City sues to change its error over affordable units at Clipper’s 77 Commercial
By Adam Pincus
The City of New York filed a suit yesterday seeking to correct its own error in an amendment to a housing affordability agreement covering Clipper Equity’s 77 Commercial Street in Greenpoint, Brooklyn. The error would allow Clipper to charge higher rents in affordable units than the original agreement contemplated.
77 Commercial is a 770-unit new construction rental with 200 affordable units. The original affordable agreement spread those 200 units in a band of affordability from 40 percent of area median income and starting at $732 per month in rent, to 125 percent of area median income. The amended agreement that the city submitted in error, had the lowest tier of affordability at 80 percent of AMI, with the cheapest apartment renting for $1,528 per month and rising to 125 percent of AMI.
The suit claims Clipper is not agreeing to correct the error and return the affordability down to 40 percent of AMI. The suit says David Bistricer’s Clipper would be “unjustly enriched” if it were not to allow the error to be fixed.
The city noted that the contract and the original regulatory agreement provided for apartments “to be offered to those households with low- and very low-incomes as well as those of moderate and middle income.”
“[Clipper] neither requested nor bargained for relief from the contractual affordable housing obligations… but they have refused to agree to the necessary correction of the Erroneous Exhibit. Therefore, this litigation is necessary,” the city’s attorney said in the filing.
“If the Erroneous Exhibit is not corrected, [Clipper] would be unjustly enriched by receiving – solely due to a mistake – a windfall worth more than $6 million which they did not request and for which the parties did not bargain,” the suit says.
The city says that the benefit of up to more than 300,000 square feet of air rights was worth a total of $8.2 million, with only only $2 million to be paid in cash. As for the balance, the developer would receive a credit of $6.2 million in exchange for agreeing to develop 200 units of affordable housing subject to the specific deeper affordability restrictions, the city says.
City agreed to transfer up to 303,903 square feet of development rights, of which at least 279,444 square feet were transferred in 2015.
According to the complaint, 0n September 3, 2020, HPD officials, Bistricer, and other discussed the error.
“On behalf of Defendants Waterview Owner and Waterview Developer, Bistricer advised HPD that he believes the Erroneous Exhibit should not be corrected. Specifically, Bistricer said that the 2013 Response Letter set forth a commitment by the City to provide HDC bond financing, which was never provided.
“Bistricer’s rationale for why the inclusion of the Erroneous Exhibit in the Second Amendment is fair misrepresents the requirements of the Contract of Sale,” the complaint says.