New York City mayor Bill de Blasio has called for the development and preservation of 200,000 affordable housing units over the next 10 years.
In an ambitious, $41 billion housing plan released today, he outlines more than 50 initiatives aimed at accelerating affordable housing construction, protecting tenants, and delivering more value from affordable housing investments. This includes doubling the Department of Housing Preservation and Development’s annual capital budget, increasing the investment to more than $2.5 billion.
De Blasio also wants to implement a mandatory inclusionary zoning plan, a major shift from the approach taken by the prior, Bloomberg administration. The mandatory program calls for developers to include affordable units in all medium- and high-density districts where rezoning provides an opportunity for more housing.
“We have a crisis of affordability on our hands,” de Blasio says. “It touches everyone from the bottom of the economic ladder all the way up to the middle class. And so we are marshaling every corner of government and the private sector in an unprecedented response. This plan thinks big—because it has to. The changes we are setting in motion today will reach a half million New Yorkers, in every community, and from every walk of life. They will make our families and our city stronger.”
Plan Echoes National Need
A Democrat in his first year as mayor, de Blasio has a background in affordable housing. During the Clinton administration in 1997, he joined the Department of Housing and Urban Development as regional director for the New York and New Jersey area.
Wages for the city’s renters have stagnated over the past 20 years, increasing by less than 15 percent, after adjusting for inflation. During the same period, the average monthly rent for an apartment in New York City increased by almost 40 percent.
“First, the plan acknowledges the tremendous need across all types of housing, all parts of the city, from rehab to new construction,” says Beth Mullen, national director of the affordable housing industry practice at CohnReznick, an accounting, tax, and advisory firm. “It’s a great summary of what’s going on across the country in terms of need.”
While acknowledging the plan’s enormous scope, Mullen notes that it also includes a number of low-cost proposals that could make a big difference. For example, de Blasio wants to review city-owned properties as potential sites for new affordable or mixed-use developments.
Housing New York: A Five-Borough, Ten-Year Plan also calls for revising city regulations to promote development, including reducing parking requirements for seniors housing.
“While the city incorporated many innovative housing strategies into the plan, a key component is the recognition that the mega-developments can’t solve the housing crisis," says Rafael E. Cestero, president and CEO of The Community Preservation Corp. "Instead, Housing New York recognizes the fact that the majority of New Yorkers live in smaller properties of 50 units or less in neighborhoods throughout the five boroughs.
"In response, this plan includes two new programs to develop on small, vacant, and scattered sites using the infill model to maximize the remaining available land in our land-constrained city. Additionally, the mayor took a stand on rent regulation by emphasizing the need to protect tenants from deregulation and incentivize landlords to keep apartments in transitioning neighborhoods affordable for existing residents."
The new proposals include the Neighborhood Construction Program and the New Infill Homeownership Opportunities Program. These programs will aggregate sites to develop affordable housing, including one- to four-family homeownership opportunities and up to 20-unit rental buildings.
Preservation, Mixed-Income Initiatives Key
Given that Michael Bloomberg’s housing plan called for delivering 165,000 housing units over his three terms in office, de Blasio’s proposal is even more ambitious, says Peter Lawrence, director of public policy and government affairs at accounting and consulting firm Novogradac and Co.
Lawrence notes that about 60 percent of the targeted numbers will come through the preservation of existing housing and 40 percent from new construction. “That’s a telling stat,” Lawrence says. “It’s often less expensive to preserve units than construct them from new. That’s a large part of how they're going to meet their ambitious goal.”
The 116-page report cites a desire to serve a wider range of New Yorkers. This includes pushing the federal government to allow “income averaging” at low-income housing tax credit (LIHTC) developments. This would allow the program to serve households earning up to 80 percent of the area median income (AMI) as long as the overall mix of LIHTC households at a development averages no more than 60 percent of the AMI.
The plan also calls for:
- Introducing new mixed-income programs: Saying that affordable units in traditional 80/20 deals target a narrow band of households, de Blasio wants to pilot a program that targets 20 percent of a project’s units to low-income households, 30 percent to moderate-income households, and 50 percent to middle-income households.
- Shifting funding from high-cost shelters to lower-cost permanent housing: The city plans to look at ways to reallocate a portion of shelter funding to permanent housing for homeless individuals and families.
- Revising the terms of the city’s existing subsidy programs and better aligning tax exemptions and other incentive programs to ensure that resources are leveraging the maximum amount possible.
“I support Mayor de Blasio’s housing goals for New York City,” says Rick Lazio, a partner at the Jones Walker law firm, who focuses on affordable housing and housing finance issues. “Like the rest of the nation, New York City has witnessed an increase in the affordability gap for renters. Over 30 percent of city renters pay more than 50 percent of their income in rent, making them one paycheck or illness away from ending up on the street. A vibrant, growing city needs to provide for workforce and affordable housing where workers, seniors, and families have access to a safe, healthy, and affordable home. Republicans and Democrats should agree on that ideal.”
Lazio and others say more information about the plan needs to emerge in the months ahead and that the devil will be in the details.
“Calling today’s announcement a ‘plan’ seems premature,” says Lazio, a former Republican congressman from New York.
“The mayor announced support for certain concepts and described areas of concern. But it reads more like an outline than a working plan,” Lazio says. “I’d ask that the mayor come back after a reasonable period of time—perhaps the next quarter—and offer the public sufficient detail so that the ideas in this announcement evolve into a meaningful plan.”
Among the areas to watch include underestimating community opposition in the outer boroughs to new rental buildings with much higher density to justify the additional affordable units; overreach by the mayor or the City Council in terms of modifying the 80/20 program; and whether new city housing funds will be properly leveraged with private dollars, Lazio says.
Terri Ludwig, president and CEO of Enterprise Community Partners, agrees that the plan comes at a critical moment, noting that more than 50,000 New Yorkers, including 22,000 children, live in homeless shelters, more than double the shelter population from a decade ago.
She commended de Blasio for putting forth the housing plan, calling it “an important first step” toward reversing the affordable housing crisis and creating diverse, thriving neighborhoods.
Connect with Donna Kimura, deputy editor of Affordable Housing Finance, on Twitter @DKimura_AHF