Developers Pare Housing Plan for Albee Square

A number of community groups thought they might have forced the city to reconsider a downtown Brooklyn real estate deal by packing public hearings with dissenters, but the transaction closed anyway last week pretty much as planned.

The big difference was that the developers have scaled down expectations for the number of apartments—a change that might end up diminishing what critics thought was the one redeeming, if limited, feature of the plan: affordable housing.

The buyer, a partnership consisting of the White Plains-based Acadia Realty Trust, MacFarlane Partners and two smaller entities, closed on the deal to buy real estate developer’s Joe Sitt’s groundlease for the Gallery at Fulton Mall on June 13, according to the city’s Economic Development Corporation. The purchase price was reportedly $120 million, compared to $25 million that Thor Equities, Mr. Sitt’s company, paid in 2001.

The 137,000-square foot city-owned parcel at Fulton and Albee streets represents the difficulties city planers have faced in trying to turn downtown Brooklyn into a job-generating office district. A rezoning in 2004 doubled the size of what could legally be built on Mr. Sitt’s site. The final environmental impact statement envisioned 1.23 million square feet of offices on top of a new shopping mall, housing a total of 5,762 jobs.

But office space has been a tough sell in downtown Brooklyn. The new leasees are planning a 1.6-million-square-foot building (which comes out to between 40 to 60 stories) with just 125,000 square feet of office space—for which they are receiving $3.2 million in tax breaks. In addition, they plan a mall of about 475,000 square feet—which will replace the very urban-centric one there now–and 650 apartments, according to E.D.C. spokeswoman Janel Patterson.

When announced in February, the project called for 1,000 apartments, and it is unclear how the excess space will be used now that housing has been scaled back. “The developer is looking at alternative mixes of uses,” Ms. Patterson said.

All told, the current plan anticipates 1,500 permanent jobs, according to a press release from the developers, plus whatever the mystery component will bring.

Assuming that the developer is keeping its original pledge to make at least 20 percent of the apartments affordable to low-income families, Albee Square, as the new tower will be named, will offer 70 fewer such subsidized rentals.

Critics, who packed two public hearings on the transaction, had called for a far higher percentage of affordable units, considering that the parcel was owned by the city. As it happened, the Department of Housing Preservation and Development, which in other parts of the borough is requiring that developers make 50 to 100 percent of units affordable if they lease city-owned land, gave its approval to an amendment to the original lease that permits the new owners to take full ownership of the site after 25 years for a mere $20 million. An H.P.D. spokesman referred all questions to the E.D.C.

“It’s a sad thing that they did not respect the community’s input and the historic value of Albee Square Mall,” said Beverly Corbin, the co-chairwoman of Families United for Racial and Economic Equality, a membership organization in Brooklyn that was one of a handful that objected to the lease transfer. “What about the small businessman who has his shop in the mall and will now be forced out?”

A press release from the development partners did not specify the number if apartments planned for the site, although it did say that it would include “a mixture of affordable and market-rate rental housing.” The press release does not mention a hotel, although previous press reports had indicated that was a possibility, and a spokeswoman for the partnership would not comment further.

The developers also experienced a disappointment on the housing front. The press release announcing the project in February stated that AvalonBay was in discussions to join the partnership as its residential developer . A spokesman for the Virginia-based REIT, Josef Korbel, told The Observer that the mention “was premature publicity.” He added, “Since that point, AvalonBay has pulled itself out of the negotiations.”