Things are moving along quite nicely, it turns out.

It may seem as though there has been limited tangible progress since Related Companies was tapped to develop the project in February of last year, but that is because most of the work is being done below the surface—with on the banks of the East River and the banks of housing finance.

Since last spring, HPD and the city’s Economic Development Corporation have been at work on building new infrastructure in Hunters Point South, which had been a Daily News printing plant until a few decades ago but otherwise little else. “There was nothing there,” an HPD official told The Observer.

According to the EDC's construction report for May, sanitary sewers are 100 percent complete, storm sewers are 96 percent complete and water mains are 82 percent complete. Parks infrastructure is coming along, as well, with subsurface work more than halfway finished and features like a dog run, playground, concession building and waterfront walkways taking shape.

Furthermore, the department has pegged financing to be wrapped up this fall for the first phase of the project—project financing usually closes in May and June, but given the cost and complexity of this deal, more time is being set aside to get it done. After that, a groundbreaking is scheduled for October.

At full build out, Hunters Point South will have 5,000 apartments, 60 percent of which are to be affordable, with a particular focus on middle class housing. Related is developing the first phase with Phipps Houses and Manadnock Construction, a builder of affordable housing throughout the metro area. The two towers are being designed by SHoP Architects and KPF and will house 950 units.

Last November, Deputy Mayor Robert Steel announced that all of those apartments would be affordable units, as opposed to just 75 percent of them as originally planned. Affordability ranges from $32,000 a year to $130,000 a year for a family of four.

As for mega projects in general, the city still sees much strength in that area.

"Willets Point and Atlantic Yards are two of the City’s important signature projects for sure, and the timetables have been recast somewhat," the HPD official said. "Those are two big projects in a city with a lot of big projects, so I don’t know if using them as a catch-all to characterize the state of housing production in City development projects is the right way to go."

The official also pointed to progress on projects ranging from Gotham West to Arverne as other large housing projects that continue to make progress in spite of surrounding economic issues.

And now, for some mood music:

At least 75 percent of the 5,000 rental units will be set below the market rent for surrounding neighborhoods, and the housing lottery will give preference to local residents.

New York City purchased the land from the Port Authority for about $100 million, Housing Preservation and Development Commissioner Rafael Cestero said. The city's total investment in the project, which encompasses subsidies for the construction of apartment units and financing for subsurface infrastructure like sewers and the park land, will come to about $130 million.

SLIDESHOW: Building a Brand New Neighborhood in Queens.>>

When introducing the project, Bloomberg was quick to parry any potential criticism about the cost of such a sweeping project, invoking his theme of making strategic investments to avoid tax increases while directing a barb upstate.

"Just because we are facing budget gaps and must do more with less doesn't mean that we can walk away from the investments that will keep our city strong for decades to come," Bloomberg said. "I talked about that in Albany on Monday: We have to have a future at the same time we have to find ways to do more with less."

Phipps Houses, Related Companies and Monadnock Construction won a joint bid to develop tHunter's Point South, and will be aided both with tax-exempt bonds issued through the Housing Development Corporation and federal housing tax credits for the low-income units.

Bloomberg said ground has already been broken for the school, which should be ready for its inaugural class by fall of 2013, and that construction of the residential buildings should take about 24 months, beginning this summer.

This is not the first attempt to develop this land, which was conceived of as the space for an Olympic Village during New York's failed 2012 Olympic bid. The development will be the largest New York public housing development since the 1970s.

SLIDESHOW: Building a Brand New Neighborhood in Queens.>>

Proposals are due by September, and the city's housing commissioner, Rafael Cestero, told the Times he was expecting many of the larger developers in the city to bid.

This project, however, is by no means the fastest moving in the mayor's portfolio. It was first announced in 2006, with planners gradually plodding away on planning and infrastructure work ever since. While planned city-led developments such as Coney Island and Willets Point have seen their budgets rise or stay flat, Hunter's Point South's budget has been cut substantially, and there is not enough funding for the full 5,000 apartment project.

One thing that is clear from this is that middle income housing is not cheap to build.

Despite the fact that the land is owned by the city (i.e. developers don't have to buy it on their own) and 40 percent of the apartments will be market rate waterfront property, the city is still offering subsidy of to $90,000 per moderate- and middle-income apartment. (The RFP says that bids "will be rated based on providing the most affordability with the least subsidy.")

This is in part because, unlike projects that contain some low-income apartments, the development is not expected to be eligible for tax-exempt financing, adding a substantial cost.

And unlike low-income housing, there's not a ton of precedent nationally for middle-income developments of this scale, given that in much of the rest of the country, city governments leave the private market to develop middle income housing on its own. The impetus in New York City is that there's a housing shortage, and if the market were left to its own devices, it would make it hard for anyone making a teacher's or firefighter's salary to find housing anywhere close to central Manhattan.

ebrown@observer.com

In two separate votes, the Council approved the redevelopment of the 61-acre Willets Point industrial site by Shea Stadium and the 30-acre Hunter’s Point South site south of Long Island City along the East River. Based on numbers released by the city, in a full build-out of what’s allowed under the zoning, Willets Point would have more than 1,900 units of below-market-rate housing while Hunter’s Point South would have about 3,000.

The Willets Point vote culminates months (or decades, taking a broader view) of contentious battle over the site's future. The Bloomberg administration targeted the district for redevelopment more than two years ago, and since has worked to push through the City Council a plan that would remove the current landowners and allow a developer to build a giant new complex of housing, retail, a hotel and perhaps a convention center. The fight to get Council approval was particularly difficult, as local Councilman Hiram Monserrate proved to be an exacting negotiator on issues surrounding affordable housing and deals with the large landowners.

Ultimately, the city boosted the affordable housing numbers to higher levels than it preferred and scaled back the scope of the main development. While the whole 61 acres will still be rezoned, two large parcels owned by Fodera Foods and House of Spices will remain in private hands and will not be awarded to a developer, though the businesses could independently sell their land. (The city bought out the largest landowner, Tully Construction, earlier today, though Tully would stay on its land for a number of years.)

Shovels in the ground shouldn’t be expected anytime soon as the project is clearly one for the long term, especially given the inclement credit markets. The site has been targeted for redevelopment by numerous administrations since the 1960s, but the landowners and other factors have thwarted the plans each time. Despite the likely widespread use of politically unpopular eminent domain, or at least the threat of it used on businesses to force land sales, the Bloomberg administration managed to emerge successful.

The plan passed the Council 42-2, with one abstention. Councilmen Tony Avella and Charles Barron voted against the plan, while Letitia James, an opponent of eminent domain, abstained.

HUNTER'S POINT SOUTH WAS hardly marked by any controversy, and thus slipped under the radar. The site was initially targeted by Mayor Bloomberg as a future home of 5,000 apartments, all for the middle class. The administration subsequently dropped that number to about 3,000 (with another 2,000 or so at market rates); however, it is still unclear how the costly venture will be financed.

The city is considering a financing structure where it would essentially be the developer and landlord for all the buildings on the site, a structure that the Economic Development Corporation thinks could save money in the long run as it would allow the use of tax-free financing. That structure has caused debate within the administration and would also need approval from the Internal Revenue Service, and has drawn fire from elected officials and affordable housing advocates who worry it would be inefficient. Still, a more standard development structure would be unlikely to qualify for tax-free bonds, and thus would require a large city investment.

Hunter’s Point South passed the Council 45-0.

The planning commission voted 11-1 and 12-0 in favor of, respectively, Willets Point and Hunter's Point South, according to a Department of City Planning spokeswoman, an unsurprising vote given that the board is controlled by mayoral appointees. The one vote against came from the representative for Public Advocate Betsy Gotbaum.

The Council has about two months to act, and typically takes much of that time for negotiations with the administration. Willets Point is the most contested large-scale project to come before the Council in years, as a majority of members have signed onto a letter of opposition to the plan in its current form. A Council defeat would kill the project, and would be an unprecedented step for a project of this size in the land use approval process.

Likely to arise over the coming weeks as a major issue is the subject of below-market rate housing, as most of the Council and advocacy groups including ACORN have said the current level planned (20 percent) is not nearly enough.

Also on the table is the use of eminent domain—never very popular among Council members seeking reelection or higher office—which the city has said is needed to guarantee that the entire 61-acre site can be assembled and developed. The existing landowners have vehemently resisted the plan, particularly the eminent domain aspect of it, and have been fighting back with a constant stream of rallies, lobbying and campaign donations.

Hunter's Point South, a site near Long Island City where the Bloomberg administration wants to put up to 5,000 apartments, most of them for middle- or moderate-income families, has been less controversial, though advocates are still pushing for more affordable units. The city has said 60 percent will be below-market rates.

As if there weren’t enough affordable housing fights around the city, it’s probably time to add another to the list. In Long Island City, at the confluence of Newtown Creek and the East River, the city is at the start of the public review process for a major planned housing complex of mostly middle-income residents called Hunter’s Point South (a.k.a. Queens West).

Tonight, the fun kicks off at a Community Board 2 hearing in Queens, where, among other issues, we’re willing to bet that people want more affordable housing than is presented in the plan.

The city-led initiative calls for 5,000 apartments, with about 3,000 of them to be aimed at middle-income households (defined in this instance as families of four making up to about $145,000 a year), with the other 2,000 to be market rate.

The plan, which was announced as a large middle-income project in 2006, is facing criticism from affordable housing advocates who want the income targets lowered.

“We’re looking for at least half to be” available to low- and moderate-income residents, said Hannah Weinstock, a coordinator with Queens Community House and Queens for Affordable Housing.