Demolition of the Domino Factory is just about underway, and Two Trees has every permit and rezoning it needs to move forward with construction of its waterfront apartments. But on Friday afternoon, the Department of Housing Preservation and Development held a hearing about a rule change proposed by Two Trees that would affect the tax breaks for developers who create affordable housing. This has agitated activists who oppose the “poor door” measures that some recent developments are accused of taking, from The Edge to Northside Piers to the impending Greenpoint Landing.

The 421-a rules in question give tax incentives to developers who deem at least 20% of the apartments in their complexes affordable housing, and intersperse these units with the market rate housing in the building, so as to avoid a “poor door” in which the affordable housing residents are segregated or have inferior amenities to the market rate residents.

Two Trees plans to build “Site E,” the only part of the development that isn’t directly on the waterfront, before the rest of the project, and make 50% of the units affordable housing, as a response to community need for affordable housing over market rate.

“From Two Trees’ financial perspective, it would be better for us to build affordable units in later years after we have recouped some of our upfront investment,” said David Lombino, Director of Special Projects for the developer, in his official statement to the HPD. “But we have agreed to build these units upfront because of this strong community preference.”

Under the current set of rules, a building can’t be separated by less than 10 feet from any other building in the development, or it will count as a separate project, with a separate division of 20/80 for affordable and market rate housing. So, Two Trees cannot build a complex made up of 50% affordable units on Site E without the rule change, because if the complex on the east side of Kent Avenue is considered a separate project from the rest of the site, Two Trees will only get a tax break on 20% percent of the units, not all 50%.  If the whole development is considered one “covered project,” Two Trees, and other developers in their wake, can divide up the units however they see fit.

Brian Paul, an urban planner and activist who writes for anti-development and Save Domino-affiliated blog The Domino Effect, opposes the rule change for this reason, among others, and submitted a written comment to the HPD.

“This rule change would appear to give other developers throughout the City free license to segregate their ‘on-site’ affordable housing in separate buildings across the street from their main developments,” he said in his official testimony to Elaine Toribio, Director of Tax Incentive Programs for HPD.

Paul also expressed concern about what “affordable” actually means, as Two Trees has not released details on the level of AMI (area median income) they are going to be working with when pricing the affordable units. Paul is advocating for 30-40% of the AMI, but the 421-a rules only require that the units be priced at 80% of the AMI, which would barely make a difference to those currently being priced out of Williamsburg.

It’s clear that Two Trees genuinely cannot make Site E a building with 50% affordable housing without the rule change. What remains unclear is why Site E, the farthest building from the water, needs to be the building with the most affordable housing. The creators of The Domino Effect have accused Two Trees of planning to maximize profits by keeping the waterfront apartments mostly market rate.

“If Two Trees wants the tens of millions of dollars of public money offered by the 421a tax break, the affordable housing should be top quality and integrated throughout the development – not stuffed into the cheaper inland building,” The Domino Effect announced in an official info sheet on the meeting.

“This is a waterfront building,” Jeremy Soffin of Berlin Rosen, the public affairs company representing Two Trees, told B + B in response. “The only structure in front of it is a park, so many apartments will have a view of the water.”

A  few of the two dozen or so community members that showed up to give testimony at the meeting were actually in favor of the rule change, including Deborah Medina, a lifelong Williamsburg resident and spokesperson for Southside United Housing.

“They are one of the first developers that have met all our demands. We held a meeting with over 500 people, and they came and listened to us,” she said. “They are promising equality for those who need affordable housing, something we haven’t gotten anywhere else. Schaefer Landing didn’t give us that.”

The problem, according to Paul, is that the promise remains only a promise until the tower is actually built.

“If a binding mechanism were devised to legally require everything Two Trees is promising, regardless of whether the site changes hands, I might feel different about this situation for the Domino site,” he told B + B in an e-mail. “I am not saying that Two Trees does not intend to keep their promises — but sometimes circumstances change and what was promised is no longer feasible.”

The NYC rulemaking agency will make a decision shortly on the proposed change, and if they decide in favor, the change will take effect in 30 days. Two Trees plans to break ground on Site E, no matter the HPD decision, sometime in 2014.

“The rule change was always planned,” Lombino told B+B after giving his testimony. “It was planned by the previous developers.”

He mentioned in his official statement that the previous developer meant for Site E to be 100% affordable, and therefore an actual “poor door” building that would segregate the affordable housing dwellers from the market rate dwellers. Two Trees references the former Community Preservation Corporation plan regularly, and makes a point of  emphasizing that their plan is better than the old, and already city-approved, CPC plan.

“Remember that David Lombino is paid (very well paid and he’s good at his job!) to make Two Trees look good,” said Paul in an e-mail to Bedford + Bowery. “Folks like myself are simply trying to hold powerful developers accountable to the public interest.”