Developer cites demise of tax incentive in abandoning off-grid plan in Astoria, NY
Dana Rubinstein reports in Politico that the Durst Organization is abandoning a $43 million plan for an energy-independent development on the Astoria waterfront, citing the collapse of a controversial tax incentive program as the reason.
The expiration of the state tax incentive, known as 421-a, “submarined” the developer’s plans, said Jody Durst, president of the Durst Organization. The incentive works by giving developers property tax exemptions in exchange for including affordable housing in new developments.
But the program, which Mayor Bill de Blasio considers essential to his affordable housing plan, expired earlier this year after developers were unable to reach an agreement with construction unions on wage requirements. Gov. Andrew Cuomo said he wouldn’t sign it otherwise.
Once the law expired, the Dursts drastically reduced the scope of their once-$1.5 billion, more-than-2,000-unit Halletts Point plan.
The family announced it was moving ahead with just one of the five planned buildings, because only one of them had a foundation in before the law expired and therefore qualified for 421-a. That means that, at least for the time being, there will many fewer apartments (400 instead of 2,000), many fewer below-market-rate apartments (about 80 instead of 483) and no more energy self-sufficiency.
Originally, the Dursts planned to build three co-generation facilities in Hallets Point, enabling the development to become one of the few in New York City that can operate independent of utilities like Con Edison, which left more than 100 customers without electricity in Queens on Thursday.
The three co-generation plants would have used natural gas to create electricity, with the byproduct going toward heating and chilling water and heating apartments. They also would have provided redundancy for each other.
Now that the Dursts are holding off on building much of the original development, including that which would have housed two of the three co-generation facilities, they determined it made no financial sense to move forward.
Building just one such facility for one apartment building was “far too expensive,” Durst said. “At that point, we threw up our hands and said we’ll do something else on a lesser scale that’s creative.”
That new endeavor will entail building a central chiller plant for the development, with water meters (rather than chiller units) for each apartment.
“We have done analyses that show that the project as a whole will consume about 50 percent of the electrical power that individual units would consume,” Durst said.
As for 421-a, on which the rest of the development depends, Durst doesn’t foresee negotiations between real estate and labor acquiring any sort of momentum until the next budget season begins.
“We’re not sensing that there’s going to be much focus on 421-a until next June starts becoming more of a reality,” he said.