Economics Behind Liberty Bond-Funded Luxury Unit Questioned

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The speaker of the City Council, Gifford Miller, spoke yesterday at an event celebrating the topping off of a luxury apartment building in Tribeca that will feature an indoor swimming pool, a two-story glass fireplace in the lobby, and a 24-hour concierge.


He called the project an important step in rebuilding the residential and commercial communities in Lower Manhattan. But at least one critic is asking why a taxpayer subsidy in the form of $120 million in Liberty Bonds is necessary to finance housing built by rich developers for rich residents.


The director of a development accountability think tank, Good Jobs New York, Bettina Damiani, said the building at 88 Leonard St. contains too many luxury units and is not a good use of resources designated for Lower Manhattan redevelopment after the attacks of September 11, 2001.


“Bring back capitalism to Lower Manhattan,” Ms. Damiani said. “Developers are going to build luxury units if there is demand for them. It is not something the taxpayer should be subsidizing.


“When you have so many luxury units being built with funds that exclude lower- and moderate-income people, taxpayers should question whether this is a good use of 9/11 resources,” she continued.


Mr. Miller himself had previously condemned the state and city for not allocating more subsidies, in the form of tax-exempt Liberty Bonds, toward the construction of “affordable housing.” Of the 352 units in the 21-story, aluminum and glass Leonard Street building, 18, or just more than 5%, are labeled “affordable housing” by the developer. That’s just more than the minimum amount required by the state to apply for the bonds.


The president of Singer & Bassuk, the organization that arranged the project’s Liberty Bond financing, Richard Bassuk, said that the bonds were necessary to move the deal forward.


“I think the economics of it are such that the rental project was really made economically feasible by the fact you have the Liberty Bond financing for it,” Mr. Bassuk told The New York Sun. Mr. Bassuk defended Liberty Bonds, saying they had been responsible for a lot of residential construction in Manhattan that would not have taken place without subsidies.


In 2002, Mr. Miller said that the state and city Liberty Bond allocation plan would “benefit wealthy New Yorkers renting luxury apartments at the expense of thousands of low- and middle-income residents.”


At that time, Mr. Miller proposed a plan through the council where at least 20% of residential units built with Liberty Bonds would be affordable to low-and very low-income families and at least 35% would be affordable to families earning between $50,240 and $94,200 a year.


Mr. Miller told the Sun yesterday, “We should always be looking for more affordable housing … At a time when a lot of people are leaving Lower Manhattan, this is a step in the right direction.”


Rep. Jerrold Nadler, a Democrat who represents Lower Manhattan in Congress, said yesterday in an e-mail that future residential downtown development should include the entire “wealth spectrum.”


“All over the city, low- and middle-income families are getting priced out of decent housing, and while it may be lucrative to build high-priced housing downtown, I think we should take the opportunity of rebuilding to provide quality options for everyone. The need is real. It’s time for developers to respond,” Mr. Nadler said.


Following the terrorist attacks of September 11, 2001, Congress authorized the city and the state each to issue $4 billion in tax-exempt Liberty Bonds, with a total of $6.4 billion allotted for commercial projects and $1.6 billion for residential.


A state entity, the Housing Finance Agency, approved $125 million of Liberty Bonds for Leonard Street in June 2004. It was one of the state’s largest residential Liberty Bond allocations.


The developers of the building are Leviev Boymelgreen and Africa Israel Investments. The project manager is Tishman Construction Corporation. The property will be leased and managed by Rose Associates Incorporated Information on rentals will become available in 2006; the building is expected to open to occupants in June of that year.


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