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Q&A
Ericka Keller details the extreme financial burdens and delays faced by smaller developers in ULURP
2:45:32
·
5 min
Commissioner Leila Bozorg asks developer Ericka Keller about the disproportionate burden the lengthy and costly entitlement process places on smaller and emerging developers.
Keller vividly describes the immense personal financial risk involved, including taking out large loans with non-reimbursable interest, essentially working for free for years while navigating ULURP. She provides a specific example where city agency demands unnecessarily expanded a project's scope and cost by hundreds of thousands of dollars, only for the expansion to be removed later, leaving her project still seeking funding seven years after initiating partnership with the church.
- Smaller developers face extreme financial hardship bridging costs during long ULURP processes, often taking personal loans.
- Interest costs on these loans are often not reimbursable, eroding or eliminating developer fees.
- Keller provides a case study where agency requirements inflated ULURP costs by $700k for elements later removed.
- This specific project remains unbuilt seven years after starting due to process delays and funding challenges.
Leila Bozorg
2:45:32
Erica, and and thanks everyone for your testimony.
2:45:34
But, Erica, can you talk a little bit about, you know, Kirk was mentioning some of the costs and time involved in entitlements.
2:45:43
And in previous panels, we've heard people talk about how, you know, changing ULURP to fast track projects is only gonna help developers.
2:45:50
That all you know, that that's a bad thing and I see you all shaking your head.
2:45:54
But but folks don't often recognize that that often helps bigger developers with with bigger balance sheets and really puts at a disadvantage, smaller emerging developers.
2:46:05
So can you talk a little bit about some of the challenges you've faced, in trying to entitle projects and just that that difference between these big developers and folks that are trying to build a business, in from an emerging state.
Ericka Keller
2:46:19
So so I always say, jokingly, but seriously, that when I get to the pearly gates, I don't have to worry because I have developed hundreds of units really basically for free.
2:46:32
Right?
2:46:32
And, I'm bearing the risk as a city but because I am a smaller developer, I have to take out loans to bridge and then oftentimes the interest is not incurred or if there's a partnership and my partner is charging me interest, that's not included.
2:46:49
So therefore, when I get to the finish line and I finally get paid, I have to pay that money back out.
2:46:56
And most times, the interest is not included in the reimbursables.
2:47:00
It comes out of whatever pay that I would have made.
2:47:03
So, I have literally done much of this because I'm passionate and I love the communities that I have been involved in as a native New Yorker for the last fifty four years.
2:47:16
So, I think it is a travesty because I'm committed and I'm willing to do that.
2:47:23
But I think it's a travesty that many businesses are not allowed the opportunity to grow and to develop and be a part of this because of the fact that projects take way too long.
2:47:36
You have to bridge with either deals with larger partners or lenders that you end up then spending all your money back.
2:47:49
You often feel like you are fighting against the very agencies and electeds that you are trying to bring their mission or their state of vision or their commitments to the community to fruition.
2:48:04
And in most instances, you're bearing the weight of the community not really understanding necessarily what's happening and why because state admissions and goals are not really transparent and clear to the community so that they can understand.
2:48:23
So I'll give you one very specific example.
2:48:26
I was working with a faith based organization since 2017.
2:48:30
It took us three and a half years to get through the EULIP process because spot rezone is not allowed.
2:48:42
And so, CPC said to us no, DCP said to us that we had to include a nursing home that was built in the 1970s out of zone as part of our ULURP application to make it reasonable or to make it sound application.
2:49:06
And what they didn't consider was that that nursing home also had a parking lot.
2:49:12
And so that parking lot, once we did the studies during the certification process, would allow for almost 600 units of housing on a residential street.
2:49:24
So here we were proposing just 83 units of housing on the church's parking lot.
2:49:31
But now, because we were forced to include this nursing home across the street as part of the application, now that allowed for almost 600 units that caused all these issues with the technical study of what would be the implication of bringing six eighty three units when we were only bringing 83.
2:49:51
Literally, I had to keep taking out loans.
2:49:54
I had to study after study after study.
2:49:57
I kept having to spend more money on additional studies, all to get finally to the end of the process where the council member said, there's no way in the world that I'm going to rezone that across the street and open the door for the possibility.
2:50:15
Take it out.
2:50:17
So it was out, and I was $700,000 in debt.
2:50:24
Right?
2:50:25
And so now,
Mitchell Moss
2:50:27
I
Ericka Keller
2:50:27
still have application to the state, my third time putting in an application for a 9% tax credit because it is a very competitive process and smaller developers don't have the technical support to be competitive with larger developers.
2:50:44
And we're hoping that we are finally successful and that this church that trusted me and partnered with me in 2017 will finally be able to develop 83 units of senior housing in the founder's name who is in a nursing home now.
2:51:05
She's she's gotten dementia, and so she won't even understand that this development for the community is being named after her.