Wednesday, January 29, 2020

Comptroller Stringer Proposes Sweeping ‘Universal Affordable Housing’ Requirement for All New Construction in the City

Universal Affordable Housing would require 25% permanently low-income affordable housing in all new development with ten or more units
Five-borough housing strategy would end the $1.6 billion 421-a tax subsidy to developers
Urges focusing all City housing capital investment on affordable housing for extremely and very low-income households to pull New Yorkers back from brink of homelessness
Outlines agenda to expand moderate and middle-income homeownership across the five boroughs
 New York City Comptroller Scott M. Stringer announced ‘Housing We Need,’ a five-borough housing strategy to fundamentally realign New York City’s failed approach to our housing crisis – including a universal requirement for 25% permanently low-income affordable housing in all new as-of-right development with ten or more units.
Comptroller Stringer also proposed an end to the longstanding 421-a tax subsidy program for developers, which costs the city more than $1.6 billion per year and has proven highly inefficient in its production of affordable housing. Comptroller Stringer’s plan further calls for the expansion of affordable homeownership programs, the redirection of existing capital dollars to extremely and very low-income housing construction, and the creation of a New York City land bank that would facilitate the transformation of vacant city-owned properties into affordable housing.
These are the cornerstones of a comprehensive housing strategy that follows six years of analyses, audits and reports on City initiatives that leave behind as many as 435,000 of New York’s lowest-income households, on housing plans that fail to create enough truly affordable housing for working families, on billions of dollars in wasted spending on inscrutable tax subsidies to real estate, on ineffective approaches to homelessness prevention, and on unrealizable paths to homeownership.
Universal Affordable Housing (UAH)
Comptroller Stringer: “The power in this approach lies in its simplicity: if you’re going to build in New York City, you will provide affordability that is sustainable.
“You will be part of the solution. No longer will developers be able to use affordable housing as a bargaining chip with communities.”
The City’s inclusionary zoning program, Mandatory Inclusionary Housing (MIH), has centered the creation of affordable housing in specific neighborhoods and offers developers additional height and/or density in exchange for the construction of a certain percentage of affordable units. However, much of this housing is not affordable to local residents; most of the housing built under the City’s ‘Housing New York’ plan is set at 80% of HUD-defined Area Median Income (AMI), or households making up to approximately $77,000 a year, or higher.
Comptroller Stringer’s proposal for Universal Affordable Housing:
  • Every new as-of-right development with ten or more units across New York City will be legally required to set aside a baseline of 25% of its units or the floor area, whichever is greater, for permanent low-income affordable housing.
  • All units created under UAH would be set at an average of 60% 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
Comptroller Stringer: “This is the housing that helps families that are one paycheck away from losing their homes. This is the housing that gets New Yorkers out of shelters. This is the housing that empowers folks to climb the economic ladder to security and stability.
“This is the housing we need.”
An analysis by the Comptroller’s Office found that the “affordable” housing created by the Administration’s “Housing New York” is too expensive for as many as 435,000 of the city’s most severely rent-burdened households.  Just one third of the newly-constructed housing units through the end of Fiscal Year 2019 were within the reach of extremely low and very low- income households (defined as households making 30 percent and 50 percent respectively of AMI, or $28,830 and $48,050 respectively for a family of three).  The Comptroller’s analysis found that nearly 565,000 New York households pay over half of their income for rent, are severely overcrowded, or have been in homeless shelter for over a year.
As New York City’s homelessness crisis grows, Comptroller Stringer called on the City to direct all current housing capital investment to benefit the households most affected by the crisis of housing affordability, including:
  • Starting immediately, focusing 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 nearly 1,000 vacant lots currently owned by the City; 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
Comptroller Stringer: “We need to fundamentally change the bargain between the city and the real estate industry.  We can’t keep spending billions and billions and getting so little in return.”
The as-of-right 421-a program, also known as Affordable Housing New York, is the largest current subsidy to generate affordable housing, at an annual cost of $1.6 billion in foregone property tax revenues, according to the Department of Finance’s 2019 Tax Expenditure Report. However, the ‘affordable’ units created by the program are not permanently affordable and can rent for as much as $3,100 a month – which is well above market rate in many neighborhoods. The Independent Budget Office estimated that from 2005-2015, the city wasted between $2.5 and $2.8 billion in revenue through the 421-a program by providing more benefit than needed. Furthermore, a report by ProPublica found that two-thirds of the 6,000 rental properties with 421-a abatements did not have approved applications on file, nor were they registered with rent stabilization.
Comptroller Stringer proposed ending the ineffectual 421-a program and instead:
  • Providing subsidies only on a discretionary basis strictly to plug financing gaps where there is demonstrated, documented need in order to meet the new mandate for affordability, deepen the affordability levels, 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 ensuring accountability and enforceability by transparently reporting all affordable housing units created through this program.
Making Homeownership an Achievable Dream
Comptroller Stringer: “We also have to do more to make home ownership an achievable dream in New York City, because right now it has become the impossible dream for too many working New Yorkers.
“If New York City becomes a place where only the wealthy can afford to put down roots and own a home, where all we do is build glass towers in the sky that sit half empty – then we should all be ashamed.”
The homeownership rate in New York City is half of what it is in the rest of the country; 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, Comptroller Stringer proposes to expand homeownership across the city by:
  • 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.

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