What can the next mayor do about affordable housing that Bloomberg didn’t?
Can’t afford that $2,500-a-month two-bedroom at an "undisclosed address" in Bedford-Stuyvesant or the $2,500 one-bedroom in the South Slope with backyard and something called a "spa bathroom"? The candidates running for mayor are here to help.
New York City has lost more than 230,000 rent-regulated units over the past three decades, and the the demand for public housing so far outstrips supply that as of March the New York City Housing Authority's apartment houses had a waiting list 167,353 families long. At the end of 2012, only 29.6 percent of homes in the metropolitan area met the commonly accepted definition of "affordable," coming within reach of residents earning the median income of $68,300.
Demand drives up rents. The supply of people able to afford those rents shows little sign of abating.
"People in the industry do fundamentally believe if they could just increase the supply, just like they learned in Economics 101 ... prices are going to come down," said Julia Vitullo-Martin, director of the Center for Urban Innovation at the Regional Plan Association. "But what no one has counted on is the ever-increasing demand, which has no limit. And there is no government solution to that."
"It’s really a hopeless subject,” she added.
At a press conference in March, Bloomberg proudly declared that the city’s population had hit 8.4 million, and for the first time in 60 years, more people were moving to New York City than leaving it, thanks largely to increased immigration and an influx of creative-class professionals.
Bloomberg is widely acknowledged to have adopted an aggressive posture toward the persistent problem of affordable housing. He's on track to build or preserve (mostly preserve) 165,000 units by the end of next year.
In a recent report by the Association for Neighborhood and Housing Development that otherwise faulted the Bloomberg administration for not making its “affordable” units affordable enough, Bloomberg’s “New Housing Marketplace” was described as “the largest municipal aﬀordable housing eﬀort in the nation’s history” and as such, “an impressive achievement.”
But despite that achievement, the problem has only grown.
“The housing market in New York has been so consistently strong over the last 10 years that the mayor’s plan really did a lot of innovative things, but it basically kept pace,” said Rebecca Koepnick, director of the Moelis Institute for Affordable Housing at New York University.
"We’re going to absolutely have to keep the current level and increase further," agreed Vicki Been, director of the Furman Center for Real Estate and Urban Policy, also at N.Y.U.
The question is, how?
AS WITH MOST ISSUES THIS ELECTION SEASON, the Democrats running for mayor have solutions that differ from each other only marginally.
If Bloomberg's program builds and preserves a total of about 15,000 units a year, Quinn would build and preserve 18,000 a year.
More precisely, right now, according to the speaker's office, the Bloomberg administration spends between $300 and $400 million a year in capital dollars to create or preserve about 15,000 units of affordable housing a year: about 10,000 rehabilitated units plus 5,000 or so new ones.
Quinn would continue all of that, and add on top of it another 3,000 units a year of new, middle-income housing. She would pay for those units, in part, by taking on more municipal debt.
Separately, she would award tax cap extensions to landlords who keep existing units affordable even after they age out of existing tax abatement programs.
Quinn’s gotten a lot of flack for the latter proposal's close resemblance to one put forth by the Real Estate Board of New York.
“The fact is that so much of what the speaker proposed in her state of the city speech was based on a plan authored by the real estate industry which bluntly provides, shockingly, tax breaks, for the real estate industry,” said Public Advocate Bill de Blasio at a housing forum earlier this year.
But some housing advocates are withholding judgment, particularly in light of the paucity of detailed proposals coming from the other camps.
"Used judiciously, tax incentives can be an effective tool to preserve affordability in privately-owned housing," said Ted Houghton, executive director of the Supportive Housing Network of New York. "The trick is to structure it effectively—you don't want to give too much for too little, provide tax breaks for something landlords would do anyway, or give so little that no one takes you up on your offer. Certainly, all indications are that she and her staff are trying to structure it so as to hit that sweet spot where it preserves a significant number of units, but it's by no means a giveaway.
For his part, in April de Blasio made a big housing speech in which he said that he would create 100,000 new affordable units and preserve nearly 90,000 over the next eight years, which means he would build or preserve nearly 24,000 units a year, more than Quinn's proposing and more than Bloomberg has achieved.
He would do that by changing "air rights" statutes. Presently, land owners can trade their right to build upward on their lots to the owners of adjacent lots, increasing the heights their neighbors can build up to. De Blasio would make them transferable from one non-adjacent property to another within the neighborhood. That would ramp up density, something Vitullo-Martin described as an idea “worth exploring.”
He would also use $1 billion in city pension funds to, as he said in March, implement “a kind of local version of a Keynesian philosophy, using our pension-fund dollars to create affordable housing on a much greater scale."
But of course using the city’s pension funds for any purpose other than maximizing the pensions of city retirees carries significant risk.
"Pension funds have to be run to maximize the return for the pensioneers," said Bloomberg in December, when another plan was floated to invest pension dollars (that time, to pay for city infrastructure improvements). "And in the case of pension funds where their returns are really guaranteed by law, it's really the taxpayers that have to make sure the returns are high.”
Nor would pension funds necessarily create as many units as some of the candidates might believe.
Benjamin Dulchin, executive director of the Association for Neighborhood and Housing Development, told me that the pension proposals were “definitely helpful,” but “not a game-changer.”
De Blasio would also, among other things, create what's called a mandatory inclusionary zoning program. Already, the city from time to time revises the zoning restrictions on certain neighborhoods, blocks or districts to increase the amount of buildable space available to developers. De Blasio's plan would automatically require developers who take advantage of "upzoning" to return some of the wealth to the city that the city has created, with the stroke of a pen.
Thompson also supports mandatory inclusionary zoning, but Quinn, warning of potential legal hurdles, does not.
“If the next mayor wants to have a really substantial affordable housing policy, they need to take better advantage of the private market and really make the private market work substantially better, and that means mandatory inclusionary zoning,” said Dulchin.
“We’ve tried an approach to rezonings that’s very friendly to the real estate industry," De Blasio said. "It’s time to drive a harder bargain.”
Gristedes billionaire John Catsimatidis, who is seeking the Republican nomination for mayor, told me he also likes the idea, with the provision that the upzonings be focused on areas close to subways.
Former M.T.A. chairman Joe Lhota, another Republican contender, told me that though he liked voluntary inclusionary zoning, he still has to give the mandatory idea some thought.
Both he and Catsimatidis have also endorsed the "Housing First" affordable housing plan, which would in the next eight years create 60,000 new affordable homes and preserve 90,000 apartments. That's nearly 19,000 homes a year (more than Quinn, less than de Blasio).
Former comptroller Bill Thompson's affordable housing plan, meanwhile, proposes building and preserving 120,000 affordable units in eight years' time, or 15,000 a year.
AS INTRACTABLE A PROBLEM AS AFFORDABLE HOUSING IS IN NEW YORK City, there is one solution that none of the candidates, except for Lhota, has endorsed.
Bloomberg has proposed leasing out underutilized land next to public housing to developers, who, in turn, would build mostly luxury housing there. The resulting revenue would go toward propping up New York City's public housing authority.
“NYCHA did exactly what a responsible landlord should have done,” said Vitullo-Martin. “It looked around and said, 'our traditional sources of government support have dried up, Albany has abandoned us, Washington has abandoned us, we have this housing stock that desperately needs infusions of money and we don’t have any money so we have to look to our own resources.' That was the right approach.”
At a mayoral forum in late March, Thompson, who might as well have been speaking for the rest of the Democrats, called the proposal a "horrible mistake."
His counterproposal, on the other hand, doesn't look all that different: he would launch a survey of all underutilized city-, state-, and federal-owned land (including land owned by NYCHA) and then see if any developers want to build on it. But he would demand that half the housing be affordable or middle-income (which is kind of undermining the profit-driving, NYCHA-supporting premise of the whole thing), and he would work more closely with NYCHA tenants.
“I think one could say it’s irresponsible of public officials to attack that idea without coming up with another solution because that housing is deteriorating and we’re going to end up with demolition by neglect if somebody doesn’t come up with a solution,” said Vitullo-Martin.
CORRECTION: The original article incorrectly associated Julia Vitullo-Martin with the Manhattan Institute, where she used to work.