 21 lowest-rent apartments were targeted for households making 50 percent of AMI—in a neighborhood where the median income was around $30,000. As in East Harlem, the influx of market-rate apartments accelerated gentrification and displacement, and contributed to homelessness.

As deputy mayor, Glen has continued to partner with these three luxury developers. “The same lack of affordability in the deals Glen negotiated while at Goldman Sachs can be found in many of the deals she has overseen while at City Hall,” the RAFA report said. “In both cases, the same three developers—L+M, BRP, and BFC—are extracting maximum profit while neglecting the needs of struggling tenants in gentrifying neighborhoods.” It notes that all three have been selected to build housing on public land in gentrifying neighborhoods, projects “eerily similar to the ‘mixed use’ project that was so celebrated at The Aspen.”

“The city should stop awarding public dollars and public lands to L+M Development. BFC Partners, BRP Development, and other developers that operate according to the Goldman Sachs model,” the report concludes. “City subsidies and public land should only be awarded to developers with a proven track record of building deeply affordable housing, especially for low-income and homeless New Yorkers who continue to struggle for basic survival.”

The RAFA report is available at: https://docs.google.com/uc?export=download&id=0Bzg4QI6NqeEAb2ZROWVRSldJSHc