Affordable Housing in Peril

by Sara Maher

Even if you can’t build it, they will come.

More than two million New Yorkers currently live in housing with some form of market-rate protection. Mayor Bill de Blasio’s Housing New York plan seeks to add or preserve 200,000 affordable units over a period of 10 years, but it’s not the mayor’s goal that raises concern. “They will get to that number,” said Richard Roberts, Managing Director of Acquisitions for Red Stone Equity Partners, LLC. “I guess the bigger question is really... will it even be enough?”

Roberts joined five other panelists, along with moderator and New York Times urban affairs correspondent Sam Roberts, to discuss Affordable Housing: What About the Future? at the opening of the Museum of the City of New York’s Affordable New York: A Housing Legacy exhibit. The exhibit celebrates the City’s progressive history regarding tenements, zoning laws, and affordable housing, leading up to what the de Blasio administration surely hopes will be an instance of history repeating itself.

Some 23,325 units were built during the first year of the “most ambitious market plan in the history of the United States,” according to the Hon. Alicia Glen, introductory speaker and Deputy Mayor for Housing and Economic Development. But with 100,000 more people in the city just in the last year, after 10 years the 200,000 units won’t even make a dent. “At the moment, there are more units being lost, converted to market rate... than anything that any program can meet... [and] I haven’t heard of any legislation or anything trying to stop this bleeding.” said Saky Yakas, partner at SLCE Architects.

One Step Forward, Two Steps Back

The New York State Mitchell-Lama housing program had intentions similar to those of de Blasio’s Housing New York. Beginning in 1955, 269 buildings with 105,000 apartments were built to support middle-income families and help stabilize income-segregated neighborhoods, but developments were allowed to buy out of the program after 20 years. Between 1990 and 2005, 34% of Mitchell-Lama units were lost to privatization.

Roosevelt Island’s Island House was the first building in the city to exit the Mitchell-Lama program while retaining affordable units, remarkable because Roosevelt Landings and Rivercross transitioned to market-rate. This was the result of a series of negotiations between unit and building owners and the government leading up to privatization; unfortunately, most management companies are not open to such prolonged negotiations. Roosevelt Landings, which includes what used to be called the “senior building,” is quickly becoming unaffordable to seniors on fixed incomes. Westview is now looking to preserve its affordable units with a privatization plan similar to that of Island House, but the plan has not received the required governmental approval.

The “fundamental challenge,” according to Rafael E. Cestero, President and CEO of the Community Preservation Corporation (CPC) and its for-profit subsidiary, CPC Resources, Inc., is the expense put on building owners to operate a property. Building owners have to be able to pay for the maintenance of their building. “It really does come down to resources, and obviously... housing is very, very expensive,” added Ron Moelis, CEO of Chairman of L+M Development Partners Inc.

Not Affordable To All

Moderator Sam Roberts asked, “what about people who cannot afford affordable housing?” Even if owners and developers are willing to preserve and build “affordable” units, there’s no guarantee that people will actually be able to afford them. 56% of city renters are putting more than 30% of their income into housing, and there can be a large range of income levels within the same neighborhood or building. Ismene Speliotis, Executive Director of Mutual House Association of New York, said there are people currently living in affordable housing “who are still putting 40-50% of their income into housing.”

And even unit owners who have a controlling stake in a privatized building like Island House have issues with affordability. The proposed “Westview House Affordability Plan,” modeled after Island House’s plan, allows current residents to buy their units at about one-third of market rate, but it is still a significant transition to go from renter to owner. Owners can face nearly doubled monthly expenditures with mortgage and maintenance fees added to their utility bills.

“The fact of the matter is if we don’t preserve these [affordable rental] units... then I don’t actually know where we are all supposed to live,” added Speliotis. “We have to really think creatively about this situation, and we are not going to be able to build our way out of it... That is not to say we stop building.”

Building a Solution

“If you could magically build enough housing, the prices would come down at some point, and you would have a more livable city,” said John H. Banks III, President of the Real Estate Board of New York. Unfortunately, “we can’t build enough for the people who are here, and the people will keep coming,” said Richard Roberts.

“The reason we can’t build as much as we want is money,” added Banks. “It’s very, very difficult to put together a financing plan that allows you to build housing the way you want to.” Now that most City-owned land is gone, and revitalization efforts have diminished the number of vacant buildings needing renovation, “there has to be a new way to think about the opportunities,” said Cestero. “One thing the City can do is create an incentive program to incentivize private developers to include affordable units in their buildings.”

There is currently a mandate on developers to include a larger share of affordable housing, but because land and construction costs are so high, it is difficult to incentivize the building of affordable units without demanding it. Developers want to build in a desirable neighborhood that promises a full, consistently profitable building, and neighborhoods with affordable housing are not usually the first to spring to mind. However, as with the Upper West Side, investment in an up-and-coming neighborhood can lead to some pretty profits... and a rapid increase in rent for current tenants.

Room For All

Neighborhoods become desirable and stable when people want to move there, and then continue wanting to live there for a long time. The difficult balance is improving the quality of life in a neighborhood without making it impossible for long-term residents – those who create community – to stay. The Housing New York plan is committed to community preference, meaning that 50% of affordable housing being built in a community goes to people who already live in that community.

“It’s important to convince community boards to be encouraged by the housing being built and to convince people to stay,” said Moelis. “But we have to be careful... that we calibrate this so that we’re not looking at this from one side or another.” He explained that imposed subsidies would have to support “not only the lowest-income people, but [also] the people who can afford market-rate housing.”

People in market-rate housing are necessary to support improvement of the neighborhood. Schools and transportation take longer to build than an apartment building, “and it’s infinitely more expensive,” said Cestero. “The density allows you to pay for a lot of that stuff... that’s what [the people] want and they are willing to take some tradeoff” when it comes to density and affordability in a neighborhood.

No Obvious Solution

“Housing production and preservation... has really become an obligation in running good and progressive city government,” said Glen in her opening keynote. “[But] if left purely up to the market to satiate the demand for housing, it would threaten to undermine what makes the city’s neighborhoods great.”

According to the General Development Plan, the Island was intended to “make the maximum contribution to the needs of the city,” meaning a place capable of accommodating the many different people who called the city home – and accommodating various income levels as well. The Island could be used as a miniature case study when considering the possible future of de Blasio’s plan, as the affordable units transition to market rate, and the construction of Cornell increases the neighborhood’s “desirability.” Yes, Cornell could boost the Island economy by bringing more human traffic to its restaurants and retail establishments, but it will also bring more traffic to the roads, subway, and Tram.

“When you don’t have land, you have to become more dense,” said Speliotis. “What the people... talk about is not that they are afraid of density, [but that] they are afraid that what will be built will not be for them.”

City residents looking for affordable housing may not have much say in what is being built “for them,” but all Island residents are eligible to serve on a RIRA committee, including the Housing Committee, which addresses issues regarding management and rental/ownership policies of Island units. City Council Member Ben Kallos is also active in affordable housing reform, and holds office hours on the Island every fourth Wednesday of the month from 2:00-5:00 p.m. at the Senior Center (546 Main Street). What can be done to change any of these realities remains to be seen.

Tags: Housing Affordable Housing Representation & Governance Ben Kallos Sara Maher

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