Comptroller Stringer Releases Plan to Address City’s Affordable Housing Problems

Universal Affordable Housing would require 25 percent permanently low-income affordable housing in all new development with ten or more units. On January 29, 2020, New York City Comptroller Scott M. Stringer announced a citywide housing strategy to fundamentally realign the City’s approach to the housing crisis. The strategy, coined Housing We Need, will include a universal requirement for 25 percent permanently low-income affordable housing in all as-of-right developments with at least ten units.

The plan calls for the expansion of affordable homeownership programs, the redirecting of existing capital dollars to extremely- and very-low income housing construction, and the creation of a City land bank that would facilitate the transformation of vacant city-owned properties into affordable housing.

Further, Stringer proposed to end to the 421-a tax subsidy program for developers. The tax program costs the City over $1.6 billion every year and has proven highly inefficient in its production of affordable housing.

Housing We Need follows six years of analyses, audits, and reports on City initiatives that have failed to make enough affordable housing, wasted billions of dollars on real estate tax subsidies, failed to prevent homelessness, and failed to make homeownership viable.

The plan is broken down into four major components: Universal Affordable Housing; Housing for Extremely- and Very Low-Income New Yorkers; Ending 421-a; and Making Homeownership an Achievable Dream.

 

Universal Affordable Housing

The City’s inclusionary zoning program, Mandatory Inclusionary Housing (MIH), has allowed for the creation of affordable housing in specific neighborhoods. MIH offered developers additional height and/or density in exchange for the construction of a certain percentage of affordable units.

Most of the housing built under the City’s prior plan, Housing New York, is set at 80 percent of Area Median Income (AMI), or households making up to approximately $77,000 a year, or higher. As a result, much of the MIH housing that has been created is still not affordable for local residents.

The Comptroller’s proposed fix for Universal Affordable Housing includes:

– Every new as-of-right development with ten or more units across the City will be legally required to set aside a baseline of 25 percent of its units or the floor area, whichever is greater, for permanent low-income affordable housing.

– All units created under Universal Affordable Housing would be set at an average of 60 percent of Area Median Income (household income of $58,000 a year for a family of three), or two parents making minimum wage and raising a child.

 

Housing for Extremely Low- and Very Low-Income New Yorkers

The Comptroller’s Office has found that Housing New York’s affordable housing is too expensive for as many as 435,000 of the City’s most rent-burdened households. The Comptroller has found that nearly 565,000 New York households pay over half of their income for rent, are severely overcrowded, or have been in a homeless shelter for over a year.

Only one-third of the newly constructed housing units through the end of the 2019 Fiscal Year were attainable for extremely low- and very low- income households. Extremely low- and very low-income households are defined as households making 30 percent and 50 percent respectively of AMI, or $28,830 and $48,050 respectively for a family of three.

Under the Comptroller’s plan, the City would be called to direct all current housing capital investment to benefit the households most affected by the housing affordability crisis, including:

– Starting immediately, to focus current City capital dollars for new construction on the production of units for extremely and very low-income households.

– Creating a non-profit New York City Land Bank to partner with community-based organizations to build 100 percent permanently affordable housing on almost 1,000 vacant City-owned lots; these sites can generate tens of thousands of affordable housing units for the lowest-income New Yorkers making 30 percent to 50 percent of AMI.

 

Ending 421-a

Affordable Housing New York, an as-of-right 421-a program, is the largest current subsidy to generate affordable housing. According to the Department of Finance’s 2019 Tax Expenditure Report, the 421-a program has an annual cost of $1.6 billion in foregone property tax revenues.

The Comptroller’s report highlighted an issue with these “affordable” units created by the program, as these units are not permanently affordable and can rent for as much as $3,100 per month, well above market rate in many neighborhoods. The Independent Budget Office estimated that from 2005-2015, between $2.5 and $2.8 billion in revenue was wasted through the 421-a program by providing more benefit than needed. The Comptroller’s Office also cited a report by ProPublica, which found that two-thirds of the 6,000 rental properties with 421-a abatements did not have approved applications on file, nor were those properties registered with rent stabilization.

The Comptroller’s proposed alternative to the 421-a program includes:

– Providing subsidies on a discretionary basis to plug financing gaps where there is demonstrated, documented need in order to meet the new mandate for affordability, allow for deeper affordability levels, and to increase the amount of affordability or provide good-paying jobs.

– Giving more discretion to the City to tailor subsidies including property tax abatements and capital subsidies.

– Mandating that all affordable housing supported through subsidies must be permanently affordable and reporting all affordable housing units created through this program to ensure accountability and enforceability by transparency.

 

Making Homeownership an Achievable Dream

Approximately 32 percent of New Yorkers own their own homes compared to 64 percent nationwide. Black and Hispanic borrowers receive less than 16 percent of home loans citywide, despite constituting a majority of the population.

In response, the Comptroller proposes:

– Expanding the Department of Housing Preservation & Development’s Homefirst and Homefix programs to provide qualified moderate- and middle-income homeowners with up to $40,000 toward down payments and loans for home repairs.

– Waiving real property transfer and mortgage recording taxes for qualified first-time homebuyers.

– Giving tenants the right of first refusal to buy their buildings when their building goes up for sale or foreclosure.

– Leveraging Community Land Banks and Land Trusts to build affordable co-ops and condominiums on City-owned land, and building more limited-equity housing for middle-class families.

 

 

By: Laine Vitkevich (Laine is a CityLaw intern and New York Law School Student, Class of 2020.)