The Real Deal New York

Staten Island development boom hits crossroads

November 05, 2007
By Janice Fioravante

Back in 1993, a Staten Island newspaper quoted a city planner from Manhattan as comparing the development boom happening in the borough to “the wild, wild West.”

Today, more than a year after the passage of downzoning changes, James Prendamano, associate broker at Casandra Properties, described the very same place as “the borough of no” when it comes to development.

Has the pendulum swung too far the other way? It depends.

If you’re from the Department of Buildings or City Planning, then you’re quite pleased with the pace of building, describing the market as strong: The number of residential construction permits for Staten Island in the first quarter of 2006 has risen 30 percent to 296, from 226 in the same period a year ago.

But if you’re a builder in the borough, you may see the glass as half-empty.

“The number of houses being built has been reduced,” says R. Randy Lee, principal of Leewood Real Estate Group, home builders for more than 35 years.

The number of permits may be deceptive, brokers and builders agree. “Many permits are reissued for projects that were started before zoning changes,” explains Lee.

And Prendamano adds: “There’s a gap of six to 12 months on average from the time a builder buys land to acquiring the building permit. I see a slowdown in building, probably by 10 to 15 percent.”

Prendamano blames this on all the recent changes. “I think builders are gun-shy,” he says. “There are as many developers, but the constant scrutinization by the Buildings Department and City Planning make developers more hesitant to pay all the taxes on land and then wake up three weeks later to find there’s a change in zoning on your land.”

As chairman of the Island-based Builders Industry Association of New York (BIANYC), Lee notes that builders are saying that they expect to build fewer and more expensive homes in the future. A cooling market will slow things down a bit, too, affecting the pace of development and the number of homes produced. “Fewer homes are being built on speculation,” he says.

Perceptions vary, though. George Smith, a broker at Chris Homes and Lands, sees a lot of new construction, but says that the resale market is being affected. “Land is being snapped up, but inventory is slowing down versus a year ago, two years ago,” he says. “And buyers want houses for less.”

Joe Carroll, district manager of Community Board 1, also sees “builders building away merrily, and the construction tide has not ebbed, but where there were 10 houses built on a piece of property, now there are eight; where there were 40, now there are 30.”

Downzoning affected the types of housing allowed in the borough, particularly in its midsection and south end. Townhouses have been replaced by semi-detached and detached homes, especially two-family detached homes.

“If a builder was going to put in eight to 10 townhouses, now he’ll put in three detached two-families,” Carroll says.

This shrinking of supply and rising costs means less affordable houses for city dwellers, Lee says. Lee — a man of many hats — is also a member of the mayor’s Task Force for Growth Management on Staten Island, one of the facilitators of downzoning. Lee is in the minority as the only builder in the group, which is made up mostly of government representatives. “This has had a negative effect on marketability,” he says.

His sentiments crystallize why another task force is forming, this one with builders who are part of BIANYC and brokers trying to get their message to the mayor and the City Council about the effect of downzoning on Staten Island. “The housing community wants to organize itself in a coordinated way to provide expertise on the issues of development and traffic,” explains Allen Cappelli, consultant to BIANYC.

“Housing costs are increasing and pricing working-class and senior citizens out of the market,” adds Michael Diaz, president of the Staten Island Board of Realtors. Diaz is also president of Coldwell Banker Village Realty.

Places for seniors or the children or grandchildren of current residents to live are rapidly diminishing, notes Lee and other market watchers, who see New Jersey as benefiting.

“The spread between here and New Jersey is closing, also due to the ending of tax abatements [for new construction of one- and two-family homes under the city's 421b program],” says Diaz. “A homeowner can get a larger home on a quarter of an acre of property and pay $9,000 in taxes, where here in Staten Island he’d get an $800,000 home on a 40-by-100-foot piece of land and pay $7,000 to $8,000 in taxes.”

Diaz is also blaming the slowdown in buying property compared with two years ago — “they’re sitting on inventory” — on the tax abatement issue.

“The value to the developer drops,” Prendamano says. And he calls the task force of brokers and builders, “long overdue.”

Diaz sees the same hornet’s nest. “Affordable housing is decreasing as townhouses and condos are almost wiped off the Island,” he says.

North Shore poised for growth

Despite a rezoning that took place in Staten Island more than a year ago, real estate observers say the North Shore of the borough, being more urban and diverse than the almost suburban mid-Island and South Shore, needs more housing, not less.

In areas like Mariner’s Harbor, 25-by-100-foot lots were allowable, but then zoning changed to permit housing on only 40-by-100-foot property.

Michael Diaz, president of the Staten Island Board of Realtors, says the downzoning makes it harder to build affordable housing. “And this is a community that could use affordable housing,” he says.

Meanwhile, George Smith, a broker at Chris Homes and Lands, points out that neighborhoods closer to the ferry to Manhattan are getting more popular. “The North Shore right near the ferry is up and coming now, it’s building up now,” he says.

Land is also cheaper. “The same land that would cost $1 million on the South Shore, would go for only $300,000 on the North Shore,” he says.

Another reason for focusing on the North Shore now is that the majority of Staten Island has been built out, notes Kevin Barry, vice chairman of the Downtown Staten Island Council, which advocates sprucing up the waterside North Shore communities. “This part of the Island has been ignored for so many years,” he says.

Joe Carroll, district manager of Community Board 1, which encompasses much of the North Shore, points to several projects in the works, including 350 condo units — five buildings no taller than five stories — at the Stapleton waterfront, on what had been the Navy Homeport, and 120 coops proposed for the current Municipal Parking Lot in Stapleton as well.

The Stapleton waterfront project is currently going through the Department of City Planning’s Uniform Land Use Review Procedure process, though several groups in the area — including the Mud Lane Society for the Renaissance of Stapleton and the Downtown Staten Island Council — are voicing their concerns.

But Patrick Hyland, the director of government affairs at the Staten Island Chamber of Commerce, sees the project as spurring other development. “The Mayor’s Office and Economic Development Corp. are to be praised for the $66 million project,” he says.

Builders and brokers still see the North Shore drawing more people from other parts of New York, meaning that what has been the fastest-growing county in New York is not totally shut down to new development yet.

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