#NYChousing 10 ISSUES FOR NYC’S NEXT MAYOR

FURMAN CENTER MOELIS INSTITUTE FOR REAL ESTATE & URBAN POLICY FOR AFFORDABLE HOUSING POLICY NEW YORK UNIVERSITY NEW YORK UNIVERSITY SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE FURMAN CENTER MOELIS INSTITUTE FOR REAL ESTATE & URBAN POLICY FOR AFFORDABLE HOUSING POLICY NEW YORK UNIVERSITY NEW YORK UNIVERSITY SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE

INTRODUCTION TO THE SERIES Although the real estate market in New York City slowed considerably during the recent downturn, there was no slowdown in the demand for affordable housing. Over the past decade, rents across the city continued to rise while incomes stagnated or fell. The next mayor will have to take on the challenge of addressing growing housing needs in an environment of shrinking federal support and a strengthening real estate market.

#NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR WWW.FURMANCENTER.ORG | @FURMANCENTERNYU 3 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC Source: U.S. DepartmentofHousing andUrban Development Income Limits, Furman Center *Maximum affordable rent isdefined as30percent of ahousehold’s monthly gross income. for aThree-Person HouseholdinNew York, NYMetropolitan Area, 2011 TABLE 1: New Yorker spent alarger share of his or incomes the averagemeans that stagnant ly.of risingrents Thiscombination and renter households actually declined slight 10 years, while therealmedian incomeof rose by 19 percent inreal dollarsover those Figures 1aand1bshowmedian rents that housing al grew between 2002 and 2011. Yorkhouseholds strugglingto afford rent severaltrends. thenumberof New First, of affordable housing,asevidenced by New York Cityfaces acriticalshortage HOUSING SHORTAGE AFFORDABLE NEW YORKCITY’S inform thedebate ononeoftheten issues. provides context, background,to anddata briefs to address these issues. Each brief City. We have prepared 10#NYChousing confrontwill thenextmayor of NewYork tified 10 key affordable housing issues that forumthat andour own research, we iden affordable housing in April2013. Through use policy,sponsored mayoral a forum on issues relatingabout to land housingand to foster frankand productive discussions Policythe Furman at Center, which seeks The MoelisInstitute for AffordableHousing Middle Moderate Low-income Income Group YO RK UNIVERSITY

Income Group DefinitionsandMaximumAffordable Rents CENTER Low Very Low Extremely Low E Percentage of Area Median Income - - - 200% 150% 120% 80% 50% 30%

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE metropolitanarea medianincome (AMI); havingtoincome up an 80percentof the those as households low-income defines Housing and Urban Development. guidelines from theU.S.of Department rents affordableto thosegroups, using groups,monthly andthemaximum low-, moderate-, middle-,andhigh-income defining thresholds income shows Table1 affordabilityvaried across incomelevels. These changes inrentalhousing utilities. of their gross monthly income on rent and burdened, spendingmore30 percentthan half of NewYork Cityrenters were rent Figure 1cshowsby that 2011 wellover her incomeonrentin 2002. in 2011 than portal/datasets/il.html 236). Retrieved from http://www.huduser.org/ Section 221(d)(3)BMIR,235and HUDProgramopment. IncomeLimits(Section8, 1 U.S. DepartmentofHousingandUrban Devel 63 percent renter ofthecity’s households about definitions, these Using AMI. the of have anincomebetween 121-200 percent and middle-income households the AMI; income ranging from 81-120 percent of moderate-income households have an YO Annual Income RK UNIVERSIT Maximum $147,250 $110,450 $88,350 $58,950 $36,850 $22,100 INSTITUT

Monthly Afford able Rent* Maximum E Y $3,681 $2,761 $2,209 $1,474 $921 $553 1 HUD - - 4 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC to26 about percent of moderate-income come toward rent and utilities)compared burdened (paying 30percentor more ofin percent of low-income renters were rent higher-income households. In 2011, 80 likely to bepaying unaffordablerents than Low-income households are muchmore percent are high-income, as Figure 2shows. moderate- or middle-income, and eight are low-income,30 percent about are FIGURE 1: Furman Center Source: NewYork HousingandVacancy City Survey, Bureau ofLaborStatistics Consumer Price Index, 1a: $1, $1, 1c: $50 20 40 60 YO

0% 50 00 Median Gross Rent (2012$)** $0 % % %

0 0 0 Rent Burdened Share Se RK UNIVERSITY ve re

ly R Rent, Income, andRent Burden inNew York City, 2002-2011* en CENTER 20 20 t 02 Bu 02 rd en ed Mo de E ra te 20 ly R 11 20 en t 11 Bu rd en ed -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE holds (2012$) 1b: rentalunits affordable to a three-person fromthat 2002 to 2011, the percentageof come households declined. Figure 4shows toable low-, moderate-, and middle-in Similarly, theshare of rentalunits afford grew from 2002 to 2011. of renter households facing rent burdens come group, asFigure 3shows, theshare the highest-income households.but In all households and justonepercent of high-in * TheFurman Center reports similarindicators inthe if these are paidfor by the renter. the leaseplusany extra paymentsfor utilities orfuels **Gross rent includes the rental amountagreed to in http://furmancenter.org/files/sotc/SOC2012.pdf Housing andNeighborhoods 2012.Retrieved from and Urban Policy. (2013).State ofNewYork City’s Community Survey. Furman Center for Real Estate 2012 usingadifferent data source, the American State ofNewYork HousingandNeighborhoods City’s $5 $4 $3 $2 $1

Median Household Income, Renter House 0, 0, 0, 0, 0, 00 00 00 00 00 $0 0 0 0 0 0 YO RK UNIVERSIT INSTITUT 20 02 E Y 20 11 - - - - - 5 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC 10 FIGURE 3: affordable housing in NewYork City has demonstrateThese data the needfor that these households. cupied rentalremainedunits affordableto proportionand asubstantial small, of oc reductionsdeclined, the incomes also were affordableunits to higher households at median income.Whiletheshare ofrental ing between 50 and 80 percent of the area the mostfor low-income households earn centage of affordablerental units declined decline of 14 percentage points.The per were affordableto asimilarhousehold, a by 2011,26percentjust but, ofrentalunits come household 50 making percent of AMI; rentalunits were affordable to alow-in For example,in 2002, nearly 40percentof household declined for each income level. 100% 20 40 60 80 20% 40% 60% 80% 0% 0% 0% Limits, Furman Center Source: NewYork HousingandVacancy City Survey, U.S. Department ofHousingandUrban Development Income (2013). using adifferent data source, the American Community Survey. Furman Center for Real Estate andUrban Policy *The Furman Center reports similarindicators inthe State ofNewYork HousingandNeighborhoods 2012 City’s % % % % YO RK UNIVERSITY 2002 2011 Households

Rent Burdened Householdby Income Group, New York City* All CENTER Severely Rent Burdened 2002 2011 E Low - - - - 2002 2011 Moderate

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE Income Limits, Furman Center U.S. DepartmentofHousingandUrban Development Source: NewYork HousingandVacancy City Survey, Income Group, New York City, 2011 FIGURE 2: Moderately Rent Burdened YO Moderate 15.1% Middle 13.9% RK UNIVERSIT

Share ofRenter Householdsin 2002 2011 INSTITUT Middle 8.1% High 62.9% Low E Y 2002 2011 High 6 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC Rent forThree-Person Householdsby Income Group, New York City FIGURE 4: 100% 1. these policyquestions.Our10topics are: we believe toof most critical the among be to contribute todebate thepublic ofwhat trends. Our 10 #NYChousing briefs seek nizations regarding howto address these mayoralthe candidates housing orga and Many proposals haveforwardput been by worldin a ofshrinkingfederalresources. dress its growing affordable housing needs ful consideration to how New York canad nextadministration havewill to give care larlylow-incomeamong Yorkers. New The only grown overdecade, the lastparticu Income Limits, Furman Center Source: NewYork HousingandVacancy City Survey, U.S. Department ofHousingandUrban Development Section 8 20% 40% 60% 80% 0% YO tration hasfinanced? the Bloomberghousing than Adminis or rehabilitate moreof affordable units Should thenextmayor commit to build 2002 2011 RK UNIVERSITY ≤ 30%

Share ofOccupied UnitsRented atorBelow MaximumAffordable -4% CENTER Percentages ofHUDarea medianincome 2002 2011 ≤ 50% -14% E 2002 2011 ≤ 80% -13% - - - - -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE 5. 4. 3. 2. 2002 2011 come households? subsidy for moderate- andmiddle-in Should thenext mayor provide arental affordable housing? the useof city pension funds to develop Should thenextmayor seek to expand they buildmarket-rate housing? preserve affordablehousing whenever requiresthat developers toor build datory inclusionaryzoningprogram Should thenextmayor man a adopt subsidies? of ability unitsdeveloped with public ers to permanently theafford maintain Should thenextmayor require develop ≤ 120% YO -4% RK UNIVERSIT Affordable Units INSTITUT 2002 2011 ≤ 150%

-2% E Y Change 2002 2011 ≤ 200% -1% - - - - 7 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC 8. 7. 6. YO ing? struction ofmarket-rate rentalhous lease itsundeveloped land for the con York City toHousing plan Authority’s Should thenextmayor support theNew affordable housing? rights to supportthedevelopmentof transferstant of unused development the nextShould mayor permitmore dis housing? forlist ing housing vouchers or public families to move to thetop ofthewait Should thenextmayor allow homeless RK UNIVERSITY CENTER furmancenter.org Aboutthe Furman Center andtheMoelisInstitute for AffordableHousing Policy The Furman Center for Real Estate andUrban Policy isajointcenter oftheNewYork University Moelis InstituteMoelis for Affordable Policy Housing to improve effectiveness the ofaffordable housing School ofLawSchool andtheRobert F. Wagner Graduate ServiceatNYU. ofPublic School founding Sinceits in 1995, the Furman Center has become a leading academic research center devoted to the public about what isandnotworking, andaboutpromising newideasandinnovative practices. policies and programspolicies by providing housingpractitionerspolicymakersand informationwith use,real ofland aspects policy estate development, andhousing.TheFurman Center the launched E - - - -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE 10. 9. housing units? the preservationof existing affordable How should the next mayor prioritize able unitswithinthosebuildings? erties in order to preserve theafford propertylevy tax on421-arentalprop Should thenextmayor offer tothe cap YO RK UNIVERSIT INSTITUT E Y - -

FURMAN CENTER MOELIS INSTITUTE FOR REAL ESTATE & URBAN POLICY FOR AFFORDABLE HOUSING POLICY NEW YORK UNIVERSITY NEW YORK UNIVERSITY SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE

1Should the next mayor commit to build or rehabilitate more units of affordable housing than the Bloomberg Administration has financed? Many of the mayoral candidates have proposed to address the city’s critical shortage of affordable housing by increasing the city’s

financial commitment to creating and preserving affordable units. Such an expansion would require significant additional resources at have to be creative if it seeks to increase funding for housing without a time of shrinking federal resources. The next administration will

taking away from other city priorities.

#NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR WWW.FURMANCENTER.ORG | @FURMANCENTERNYU 2 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC 3 financing. York State orHUD thatare notlayered withcity NHMP count)andincludeunits financedby New the startofdecade(four years longerthanthe construction unitsbecause we are countingfrom vation brief,we report ahigher numberofnew Owner Repair Program). Inourhousing preser as thePreservation LoanProgram ortheSmall programs not captured intheSHIPDatabase(such preserved asaffordable housingusing city-funded as properties thatleft allSHIPprograms butwere Fund orHousingAssetRenewal programs), aswell properties developed through theHousingTrust are notcataloguedintheSHIPdatabase (suchas units thanHPDbecauseNHMPincludesthat properties). TheSHIPreports fewer preserved base (ourfree, searchable database ofsubsidized dized HousingInformation Project (SHIP)data from thenumbersinFurman Center’s Subsi financed under NHMP (reported here) are different because thenumbersthatHPDreports for units housing preservation (#10inthisseries).Thisis those we report inourissuebriefaddressing 2 Thenumberswe report inTable 1differ from “IBO NHMP2012Report”) ny.us/iboreports/nhmp2012.html (hereinafter Built Goals MeanFewer NewApartments Likely to be place Plan:Recession, Funding Shifts,andChanging (2012, June). 1 NHMP. to located resourcesdollars inpublic billion were al tial. Between 2004 and 2011, a total of $5.6 substan was units these for tag price The across the five boroughs, as Table 1 shows. of 124,106 units of affordablehousing had financed the creation and preservation ing in 10 years. affordableof hous preserveunits 165,000 and create to and dollars billion $7.5 of tal (NHMP) wasPlan projected to costato expanded,New HousingMarketplacethe was plan the when history.2005, U.S. In in largestaffordablemunicipal housing plan 2002, MayorIn Bloombergthe announced THE BASICS NewYork CityIndependentBudgetOffice. IBO NHMP2012 Report at6-7. YO , at2.Retrieved from http://www.ibo.nyc. RK UNIVERSITY The Mayor’s NewHousingMarket CENTER 1 By theendof 2011, the city 3 Eighty-four percent of E ------2

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE units planned throughplanned units 2014 is estimated to 165,000 all of monies, public in just cost, again the that reports Office Budget dent Indepen The dollars. government other privateand of $3.41 reserves)leveragesin rowcity subsidy and HDC budget (capital and Development, under NHMP, $1 of nar of HousingPreservation Department city’s the to According bonds. tax-exempt of ply as wellas useofthestate’s limited sup investmentprivate significant upon pends developmenttal cost of NHMP, which de sources. The rest camefrom othercityandfederal billion). ($1.0 budget expense city’s the and billion), ($1.1 reserves corporate HDC’s billion), ($2.7 budget capital city’s the sources: three from came money this 5 al). IBONHMPReport 2012at7,10-12. and theWeatherization AssistanceProgram (feder the Neighborhood StabilizationProgram (federal), (city), theTax Credit AssistanceProgram (federal), hattan Development Corporation, the421-aFund New York City Housing Trust Fund, the Lower Man (federal), theNewYork CityAcquisition Fund, the 2011 includedLow IncomeHousingTax Credits 4 some are shrinking. city to fundNHMPare under pressure and of the majorsources currently used by the some However, neighborhoods. stabilize help and jobs create also can It assistance. ing, subsidized housing or other housing renters who arefor, eligible receivnot but rentburdens faced by many NewYorkCity the supply andthereby alleviate thesevere of affordablehousing couldhelpto expand the creationExpanding andpreservation & QUESTIONS CONSIDERATIONS be $8.3billion.

Other sources offunding between 2004and IBO NHMP2012 Report at6. YO 4 Those figures don’t cover the to the cover don’t figures Those RK UNIVERSIT INSTITUT 5

E Y ------3 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC (2013). 8 New York CityIndependentBudgetOffice sites/default/files/NYCDebt.html# standing. 7 Citizens BudgetCommission. ports/IBOCBG.pdf trieved from http://www.ibo.nyc.ny.us/ibore (2013, June). 6 New York CityIndependent BudgetOffice. transportation. and education, parks, ects by other city agencies like sanitation, the availabilitydollars forof capital proj city either takedebt orlimit onadditional budget likelyital would requirethe that or rehabilitationstruction cap of the out nance additionalaffordablehousing con 1. Figure in illustrated billion, $100 grown by 86 percent, andnow exceeds goes towardall, budget) has the capital totaldebt (the majority of which, not but budget. primarily expense paidoutof the city’s of bonds), the debtservice for which is (Generaldebt Obligation other types and is budget primarilycapital funded by city forNHMP.funding public sourceof est The byfar,is, budget capital city’s largThe the Capital Budget in New York Cityby Year,* Fiscal Year 2004-2011 TABLE 1: Total Preservation Construction New Source: NewYork DepartmentofHousingPreservation andDevelopment City * Theyears inthis table represent the year that the dealclosed. YO RK UNIVERSITY Retrieved from http://www.cbcny.org/ 6 Over decade, thecity’s thepast Housing UnitsFinanced through theNew HousingMarketplace Plan A Guideto the Capital Budget. CENTER 10,207 5,025 5,182 2004 11,296 18,332 7,036 2005 E NYC Debt Out 10,921 17,325 6,404 2006 Re 7 To fi To - 8 - The - 13,084 18,408 5,324 2007 - - - - -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE indirectly through fees such as those for taxpayers either directly through taxes or debt would impose additional burdens on cost ofdebtservice on additional annual 11 IBO NHMP2012Report at14. 10 IBO NHMP2012Report at13. sites/default/files/NYCDebt.html# standing 9 cent. per 45 by funds HOME of allocation city’s year 2012, the federalgovernment the cut NHMP. on spending capital HOME funds madeup30 percent of HPD’s 2011, through 2004 years fiscal NHMP.In havethat dollars budget ital gonetoward programis theothermajorsource ofcap InvestmentfederalPartnershipHOME The ficult tradeoffs. involvedollars onhousingwill budget dif capital more spending Accordingly, debt. mayto ability increasethe city’s limit its finances city’s the of assessment the market’s and prudence, fiscal state, the by set sewer. and water 16,956 9,953 7,003 2008 Citizens BudgetCommission. 11

YO . Retrieved from http://www.cbcny.org/ 12,444 8,108 4,336 2009 RK UNIVERSIT INSTITUT 11,337 14,699 3,362 9 Inaddition,constraints 2010 11,680 15,735 4,055 2011 NYC Debt Out 10 E u i fiscal in But Y 124,106 81,404 42,702 Total - - - - 4 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC $100 $125 13 IBO NHMP 2012Report at8-9. 12 IBO NHMP2012Report at8-9. for affordable housinggoingforward. totinue sourceimportant an be offunding predict. Still, HDC reserves are likely to con ed, and itsexcess reserve levels are hard to toability spenditsreservesunlimit isnot revenues. expected than this levelat the plan resulted from higher budgeted. whichwhatdouble isalmost was originally pool of public funds ($1.1 billion) to NHMP, serves hadcontributed the second-largest cy.corporateHDC’s 2011, reof end Bythe from HDC, the city’s housing financing agen reliedNHMP hasalso heavily onfunding HDC CorporateReserves $25 $50 $75 FIGURE 1: $0 YO 2002 Comptroller, Comprehensive Annual FinancialReport ofNew York, for the City Fiscal Years 2002-2012) Source: Citizens Budget Commission ofNewYork (usingdata from the NewYork Office ofthe City RK UNIVERSITY

12 Total New York CityDebtOutstanding($billions),FiscalYear 2002-2012 HDC’sto ability contribute to CENTER 2003 2004 13 E However, HDC’s 2005 2006 - - - - 2007

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE 15 IBO NHMP 2012Report at13. 12-13. and repair programs. IBONHMPReport 2012at and to fundcodeenforcement andmaintenance Instead, they are usedto pay HPDpersonnel costs go directly toward buildingorpreserving units. mostofthosefundsdonot in theNHMPbudget, 14 While HPDincludesexpense budgetfunds In years. recent in Sandy) hurricane to ed ofCDBG dollars(unrelat allocation city’s the federaldollars, government the cut dollars. (CDBG) Community Developmental GrantBlock ing—71 percent—has comefrom feder 2011). of end the by billion ($1.0 NHMP for funds been thethird largest source of public Money from expense budgethas thecity’s Expense Budget 2008 14 YO Mostof the expense budget fund RK UNIVERSIT 2009 INSTITUT 15 Like the federalHOME 2010 E 2011 Y 2012 - - - 5 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC 16 IBO NHMP2012Report at14. 421-a Fund(which have will largely been Programtance (which also hasended), the Assis Credit Tax the ended), has (which the NeighborhoodProgram Stabilization toable thenextadministration, including not beavailthe NHMPwill budgetthat Finally, there are ofsourcesnumber a in Other FundingSources thereby makingprojects financially viable. offsetting partof households’ rentand bills to address the affordabilitygap in NYC by 8 program—another programhelps that and CDBG, as wellas to thefederalSection likelywill resulttoin furthercuts HOME Further, therecent federalsequestration percent. was allocation city’s by cut anothereight the 2012, year fiscal In percent. 16 by cut was allocation city’s the 2011, year fiscal YO RK UNIVERSITY 16 CENTER furmancenter.org Aboutthe Furman Center andtheMoelisInstitute for AffordableHousing Policy The Furman Center for Real Estate and Urban Policy is a joint center of the New York University Moelis InstituteMoelis for Affordable Policy Housing to improve effectiveness the ofaffordable housing School School of Law and the Robert F. Wagner Graduate School of Public Service at NYU. Since its founding in 1995, the Furman Center has become a leading academic research center devoted to the public about what is and is not working, and about promising new ideas and innovative practices. policies and programspolicies by providing housingpractitionerspolicymakersand informationwith policy aspects of land use, real estate development, and housing. The Furman Center launched the E - -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE will stretch limited dollarsfarther. order toand howthose goals, meet they come from, whattradeoffs made in be will also wherehousing, but thosefundswill serve andhow muchtheyspend on will howmany unitstheyproduce will or pre only not explain should Candidates orities. pri city spending lessonotherimportant affordable may housing,that alsomean seeks to commitmentto expand the city’s administration next the if But efficiently. seek creative ways to useresources more the nextadministration mustcontinueto funding environment,In thischallenging been spentdown), amongothers. have will also (which Fund Trust Housing spent downby theendofNHMP),NYC 17 IBO NHMP2012Report at7-12. YO RK UNIVERSIT INSTITUT E Y 17 - -

FURMAN CENTER MOELIS INSTITUTE FOR REAL ESTATE & URBAN POLICY FOR AFFORDABLE HOUSING POLICY NEW YORK UNIVERSITY NEW YORK UNIVERSITY SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE

2Should the next mayor require developers to permanently maintain the affordability of units developed or rehabilitated with public subsidies? The city, state, and federal governments help address the shortage of affordable housing by subsidizing the development, rehabilitation, and operation of affordable units. Currently, developers who use these subsidies must ensure the affordability of new and rehabilitated units for only a set period of time, and after this period, developers can “opt out” of the affordability.

#NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR WWW.FURMANCENTER.ORG | @FURMANCENTERNYU 2 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC ers, suchastheHousingAssetRenewal Program, the units subjectto affordability restrictions dueto oth (including thefour namedabove), butdoesnotinclude rehabilitated through several commonly usedprograms tion Project tracks subsidizedrental unitsdeveloped or 1 The Furman Center’s SubsidizedHousingInforma Information Project. by theFurmanCenter’s Subsidized Housing (LIHTC), or other subsidy programs tracked HUD, federalLow Income Housing Tax Credits program,project-based rentalsubsidies from the from city andstate through theMitchell-Lama abatements tax or land, financing, and Urban Development (HUD), below-market provided by theU.S. DepartmentofHousing marketmortgages or mortgage-insurance or more ofthefollowingprograms: below- not-for-profit or organizationswerethat developedone using firms for-profit by owned of affordable rentalhousing in NewYork City There are currently more than180,000 units THE BASICS subsidy, andhave otherconsequencesaswell. units, potentially committhecityto anongoing increase the costof developing newaffordable to extend theaffordability restrictions may affordabilityor giving thecityoption market rents. However, requiring permanent developers fromchargingand out opting first the when period expires. These changes wouldprevent extension an for pay to right agreement, or grantthe cityunilateral permanently affordableof theinitial as part would require developers to make theunits changes to these subsidy programs that Severalcandidates for mayor have proposed WHY ITMATTERS YO RK UNIVERSITY CENTER 1 Aspartofeachsubsidy E (CONT’D) - -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE resources to extensionsrenewals and may not to willingness devotethe city’s substantial to years fivepreserve theaffordabilityEvenof 47,000 units. following the over billion $1.4 Plan anticipated that thecitywould spend 2010 New Housing Marketplacethe city’s negotiates with property owners. Infact, millions onrenewalsand extensions it expiring program contracts, thecityspends To preserve theaffordabilitywith of units out oftheprogram. Once thatperiod expires, the developer can opt keep their units affordablefor 30 years.least at new affordablehousing units),mustgenerally financing for program used commonly most developers using theLIHTC program (nowthe the unitsfor some period of time. For example, requiring them to maintain theaffordability of program,developers enter into contracts longer thantheinitial15years. of subsidy may have affordability requirements thatlast affordability. Projects developed withadditionalsources if there isnosuitablebuyer who canmaintaintheir the unitsasaffordable isnoteconomically viableand may expire ifthedeveloper can show thatmaintaining 2 After 15years, theLIHTC affordability requirement Program. Preservation LoanProgram, ortheSmallOwnerRepair 2000 and2011. restrictionsexpired that between theyears approximately 62,000 units withaffordability extend the restrictions on less than halfof the Indeed,thecitywasbudget. to able renew or expiringwith contracts outpacesthecity’s offers decline the city’s or if the numberof units of subsidized units, however, if developers guarantee the affordability of the current stock YO RK UNIVERSIT INSTITUT E Y 2

3 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC Source: Subsidized Housing Information Project (SHIP),New York Planning, Furman DepartmentofCity Center City and UnitsthatRecently LeftAllAffordability Restrictions FIGURE 1: subject to program requirements remained subjectto Furman Center. Additionally, many properties nolonger tions through programs thatare notyet tracked by the properties may have remaining affordability restric not comply withprogram requirements. Someofthese that expired or“failed out”becausethedeveloper did 3 These unitswere eithersubjectto requirements affordableto low-income households. rentinitial restrictions and may nolongerbe programs areto nolongersubject their developed underthefoursubsidy main Overall,more than68,000 units originally YO Restrictions, 2002-2011** Units thatExited Affordability Affordability Restrictions, 2014-2017* Affordable UnitsEligibleto Exit RK UNIVERSITY

Location ofUnitsEligibleto ExitAffordability Soon 500+ 101-500 0-100 500+ 101-500 12-100 CENTER

E ** Ascatalogued by the SHIPDatabase restrictions scheduled to expire 2014and2017. between * Includes unitscurrently eligible to optoutofrestrictions andunits with

3 Tens of -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE 8 vouchers. tenants atthetimeofoptoutoften received Section while therents may have increased to market rate, the ments. Inmany formerly HUD-subsidizedproperties, due to previous agreements orinexchange for taxabate rent stabilizationrestrictions after theirsubsidy expired Figure 1shows thelocationtheseunits. developer canalreadyany optoutat time. term or areto subject restrictions first from which the mayor’s next the during expire to thousands more have restrictions scheduled YO RK UNIVERSIT INSTITUT E Y -

4 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC possible, however,developers,that lenders, for future renewals or extensions. It is also havingwithout to of dollars billions budget could preserve the affordablehousing stock generations. This the city could alsomeanthat programs, preserving the housingfor future from the stock dueto ownersof the out opting would lessen the attrition of affordable housing to bemadepermanently affordableup-front it forward.City going Ifaffordablehousing were units preserved andconstructed inNewYork likely affect thenumberof affordable housing Any model of permanent affordability will are proposing. two models,orwhatalternative model,they for mayorwhichclear about shouldbe ofthese in light of the later circumstances. Candidates price that pay to whether decide to flexibility agreedprovidealso price,but the thecitywith toability preserve unitsinthefuture for an price. The latter policy couldgive thecity end of the initialterm for apre-determined extend or renew theaffordabilityperiod the at that gives the cityanoption to unilaterally out atany Analternative point. couldbeapolicy extended), and owners wouldto notbeable opt an expiring program contract is renewed or initially developed or rehabilitated, or when permanently affordableup-front (when is it matter.one model,housingwould In be made and termsaffordability ofpermanent will anyAs with policy,public the structure affordability. should consider when exploringpermanent arenumber ofquestionsthecandidates a of affordable the housing in NewYork City. There on effects retention, production,and operation location, significant have would potentially it programs, HDC-financed and HPD- towardsaffordabilitypolicy ofpermanent a in the nextIf mayoral administration were to move & CONSIDERATIONS QUESTIONS YO RK UNIVERSITY CENTER E

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE of higher opportunity. Ontheother hand, income families withaccess to neighborhoods desirableneighborhoods, providing low- of affordableunits ingentrifyingorhighly particularlyfor useful preserving the stock policy of permanent affordabilitycould be out when market rents are high or rising, a of affordablehousing are mostlikely to opt subsidized housing islocated. Becauseowners have aneffect ontheneighborhoods where A policyofpermanentaffordabilitycould also affordable unitsintheshortrun. the citycouldafford to subsidize fewer new market.Higher developmentcosts would mean whose restrictions expirefavorable ina rental or someofthe“residual”value propertyof a if they nolongerhaveto theoption realize all up-frontsubsidies to participate inprograms and investors may demand deeper ongoing or neighborhoods, shifting more affordable attractivedeveloping than inlessdesirable or high-rent neighborhoods may becomeless developingaffordable housing ingentrifying the promisewithout of the residual value, York City. affordable housinginNew location, andoperationof retention, production, significant effectsonthe would potentiallyhave financed programs,it in HPD-andHDC- permanent affordability move towardsapolicyof administration wereto If thenextmayoral YO RK UNIVERSIT INSTITUT E Y 5 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC repairs. However, there is much less reason operationsneglected itselfandmaking capital providingsubsidy additional orassuming times, leaving thecity with theburden of may simply walkaway from themintough possibility offuture gains from theirproperties extreme cases,private ownersthe without units to thedetrimentof their tenants.In private owners to invest lessintheiraffordable affordabilityperiod in advance, itcouldlead sets the costof renewing or extending the valuehighera with up-frontpayment, or affordabilitypermanent buys the residual out the life ofthecontract. Ifapolicyaimingfor properlyaffordable maintain units during renew canactasanincentive for owners to programor receiving negotiated a pay-off to possibility of opting outofanaffordability perpetuity withoutadditionalsubsidy. The maintained stock of affordable housing in affordabilitydoes not guarantee a well- Finally,policy ofpermanent a implementing fewer amenities. offer residents lower performing schools and housing production to neighborhoods that YO RK UNIVERSITY CENTER furmancenter.org Aboutthe Furman Center andtheMoelisInstitute for AffordableHousing Policy The Furman Center for Real Estate andUrban Policy isajointcenter oftheNew York University Moelis InstituteMoelis for Affordable Policy Housing to improve effectiveness the ofaffordable housing School ofLawSchool andtheRobert F. Wagner Graduate ServiceatNYU. ofPublic School founding Sinceits in 1995, the Furman Center has become a leading academic research center devoted to the public about what isandnotworking, andaboutpromising newideasandinnovative practices. policies and programspolicies by providing housingpractitionerspolicymakersand informationwith use,real ofland aspects policy estate development, andhousing.TheFurman Center the launched E

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE toensure help private that owners properly incentivesmuch)? What wouldprograma offer to address the higher costs, andif so, by how would they reduce housing production targets each candidate fundthehigher up-frontcost (or current affordabilityperiod ends? How would right optionto pay for an extension when the the beginningor would thecityhave anas-of- would units bemadepermanently Specifically, affordablefrom drawbacks. possible the howthey wouldstructure thepolicyto limit affordabilityshould beasked to make clear Candidates who advocate for permanent owners to maintainthebuildings. an ongoingcross-subsidy andincentive for the buildings where themarket-rate unitsprovide from resulting permanent affordabilityin mixed-income hardship financial or issues to beworriedlong-term about maintenance taken over by more responsible owners? forfunding contingency they ensuringthat are properties, whatand plan would the city’s be And if such a policydoes lead to more failed and continuetomaintain operate properties? YO RK UNIVERSIT INSTITUT E Y

FURMAN CENTER MOELIS INSTITUTE FOR REAL ESTATE & URBAN POLICY FOR AFFORDABLE HOUSING POLICY NEW YORK UNIVERSITY NEW YORK UNIVERSITY SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE

3Should the next mayor adopt a mandatory inclusionary zoning program that requires developers to build or preserve affordable housing whenever they build market-rate housing? Several of the mayoral candidates have proposed implementing a policy of mandatory inclusionary zoning as a way to increase the development or preservation of affordable housing units. Such a policy could help meet the housing needs of more of the city’s poor and working class families.

#NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR WWW.FURMANCENTER.ORG | @FURMANCENTERNYU 2 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC (with theadded requirementrents that remain first tosubject NewYork’s rentrules stabilization the after moveoccupants rentalremainunits out, even Additionally, income. toearning up $68,720 are considered low- up to $55,040 andafour-person household two-personguidelines, a household earning DevelopmentUrbanAccording (HUD). 2013 to defined byU.S.the of Housingand Department inhabited by) low-income households, as most cases they mustbeaffordable to (and 2009, offered for homeownership,in but The affordable unitscanberentalor, since applies. city where theInclusionaryHousing Program areas.eligible Figure 1shows thepartsof the the developer provides, and varies across of affordableand type the amount housing density a developer can receive is based on separate, nearby site. The amount of bonus of theprojecthousing aspart itselforona zoninga bonusby providing theaffordable In most eligibleareas, developers can obtain as partofacity-led comprehensive rezoning. severalother parts ofthecity, inmany cases, Downtown Jamaica,theLower Concourse, and Williamsburg, Hudson Yards, West Chelsea, Program beyond R10 districts to Greenpoint/ the cityexpanded its Inclusionary Housing for providing affordablehousing. More recently, byin Manhattan) upto 20 percent inexchange high density zoningdistricts located primarily size otherwise allowablein R10districts (very developers toexceed building maximum the provisions in 1987, when itbegan allowing zoning inclusionary first its adopted YorkCity commonlyzoning.”“inclusionary called New developers to produce affordable housing are requireZoning rulesthat orencourage THE BASICS cost ofdevelopment. for market-rate unitsifthepolicyincreases the requirement withanupzoning,or higher prices some neighborhoods if the cityoffsets the including higher density development in policy couldhave other consequences, However, amandatory inclusionary zoning WHY ITMATTERS YO RK UNIVERSITY CENTER E (CONT’D)

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE Preservation andDevelopment Source: NewYork Department ofHousing City are inBrooklyn. areof the others and almostall inManhattan Program. As Table 1 shows, most of these units offered through theInclusionaryHousing separate had projects tothe zoningbonuses obtain developers 2013, of affordableunits housing located over in 100 spring latecompleted orbroken ground4,500 onalmost of As meet thatprogram’s requirements. subsidy program, affordable unitsmustalso less of a density bonus. Ifadeveloper uses a applies subsidized units earn thedeveloper city where theInclusionaryHousing Program affordable units,though in some parts of the TaxCredit exemption, or 421-a tax tothe build subsidies, such astheLow IncomeHousing units are capped. Developers often use public tenants),new and resale values the of owned for guidelines HUD the under affordable 1988 to 2013 under theInclusionaryHousingProgram, TABLE 1: or to make acashcontributiontoaffordable an developers torequirementssatisfy the off-site income households. Some jurisdictions allow a share of new unitsfor low- or moderate- new developments over a certainsize reserve policies. These policiestypically require that adopted mandatory inclusionaryzoning Sacramento, andmany suburban towns, have Boston,Other cities,including Denver, Total Queens Manhattan Brooklyn Bronx YO Affordable HousingProduced RK UNIVERSIT INSTITUT Projects 103 77 22 2 2 E Y Affordable 4,471 3,286 1,112 Units 33 40 3 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC can Planning Association, ington, DC,and Suburban Boston. Zoning: ComparingPolicies From SanFrancisco, Wash Meltzer, R.,&Been,V. (2009).31Flavors ofInclusionary programs ineffect around thecountry, seeScheutz,J., 1 For more information aboutthearray ofmandatory slow could program completely the or unprofitable, profitable less projects zoning program often render potential the costs of a mandatory inclusionary that find developers if hand, other the On direct subsidy from thegovernment. additional income households without demand for affordablelow-housing among Accordingly, encourage developers to meet more of the density. mandatory inclusionary zoningcould development throughof compliance the cost greater upzoned to allow developers to make up the programareapplies simultaneously This is particularly likely iftheareas where under thecurrent, voluntary program. more affordablehousing thanthey would Yorkdeveloperslead could City to produce mandatorya adopting programNew in to subject the program despite therequirement, areas in build to find profitable it developers If applies. program the development occurs in thearea where produces depend will onhow muchnew mandatorya program inclusionaryzoning How muchadditionalaffordable housing New York housingmarket. City’s affordablealso ontherest housing,but of on theproductionimpacts only not of zoning, it could have potentially significant implement apolicyof mandatory inclusionary Should thenextmayoral administration & CONSIDERATIONS QUESTIONS requirement. the fulfill to but alternative no have programs Developersunits. mandatorywith inplaces housing fundinstead ofproviding affordable YO RK UNIVERSITY 1 CENTER 75(4), 441-456. Journalofthe Ameri E - -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE as ofJuly 2013 Existing InclusionaryZoningProgram FIGURE 1: additional density is allowed) may mean programthese cases(particularlyin if no density.the bonus mandatory Imposinga developmentgivenon a sitewithout met be can because thedeveloper believes the demand for housing needed toor the bonus, obtain to offsetthe cost ofproviding the affordable sufficient not is density bonus the because be developera tonot elects participate,mayit when program, voluntary current, the Under while providingnew affordable little housing. the development of market-rate housing Furman Center Source: NewYork Planning, Department ofCity City YO

RK UNIVERSIT Areas Eligibleforthe INSTITUT E Y

4 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC development sites. offset theaddedcostofdevelopment by offering lessfor effect ofdriving down landpricesasdevelopers seekto 2 Alternatively, amandatory program couldhave the such assubways andschools. Ontheother of theanticipated strainservices, public on density,eitherfor aestheticreasons orbecause residents maywelcome not theresulting cost ofproviding affordable housing.Current does include additionaldensityto offset the if amandatory inclusionary zoningpolicy neighborhoods where thepolicyisimplemented Increased density canbecontroversial in generated, butmarket-rate housingtoo. onlynot the amount ofaffordablehousing The size of help determinethat bonuswill as apartof any mandatory inclusionary bonus. above andbeyond current allowabledensity consider whether to providedensity bonus a nextmayoral administration should carefully York market-rate City’s housingmarket. The which wouldit, add furtherpressure to New more expensive are likely to resultin lessof requirementsmake that housingdevelopment has research broad consensus among economists that past and providednot difficult clear answer, a there but is is occur Predicting which of these outcomes would tenants andbuyers ifthemarket allows it. try to passtheaddedcostsonto market-rate costs resultingfrom mandatory a policy,but her project, incurring the added development developerother cases,a may proceed with the developmentwould In all. at notbebuilt YO RK UNIVERSITY CENTER furmancenter.org E 2

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE ut e aife o-ie o i developers if or wouldinstead on-site,allowed be to provide off-site satisfied be must whether the affordablehousing requirement they propose,clear,making for example, Candidates should be specific about any policies with associated is higher levels ofaffordablehousing production. flexibility program that other jurisdictions, the Furman Center found housing generated.research In focusing on of affordableparticipation andtheamount determinealso will the levelof private sector mandatory termsof theaffordable ofthelocation housing the flexibility givesinclusionary policy to developers of in amount The lower rents across theboard. only way to increase the supply of housing and New YorkCity, density may additional bethe givenhand, forof land lack the developmentin challenges. its abilityto withstandconstitutionalandotherlegal program isstructured may alsohave implicationsfor 4 Importantly, how amandatory inclusionaryzoning center.org/files/publications/IZPolicyBrief.pdf DC andSuburban Boston Areas. ing Markets: Lessons from the SanFrancisco, Washington (2008). 3 Furman Center for Real Estate andUrban Policy. mandatory inclusionaryzoning. increasedan at densityonsitesto subject whether theyto plan allowdevelopers to build Similarly, important. candidates should specify would have to remain affordableare also of time theaffordablethe length about units payor units intodevelopment a Specifics fund. The Effects ZoningonLocal ofInclusionary Hous YO RK UNIVERSIT INSTITUT Retrieved http://furman 4 E Y

- - 3 FURMAN CENTER MOELIS INSTITUTE FOR REAL ESTATE & URBAN POLICY FOR AFFORDABLE HOUSING POLICY NEW YORK UNIVERSITY NEW YORK UNIVERSITY SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE

4Should the next mayor seek to expand the use of city pension funds to develop affordable housing? The Bloomberg Administration’s New Housing Marketplace Plan (NHMP) to increase the supply of affordable housing is winding down, and the city’s ability to fund affordable housing is increasingly strained, as described in brief numbers 1 and 2 of this series.

#NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR WWW.FURMANCENTER.ORG | @FURMANCENTERNYU 2 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC Furman Center. (2007). 2 New York CityEmployees Retirement System. press/2013_releases/pr13-07-127.shtm Funds Street Selected asNext Custody Bankfor NYC Pension 1 New York CityComptroller. (2013,July 19). islocatedhousing that inlower-income the finance help construction and rehabilitationof affordable to ways found have funds investments.” and structure ofcomparablenon-targeted with theoverallrisk, liquidity, security, made ifthey generate returns “commensurate of stock the affordablehousing, for increasing example) canonly be (by benefits social Investmentprovidealso opportunitiesthat obligations to thebeneficiaries. their investmentpolicy andadequate to meet rate ofreturnis bothconsistentthat with Overall,trustees look to achieve anaggregate decreaseoverall the riskiness of theportfolio. classes withdifferent risk attributes serves to can be.Spreading riskacrossasset multiple howand limit risky any individualinvestment in any onetypeof asset class(such as realestate) howlimit much oftheportfolio theyinvest can risk-adjusted market returns, andthetrustees to funds their As aresult, investments mustgenerate the of beneficiaries maximize earningswhileoverall limiting risk. the to duty fiduciary a havefunds pension of trustees The THE BASICS control theiruse. these fundsandrestricts themayor’sto ability However, thelawlimits thepotential uses of might appearto beavaluablesource ofcapital. “NYCRS”) have some $137 billion inassets and pension funds ofNewYork City(collectively createpreserve and affordablehousing. The or maintain increase the fundingavailableto the citypensionfunds asawaytapping to Some ofthemayoralcandidates have suggested WHY ITMATTERS YO . Retrieved from http://www.comptroller.nyc.gov/ Investment Policy Statement. RK UNIVERSITY 2 Withinthese limits, citypension CENTER E Onfilewiththe (CONT’D) State

1

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE dollars further. fixed Whiletheinterest rate cannot offer toprograms to stretch theirlimited subsidy funds mortgage pension rates inturn,allow cityhousing that, the allows tothe ability invest withalong-term horizon of mortgageThe combination insurance and determined prior to thestartofconstruction. rates at mortgages fixed-rate long-term, offer Through this program, citypension funds thereby lower theriskofinvestment. to protect thepension funds from defaultsand State of NewYorkMortgage Agency(SONYMA) the from insurance mortgage 100% on relied affordablehousing. preservation or construction of 29,694 units of (PPARP), hasinvested over $757 in the million Private Apartment RehabilitationProgram Public the called NYCRS, by financed program neighborhoods. but itscapacityismuchmore limited. Residential Mortgage Insurance Corporation (REMIC), its HousingDevelopment Corporation (HDC)calledthe 5 The cityhasitsown insurance fund,asubsidiaryof nomically-targeted-investments.shtm from http://www.comptroller.nyc.gov/bureaus/ed/eco velopment. 4 New York CityComptroller, Bureau ofEconomic De node/58871 New York Teacher. (2013, May 16).Pension funddoeswell by doinggood. their inceptionin1981.United Federation ofTeachers. which have posted returns ofnearly ninepercent since System devotes roughly two percent ofitsfundsto ETIs, housing projects. For example, theTeachers’ Retirement pension funds makecity’s such investments inaffordable asset classesandearnamarket return, andsomeofthe targeted investments” (ETIs)thatfitwithinapproved 3 Pension fundsare allowed to make “economically on theirownto create affordablehousing in sufficient not however,are financing, pension to access having of benefits These financing. securing processof the simplifies and finances increasespredictability the oftheproject’s be superseded will bymortgage) apermanent (whenof construction theconstruction loan wellbegins and advancein completion of the interestin an rate even before construction belowbe market rates, to theability lock- YO Economically Targeted Investments. RK UNIVERSIT Retrieved from www.uft.org/print/ INSTITUT 3 The largest affordablehousing 4 The program has primarily E Y Retrieved 5 - - 3 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC growth inthisprogram. mortgages maythe potential limit for further mayto beable take advantage ofthesetypes subsidy dollarsavailablefor theprojects that approved under PPARP andconstraints onthe However,the limited numberoforiginators would beto increase thesize of this program. subsidy dollarsto stretch further.option One mortgage market for developers andallowcity increasethat thedepthandpredictabilityof the long-term mortgages for affordablehousing fixed-rate, provide already funds pension city of money containedinthefunds.Asnoted above, housing funding needs given thelarge amount to affordablepotentiala as tosolution city’s the is not surprising It NYCRSthat isoften looked & CONSIDERATIONS QUESTIONS implementing theirdecisions. recommendations to the trustees and who isresponsible forinvestment making is thecitycomptroller,it the mayor, andnot and theborough presidents. Furthermore, comptroller,advocate, unions,the public labor boards; other trustees are appointed by the aminority of the members of those at most, appoints, mayor The NYCRS. in funds five the controlled by theboard of trustees for each of limited. Investmentdecisions for thefundsare to determine how these funds are used is pension funddollars,themayor’s power Separate from whatare uses for acceptable and construction. requiredstill to offset thehigh costsofland is subsidy significant because City York New YO RK UNIVERSITY CENTER furmancenter.org E

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE the funds’investments, andhowthe mayor construction affordablegiven restrictions on developers, howwouldlending that makehelp could beinvested inloansto affordablehousing should specify exactly housing howmuch ofthe funds affordable finance to funds pension Candidates promising to expandthe useof comptroller and thefunds’trustees. requireshousing plans thecooperation ofthe the fundsto supportthemayor’s affordable investment decisions of the funds,so using the mayor lacks majority control over the earn market-ratemust returns. affordable housing because pension funds replacecannot cityor federalsubsidies for of affordablehousing. Pension funddollars of their options for aiding thedevelopment of responsibilities the rangethe pensionfundsfurther limit fiduciary the Moreover, with theriskofinvesting. In thiscase,they are lookingfor areturn commensurate developers who willalsobeputtingintheirown capital. lars to theSandy rebuilding inpartnershipwithprivate 6 Four oftheNYCRS fundshave committed equitydol programs. affordablepension dollarsinthecity’s housing decision-makers necessary to invest more wouldsecure cooperation the other the ofall YO RK UNIVERSIT INSTITUT E Y 6 In addition, In - FURMAN CENTER MOELIS INSTITUTE FOR REAL ESTATE & URBAN POLICY FOR AFFORDABLE HOUSING POLICY NEW YORK UNIVERSITY NEW YORK UNIVERSITY SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE

5Should the next mayor provide a rental subsidy for moderate- and middle-income households? Housing is a substantial expense for New Yorkers, and has grown even less affordable in the last decade. Data indicate that a smaller share of the city’s rental housing stock was affordable to renters at all but the highest income levels in 2011 than it was in 2002. Moderate- and middle-income households saw a big jump in the share of households that were rent-burdened during those years.

#NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR WWW.FURMANCENTER.ORG | @FURMANCENTERNYU 2 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC FIGURE 1: income. an income up to 80 percent of the area median Development, low-income households have the U.S. Departmentof Housing and Urban New Yorkers. Based onguidelinesfrom faced by moderate- andmiddle-income have candidates mayoral discussed the growingaffordability challenges the of number A THE BASICS vitality. diversitywhich could undermine the city’s and might choose to leave thecityaltogether, households, many worrythose households that of more becomes a strain for moderate- andmiddle-income affordability housing As WHY ITMATTERS 100% 20% 40% 60% 80% 0% YO Income Limits, Furman Center Source: NewYork HousingandVacancy City Survey, U.S. DepartmentofHousingandUrban Development 20022011 RK UNIVERSITY 1 Moderate-income households have ≤ 80%ofAMI Rent Burdened Householdsby Income Group, New York City Low CENTER Severely Rent Burdened E 20022011 81-120% ofAMI (CONT’D) Moderate

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE http://www.huduser.org/portal/datasets/il.html (3)BMIR, Section235and236) HUD Program Income Limits (Section8,Section221(d) 1 U.S. DepartmentofHousingandUrban Development. households arethat “rent burdened”—paying Figure 1 depicts changes in theshares of $58,951 and$88,350annually. moderate-income range ifthey madebetween person household three- a 2011, In 2011. in households renter third a just lessthan made up ofthecity’s middle-income households and together percent ofthearea medianincome.Moderate- households have anincome between 121-200 the area median income. Middle-income income rangingan from 81-120 percent of people. 2 The average householdinNewYork Cityhas2.67 Moderately Rent Burdened 20022011 121-200% ofAMI YO Middle RK UNIVERSIT INSTITUT 2 would beconsidered in the 20022011 . Retrieved from > 200%ofAMI E Y High 3 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC www.ibo.nyc.ny.us/iboreports/nhmp2012.pdf Apartments Likely to BeBuilt. Funding Shifts,andChangingGoalsMean Fewer New The Mayor’s NewHousing Marketplace Plan:Recession, 4 New York CityIndependentBudgetOffice.(2012). middle-income householdsmight be. Yorkers thanrental subsidiestargeted to moderate- and country, thosetaxexpenditures are lesshelpfulto New middle-income households)rent than intherest ofthe holds inNewYork City(including more moderate- and middle-income homeowners. Becausemore house interest andproperty taxes, benefitmoderate- and federal taxsubsidiesfor deductionsfor homemortgage al housing.Someexisting programs, includinggenerous 3 The focus ofourdiscussion here issubsidiesfor rent regulation, rent from benefit do however, Moderate- andmiddle-income households, households. Plan served moderate- and middle-income 2011 through theNew Housing Marketplace units created and preserved from 2004 to onlythat 15 percent of ownership and rental reports Office Budget Independent York City’s pay aportionoftenant’srent). Further, New in subsidized and vouchersbuildings that (such subsidies include bothunitsof housing receiving rentalsubsidies from thegovernment middle-income rentalhouseholds reported showsonly that sharesmall a ofmoderate- and households. low-income benefit of the government’s rentalhousing subsidies existinggovernment housingsubsidies. Most these households arewell not served by middle-income households are rent burdened, increasingan While share the moderate- of and to rent andutilities). burdened, havingtheir income half least paidat rentburdened were (andhalf severely rent 80 percent of low-income households were households was rentburdened, whilefull a 2011, onlyof four oneout moderate-income renters.low-incomeByfor highersignificantly households. However, rent burdens remain income households as for low-income burdened increased as muchfor moderate- proportion of householdswere that rent Betweenand utilities. 2002 and 2011, the 30 percent ormore ofincometoward rent YO RK UNIVERSITY 4 CENTER Retrieved from http:// E 3 Figure 2 - -

20% 40% 60%

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE Income Limits, Furman Center U.S. DepartmentofHousingandUrban Development Source: NewYork HousingandVacancy City Survey, Group, New York City Receiving HousingSubsidiesby Income FIGURE 2: from http://furmancenter.org/institute/directory of NewYork Affordable City HousingPrograms. Moelis Institute for Affordable HousingPolicy. 5 Furman Center for Real Estate andUrban Policy and served. apportioned between the different populations are units how for requirements firm no have named above havebut setincomelimits income households, the other two programs percentageforof units moderate-middle- and minimum a aside sets Program Income Mixed (50/30/20) to middle-incomehouseholds. Income Mixed Program—thatare designed to serve low- and Loan Program, Participation Program, ongoing Opportunities few rentalhousing—such a as theNewHousing operates programs to City encouragethe creation of new York New rent-regulated buildingsin2011. middle-income renter households lived in 3 showsnearly that moderate- halfofall and is intended to moderate rising rents. Figure which is not agovernment-funded subsidy, but 0% Households YO All RK UNIVERSIT Share ofRenter Households INSTITUT Low 2002 2011 Moderate E Middle Y 5 While the While Directory Retrieved High 4 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC moneyfor moderate-income ratherlower than address thetradeoffs involvedthe inusing funds for the subsidy would come from, directly moderate-income subsidies shouldspecify precisely where the propose who Candidates greater riskofhousinginsecurity. at households lower-income place could That the scarce subsidy dollars availableto them. allocated to low-income renters, and reduce subsidies could divertresources the public now arethat over andabove existing subsidies, those moderate- andmiddle-income rentalsubsidies However, unless thecity devotes funds for household. up their fororiginal apartment a low-income move into thenewly subsidized freeingunits, units affordableto low-income households to income households who are currently living in households might encourage thosemoderate- subsidized units for moderate-income income renters). Furthermore, targeting overdecade the past(especially for moderate- housing cost burdens, which grew significantly and moderate- to middle-income renters could mitigate their targeted subsidy new A & CONSIDERATIONS QUESTIONS YO RK UNIVERSITY CENTER furmancenter.org E

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE 20% 40% 60% Income Limits, Furman Center U.S. DepartmentofHousingandUrban Development Source: NewYork HousingandVacancy City Survey, in schoolsorlower taxes. households in thecity, suchasimprovements keepingat moderate-middle-income and in the mix of other possible initiatives aimed investments inhousing subsidies should play should alsoexplainwhat role additional Candidates tradeoffs. those make would they income households andexplainhow and why New York City in Rent Regulated Unitsby Income Group, FIGURE 3: 0% Households YO All RK UNIVERSIT

Share ofRenter Households INSTITUT Low 2002 2011 Moderate E Y Middle High FURMAN CENTER MOELIS INSTITUTE FOR REAL ESTATE & URBAN POLICY FOR AFFORDABLE HOUSING POLICY NEW YORK UNIVERSITY NEW YORK UNIVERSITY SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE

6Should the next mayor permit more distant transfers of unused development rights to support the development of affordable housing?

In a very dense city with a significant need for affordable housing, unused development rights are an important potential source of additional capacity. At least one mayoral candidate has proposed allowing wider transfer of development rights to support the development of affordable housing. Many communities, however, fear the increased density that additional transfers would create.

#NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR WWW.FURMANCENTER.ORG | @FURMANCENTERNYU 2 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC 2. 1. transfer development rights inthree ways: to owners property allows city The (TDR) programs. rights development transferable city’s the of throughone lot developmentanother torights unused the transfer to able be may owner the lot, the on permitted area floor maximum the than smaller is building existing the If lot. the of area land the times five to equal area floor a with structure a build FAR can owner a an five, has of building a if example, given For a parcel. on build can owner an much how of determinant primary the as (FAR) ratio area floor uses Resolution Zoning City’s York New THE BASICS YO property recordsproperty Source: Furman Center analysis ofNewYork PlanningData and publicly Department ofCity recorded City Districts 1-6andBrooklyn Community Districts1-2,2013 TABLE 1: to rights landmarks development unused of transfer to owners the allow permit, Landmark transfers, which require a special the city. in transferredare rights development way that primary the are mergers lot Zoning block. same the on properties right, adjacent to of as rights, to development owner transfer an permit mergers lot Zoning RK UNIVERSITY Greenpoint/Williamsburg Community District Stuyvesant Town/Turtle Bay Midtown Clinton/Chelsea Lower EastSide/Chinatown Greenwich Village/Soho Financial District Fort Greene/Brooklyn Heights CENTER Unused Development Rights by ManhattanCommunity Community District, E Manhattan Manhattan Manhattan Manhattan Manhattan Manhattan Brooklyn Brooklyn Borough

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE Policy Source: Furman Center for Real Estate andUrban the sameintersection. touches that corner another on lot any to the street, or, if the landmark is on a corner, across block, same the on parcels adjacent YO RK UNIVERSIT Capacity (square feet) Unused Development INSTITUT 21,416,120 52,099,066 45,958,441 20,230,060 12,460,943 21,664,998 46,652,705 86,948,150 E Y 3 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC property records. are from Furman Center analysis of publicly recorded 1 All ofthedataaboutdevelopment rights transfers transfer to permitted of not majority are vast the properties of owners Currently, & CONSIDERATIONS QUESTIONS and Northwest Brooklyn). Downtown and below Street (Manhattan 59th place historically taken have transfers TDR where city the of areas the in just of unused development rights exist show, feet square 1 additional of Figure millions and 1 Table As landmark 2 transfers. only and other transfers, 4 transfers, Chelsea West 16 transfers, also District Theater were 11 There Manhattan. in Street 59th below were which of zoning lot mergers, a vast majority to square327 throughtransferredwere feet those of City million 5.4 than York New More others. by owned properties in rights million square feet of development 6.8 than more transferred owners property 2011, and 2003 Between 3. YO n Hdo Yards—have Hudson and these Chelsea Theater West of programs—like Some the Subdistrict. and District, (the Yards Hudson the Line), District High Chelsea Special West planning the as larger such projects, of part the as Planning City by of created Department programs been have transfer Special r D tases o the affordable to housing. of transfers density development TDR additional or linked RK UNIVERSITY 1 CENTER E City PlanningData and publiclyCity recorded records property Source: Furman Center analysisofNewYork Departmentof City Districts 1-6andBrooklyn Community Districts1-2,2013 Development Rights by Block,ManhattanCommunity FIGURE 1:

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE ) norgn nw eeomn t help to development new encouraging 2) owners; to valuable more rights development the making 1) goals: three accomplish could affordable of housing in the building using the TDRs, included the city purchaser rights the development as the long as farther, TDRs transfer to owners allowing designated transfer By block. to the of off ability the number have districts small special a properties in or located landmarks Only property’s block. the home beyond rights development Square Feet ofPrivately OwnedUnused YO RK UNIVERSIT INSTITUT E Y

1,000,000 + 100,000 -1,000,000 10,000 -100,000 1 -10,000 0 4 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC mlmn a e TR rga lne to linked program TDR affordable housing. First, how to new far would owners a need implement would could it before questions of number administration a answer next The historic many city’s the districts. in allowed be not new would transfers Further, TDR by enabled development TDRs. uses new that any on development factor limiting a remain would they modified, explicitly sky-exposure Unless requirements. and space, open limits set-back, height and include These transfer. the by affected not are that size building’s a limiting regulations other are there FAR, their exceed new freely.transfersTDR While tobuildings permit on checks more TDRstransfer to allowedwere owners if of number even effect in remain would that development a are There the building usingtheTDRs willbedifferent. of neighbors the and site underbuilt the of neighbors the away, farther transferred density is additional the if But transfer. the by enabled is that building larger the by created transferring the neighbors TDRs building will smaller also the bear of the any benefit burdens the enjoy that because to neighborhood, difference a the of much make to unlikely is property underbuilt the to adjacent lot the on density.additional density additional Allowing with transfers neighborhoods certain overwhelm could wider that however, worry, Some of new affordable housing. construction encouraging 3) and growth; economic support and demand accommodate YO RK UNIVERSITY CENTER furmancenter.org E

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE Would the city require transfers to go through go to transfersrequire city Wouldthe transfers? for upon insist if city review, the would any, discretionary of kind what Third, of development affordable housing? the for fund a to contribute instead or elsewhere housing affordable the the would developto permitted be developerpurchasing Or site? receiving the on built be housing affordable that require program the be required in exchange for the would transfer? Would housing affordable much how Second, resulting the density onthereceiving site isappropriate. that ensuring the of As will too complexities city? so grows, the distance transfer within the district, anywhere community allowed the or of boundaries the within confined radius, specific a to limited be be permitted to transfer TDRs: would transfers eevn te diinl eeomn the development transfers make possible. additional the receiving obtain affordableprotectsufficient and areashousing to program the structure would they how about detail additional provide candidates to need but strategy, creative a be could to rights promote the construction development of affordable housing unused Harnessing the take-up ofanewprogram. uncertainty,time, expenseand might limit that adds also from but leaders, city and community input the and oversight for allows ULURP (ULURP)? process review use land public the YO RK UNIVERSIT INSTITUT E Y FURMAN CENTER MOELIS INSTITUTE FOR REAL ESTATE & URBAN POLICY FOR AFFORDABLE HOUSING POLICY NEW YORK UNIVERSITY NEW YORK UNIVERSITY SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE

7Should the next mayor support the New York City Housing Authority’s plan to lease its undeveloped land for the construction of market-rate rental housing?

#NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR WWW.FURMANCENTER.ORG | @FURMANCENTERNYU 2 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC Urban Policy ing/leasing-land-sites.shtml (seeLeaseLandProposals for listed developments) Furman Center for Real Estate and Source: NewYork Housing Authority. City LeaseSites. Retrieved from http://www.nyc.gov/html/nycha/html/preserv *Unit count for Baruch Houses estimated by Furman Center basedonaverage square footage oftotal units. TABLE 1: 2 New York CityHousingandVacancy Survey, 2011. html/nycha/downloads/pdf1/pdb2013.pdf ment DataBook.Retrieved from http://www.nyc.gov/ 1 New York CityHousingAuthority. (2013).Develop however, thatthreaten thelong-term shortfalls, viability financial dire facing is agency The five8.2 percent renter of the city’s households. approximately house percentYork ofNew population City’s together which 178,911 apartments in334 developments, (NYCHA)Housing Program Public includes The NewYorkCity Housing Authority’s WHY ITMATTERS Douglass Houses Smith Houses Baruch Houses Washington Houses Meltzer Tower LaGuardia Houses Carver Houses Campos Plaza NYCHA Development YO RK UNIVERSITY Proposed NYCHA InfillDevelopment Sites CENTER Valley Manhattan Chinatown Two Bridges/ Lower EastSide East Harlem Lower EastSide Lower EastSide East Harlem Lower EastSide Neighborhood E TOTAL West 100thStreet West 104thStreet Manhattan Avenue South Street R.F. Wagner Place East Houston St. East 99thSt. East 99thSt 3rd Ave & East 1stStreet Rutgers Street Madison Street Park Avenue Madison Avenue East 12thStreet Site Name NYCHA Proposed 1 and - 2

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE 2017.pdf loads/pdf/Five%20Year%20Capital%20Plan%202013- Retrieved from http://www.nyc.gov/html/nycha/down 22). 4 New York CityHousingAuthority. (2013,May plan-nycha.pdf from http://www.nyc.gov/html/nycha/downloads/pdf/ Plan NYCHA: ARoadmap for Preservation. 3 New York CityHousingAuthority. (2011,December). shortfall through 2017. NYCHA projectsinvestmentcapital $13 billion a 2002. in federalmillion operating assistance since of its stock. NYCHA has seen reductions of $700

Five Year Capital PlanCalendar Years 2013-2017. 330,513 3 Proposed Site Area And,ifnewrevenue is not generated, 21,164 16,107 17,784 55,134 16,941 22,493 18,953 57,649 18,798 10,038 22,109 16,716 28,256 (sq. ft.) 8,371 YO RK UNIVERSIT

INSTITUT Residential Floor Area 220,000 175,000 340,000 700,000 339,000 350,000 350,000 500,000 121,445 112,000 126,000 242,000 Proposed 90,000 (sq. ft.) 4

3,971 Residential Estimated 1,151 375* Units 794 919 276 262 97 97 E Y Retrieved 518,798 munity Facility munity Proposed Com Floor Area 500,000 18,798 (sq. ft.) n.a. n.a. n.a. n.a. n.a. n.a. -

- - 3 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC units. The projects couldresulttotalin a of 3,971 three are in Manhattan Valley other and East Harlem. the and Side East Lower the in located are sites eight the of Five sites. development Table1 presents detailsontheproposed to residents ofthepublichousing. opportunities) employment as (such benefits sufficient provide not will developments the that concerned are stakeholders Some bring. developmentdensity that the additional will these developments, or because they objectto not beadequately relocated elsewhere within they fear theamenitieslostonsitesthat will should not bedevelopedeither at all, because of low-income housing.Others argue theland should beused onlythe land for additional units existing tenants andadvocates who argue that households, has beenquestioned bythe plan of the newhousing units for low-income percent 20 designates proposal the Although year. per revenue in million $30-50 generate would leases for thesites, for99-yeartypical a term, center building. NYCHA estimates groundthat recreationalcommunity and openspace,anda variety ofexistinguses—primarily parking, presently used for do housingsupport a but siteszoning changes.The sites without are not community-facilityon the be built space could limitedand a units of retail amount and housing 4,000 approximately that estimates private, mixed-income development. NYCHA for Manhattan in developments NYCHA eight proposed on 14sitesleasing theland across improvementcapital needs, its leadership has revenue to meetitslong-term projected In considering waysNYCHA that could raise buildings) andunuseddevelopmentrights. of “vacant”amount any(land without land developments on its land as well as a significant NYCHA’s assets consist of the largely residential THE BASICS YO RK UNIVERSITY CENTER E

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE well. supplytakewill pressure offmarketrents as desirableneighborhoods, and theincreased many newunitsof market-rate housing in households. be permanently affordableto low-income will units new of percent 20 because increase aggregate supply ofaffordablehousing would to flows addressneeds. In addition, its capital the cash much-needed and significant proposalIts leasing would provide NYCHA units. housing public of number significant a of thefewhas notdemolished bigcitiesthat options to doso.Notably, NewYorkCity isone gaps,budget andhasalimited numberof NYCHA needs to closeitsoperatingand capital & CONSIDERATIONS QUESTIONS land-lease-initiative-pre-rfp-discussion-document.pdf http://www.nyc.gov/html/nycha/downloads/pdf/ Initiative Pre RFPDiscussionDocument. 7 New York CityHousingAuthority. nycha/html/preserving/leasing-land-faqs.shtml Questions. to Preserve PublicHousingFrequentlyportunity Asked 6 New York CityHousingAuthority. ing-land-proposal.shtml http://www.nyc.gov/html/nycha/html/preserving/leas Proposal to Preserve PublicHousing. 5 New York CityHousingAuthority. the streetscape.developments Thenew will designed to better integrate existingsites into power and resiliency features such as back-up sites (e.g.,lighting, security improvements, new infrastructure andservices to theexisting NYCHA portfolio. any proceeds canbeused elsewhere in the developments to astate of good repair before the lease proceeds to bringtheparticipating developments.NYCHA has committed to using to improvehousing nearthenew thepublic In addition, the proposal has the potential 7 ); andthenewdevelopments couldbe YO Retrieved from http://www.nyc.gov/html/ RK UNIVERSIT 5 Theproposalresultwill also in INSTITUT 6 NYCHA toalso plans add Retrieved from Land Lease Land LeaseOp Land Lease E Retrieved from Y - - 4 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC 9 New York CityHousingAuthority. tive Pre RFPDiscussionDocument. 8 New York CityHousingAuthority. proposal).NYCHA’s proposal leasing presents for NYCHA,misses of the soit the point affordable,wouldthat but result in norevenue (some arguethe unitsshould be all that units should bedevoted to affordablehousing the of percent 20 than more that object Some generally. in someexisting amenities,andchangemore disruptions maycause, construction trafficthe unwanted noise, vibration, andincreased health effectsor detrimental public from housing of fearthe public inconvenience development go uparound them, theresidents like many people around thecityseeingnew Further, liking. their to be not will amenities promisesthat won’tthe new kept,be or that oppose new development becausethey fear is available.land (likeamenities lost gardenswhere orseating) also replacepermit-holders, will and other to replaceparking all for existing resident for residents andemployees. NYCHA plans and others), such asopen space andparking to neighborshousing residents (thepublic brought development of absence the benefits developments may take away some of the Likeconstruction, theproposednew all other criticshave raisednumber of concerns. a On theother hand, some NYCHA residents and public housing. activity andwider retail offerings near the new residents alsomay attract more economic with developers. resident hiringpreferences when contracting NYCHA residents, forand NYCHA hascommitted to jobs additional bring could they Further, increase theeconomicdiversity oftheblocks. YO RK UNIVERSITY CENTER furmancenter.org 8 9 The purchasing power of the But existing residents often residents existing But E Lease Sites. Land LeaseInitia -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE and preserve this critical source of affordable to address NYCHA’s longtermneeds capital and thecitymustthinkcreativelyhow about proposal, thereNYCHAquestion that is little movesit Whether ornot forwardthis with it was when they moved in. developmentof neighboring areasthe level at throughout thecity, have noright to freeze residents, like other owners andrenters NYCHA that argue others But city. the across and losses NYCHAof open spaceat properties mightcomparablemean increases indensity sector encroachmentonto NYCHAthat land of trenda resultwill that wider private-in a start the is this that worry also Residents revenue for NYCHA. housing inthedevelopments would meanless tradeoff—creatingimplicit an more affordable and improve theagingNYCHA stock. and deficit operating providebudget adequate a capital to maintain its reduce to order in both decrease costs and increase revenues howabout theyto plan work with NYCHA to the candidates should be asked for details generally, More limits. proposed any through how they would make up therevenues lost wantto make to NYCHA’s proposal, andexplain specifics about what changes, if any, they would housing. The mayoralcandidates shouldoffer YO RK UNIVERSIT INSTITUT E Y FURMAN CENTER MOELIS INSTITUTE FOR REAL ESTATE & URBAN POLICY FOR AFFORDABLE HOUSING POLICY NEW YORK UNIVERSITY NEW YORK UNIVERSITY SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE

8Should the next mayor allow homeless families to move to the top of the waiting list for housing vouchers or public housing? In recent months, the homeless population in New York City has reached its highest level since the Great Depression. While the city and state have adopted a variety of strategies to house the homeless, the growth of the population shows that much more needs to be done to assist homeless households seeking to move from shelter to permanent housing.

#NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR WWW.FURMANCENTER.ORG | @FURMANCENTERNYU 2 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC this may understate theactualtotal. ing thenumberofunsheltered individuals inthecity, so 4 The Street Survey has been criticized for undercount downloads/pdf/hope_2013_web_presentation.pdf slides]. Retrieved from http://www.nyc.gov/html/dhs/ (2013). 3 New York CityDepartmentof HomelessServices. (on filewiththeFurman Center) www.nyc.gov/html/dhs/downloads/pdf/dailyreport.pdf (2013). 2 New York CityDepartmentof HomelessServices. pages/state-of-the-homeless-2013 trieved from http://www.coalitionforthehomeless.org/ 1 Markee, P. (2013). homeless families priority for receiving administrations hadfollowed of giving ended the practicethe three previous mayoral OctoberIn 2004, the Bloomberg Administration the past30years. in New Yorkpopulation Cityhaschanged over in 2013. Figure 1shows howthe nightly shelter 50,000 citywide, 3,180 unshelteredadditional individuals conducted on January28, 2013, counted an 21,030 children. The 2013 NYC Street Survey, singlein families,18,284 adults adults, and system onAugust6, 2013. spent thenight intheNewYorkCity shelter of Homeless Services, 49,184 individuals According to theNewYorkCity Department THE BASICS move from shelter to permanenthousing. done to assisthomeless households seeking to showspopulation much more that needs to be to house the homeless, the growthof the and state have adopted a variety of strategies Greatsince the Depression. in NewYork City has reached its highest level recentIn months,thehomeless population WHY ITMATTERS YO Daily Report, 8/7/2013. DailyReport, HOPE 2013:TheNYC Street Survey 4 RK UNIVERSITY homeless individuals onagiven night 3 forestimated an totalof over CENTER State ofthe Homeless 2013. 2 Retrieved from http:// This included9,870 E 1 While the city While [PowerPoint Re - -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE for housingchoicevouchers isgiven to victims have endorsed this approach. Currently, priority Severalcandidates for New York Citymayor forhousing or choice vouchers. public priority forstatus homeless families applying Homeless advocates propose reinstating policy disputes with the State ofNewYork. and budget following 2011 however,March in program,Advantage,called was terminated, shelter system. The second incarnation ofthat subsidy tofamilies help transitionof the out instead began providing a short-term rental for vouchershousing. Thecity public and enter theshelter system to receive priority encouraged some families to deliberately the practiceconcerns that and housing units both included the limited supply of vouchers and public change the for justifications housing assistance. cha/html/assistance/working_family_pref.shtml Housing. 9 New York CityHousingAuthority. support_families/housing.shtml#3 Retrieved from http://www.nyc.gov/html/acs/html/ for Children’s Services.(2013). nyc.gov/housing-guide/B; NewYork CityAdministration Affordable Housing. 8 Office oftheNewYork CityPublicAdvocate. (2013). from http://pubadvocate.nyc.gov/housing-guide/A/1 Section 8-HousingChoice Voucher Program. 7 Office oftheNewYork CityPublicAdvocate. (2013). http://www.nytimes.com/ homeless program. 6 Secret, M.(2011,May 31).Clockticks for akey Retrieved from http://www.nytimes.com/ blamed for families inshelters. 5 Bosman, J.(2009,April22).Bloomberg policy a preference for publichousing. witnesses. youth agingoutof foster care, andintimidated housing unitstogroups thesesame plus in foster care. barrier” preventing reunification with children ofhousing permanentlack is the “primary of domestic violence andto families for whom YO Retrieved from http://www.nyc.gov/html/ny 8 NYCHA also gives working families RK UNIVERSIT 7 NYCHA gives priority for public INSTITUT The NewYork Times Retrieved from http://pubadvocate. 5 Theadministration’s The NewYork Times. Housing Support Services. Applying for Public 9 E . Retrieved from Y Retrieved 6 -

3 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC FIGURE 1: near enough tothe families house all currently become availablein any given year is nowhere of vouchershousing unitsthat and public prioritization on for federalsubsidies. However, the number focused have discussions transition to permanenthousing.Recent policy to help homeless individuals andfamilies candidates have saidthey supportpolicies crisis levels,manyand mayoralof the Homelessness in NewYorkCity hasreached CONSIDERATIONS QUESTIONS & 10,000 20,000 30,000 40,000 50,000 60,000 YO from http://coalhome.3cdn.net/ffa876dd2296ef791b_4rm6i64oh.pdf * Coalition for the Homeless. (2013).NewYork Homeless Shelter City Population, Retrieved 1983-Present. York HumanResources City Administration, andNYCStat shelter census reports)* Source: Coalition for the Homeless (usingdata from NewYork Department ofHomeless Services, New City 0 RK UNIVERSITY New York CityNightly Shelter Population, 1983-2013 CENTER E

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE html/nycha/html/about/factsheet.shtml NYCHA Fact Sheet. 10 New York CityHousingAuthority. (2013). sequester,budget evenputs the availability of funding shortfalls,compounded by thefederal rate for vouchers is similarly low, andfederal housing availablepublic each year. The turnover makeover just 5,000 units ofconventional turnover rate of 3.04% in 2012, in shelters. NYCHA reportedhousing a public YO RK UNIVERSIT Retrieved from http://www.nyc.gov/ INSTITUT E 10 Y which would About 4 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC 14 Secret, M.(2011). 13 Navarro, M.(2013). York Times. vie for rare vacancies publichousing. inCity’s 12 Navarro, M.(2013,July 23).227,000namesonlist ibo.nyc.ny.us/iboreports/dhspriorityletter61412.pdf Coalition for theHomeless.Retrieved from http://www. Budget Office.(2012,June14).Letter to Patrick Markee, over inayear. Champeny, A.,NewYork CityIndependent NYCHA, there would be4,500vouchers total turning When andifthey dobecomeavailable, according to a year ortwo becauseoffederal fundingconstraints. reported thatvouchers are notlikely to beavailable for ers andpublichousing,theIndependentBudgetOffice reinstate preference for homelessfamilies for vouch 11 In its2012analysis ofacitycouncilproposal to for this theory. the endofAdvantageprogram as evidence followingapplications of the announcement when Administrationcited shelterdecline inshelter a a enter they The Bloomberg otherwise would not. to doubled example) are for they up, (where situations living create incentives for peopleto leave undesirable residents contendsuch apriority may that Critics of grantinga priority for shelter 2012. shelters shrankfrom 1,600 in 2004 to 100 in of individuals entering public housing from also receive priority. thenumber Asaresult, many years. with waittimes ranging from three monthsto housing hadgrownto 227,000 in July 2013, reportedthe waiting that forlist public non-homeless limited spaces.TheNewYorkTimes recently many individuals are andfamilies competingfor these there Moreover, don’t comecloseto meetingtheneed. the vouchers housing unitsavailableand public of approximatelyhomeless population 50,000, number ofvouchersthis small risk. at YO 13 RK UNIVERSITY Retrieved from http://www.nytimes.com/ 12 Andthepopulationslisted above CENTER 14 Supporters of giving priority E TheNew 11 With a With -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE But, aswasBut, discussed above, even ifthepriority and theirdifferential needs. should distinguishbetween thesepopulations priorities policyabout as disabilities.The city’s other serious barriers tohousing, such stable whilegroupsmaller much a of families have the waitingforlist housing orvouchers, public problems,likejust themany otherfamilies on families are homeless because of income researchthe But indicatesmost homeless that givenbe to shelter residents across theboard. anythat and monolithic, prioritywouldhave to oftenis assumesthe homeless thatpopulation Some researchers point outthatthedebate individuals andfamilies. shelters remainsresort thelast for struggling was a seasonal fluctuation and that moving into to shelter residents countered that this decline munity-Prevention-Pr.aspx com/Reports/2013/Evaluation-of-the-Homebase-Com Final Report. ation ofthe Homebase Community Prevention Program: 17 Rolston, H.,Geyer, J.,andLocke, G.(2013). CHA’s eligibilityrules. will notqualifybecausethey willbeeliminated by NY 16 It isalsoimportantto note thatsomehouseholds 15 Secret, M.(2011). shelter entrants. suggest has beeneffective inreducing thenumberof studies which Program, Prevention may wantto expandthe Homebase Community also areForessential. example,the next administration place first the in system shelter the to reduce the numberof households who enter homeless population. close to meetingthehousing needs of the city’s shelter extendednowherecome will it homelessness), all for (whether residents foror just most riskof those at adopted is policy YO Retrieved from http://www.abtassociates. RK UNIVERSIT INSTITUT 17 16 Other policies aim that 15 E Y Evalu - - - 5 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC and shelterand programslarge ofthe because share partner inhomelessness is acritical prevention which state, the from commitment significant NYCHA also requirehousing subsidies. It will a give or some all shelter residents priority for wellbeyond the question of whether or not to of resourcescreative and goes that thinking homeless population will require both an influx meaningfully short, In reducing thecity’s YO RK UNIVERSITY furmancenter.org CENTER E

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE the homeless. areto mostviable reduce theswellingranks of the otherstrategiesabout also but they think onlytheir views about onthepriority issue, not specifics for pressed be should mayor for from Accordingly, the state budget. candidates of thefundingfor theseprogramscomes that YO RK UNIVERSIT INSTITUT E Y FURMAN CENTER MOELIS INSTITUTE FOR REAL ESTATE & URBAN POLICY FOR AFFORDABLE HOUSING POLICY NEW YORK UNIVERSITY NEW YORK UNIVERSITY SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE

9Should the next mayor offer to cap the property tax levy on 421-a rental properties in order to preserve the affordable units within those buildings? Property tax expenditures to encourage the preservation of affordable housing have generated controversy in this year’s mayoral race. One prominent proposal recommends capping the total annual property tax liability of large rental buildings based on the buildings’ rental income, if their owners agree to keep 20 percent of their units affordable by renewing their participation in the city’s largest tax- based affordable housing program, known as the 421-a program.

#NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR WWW.FURMANCENTER.ORG | @FURMANCENTERNYU 2 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC 4 Typically developers ofrental buildingsare required tion isthenphasedoutover time. pay property taxes onthevalue oftheland).Theexemp liability resulting from construction(i.e.,developers still for aperiodoftimefrom any increase inproperty tax 3 More specifically, participatingproperties are exempt um developments). benefitted rental properties (asopposedto condomini 2 Nearly halfoftheFY2013421-ataxexpenditure pdf/13pdf/ter_2013_final.pdf trieved from http://www.nyc.gov/html/dof/downloads/ Policy. (2013). 1 New York CityDepartmentof Finance,OfficeofTax YorkersNew lower-income to affordable—by setting rents at rates affordable make 20percentof theunitsthey construct boroughs)a 421-a can obtain exemption ifthey and selectareasof Manhattan all intheouter Exclusion Areas” (recently expanded to include for 10 to 25 years. a program are exemptfrom property taxes FY2013. city nearlyin forgone $1.1billion revenue in of buildings,whichnew apartment cost the is the421-aprogramfor theconstruction largest housing-relatedcity’s expenditure tax bottomsimilar effecta The line. onthecity’s alternative to direct appropriations,have but housing. for thedevelopmentand rehabilitation of granted City York approximatelyincentivesin tax $1.5billion New 2013, year fiscal In THE BASICS offer affordable units. is necessary tothan persuadedevelopers to more no away possible—giving as efficiently subsidy programs like 421-a are structured as policymakerschallenges, must ensuretax that revenue. As the city faces significant budgetary can alsodeprive thecityof much-needed of affordablesuch subsidies housing,but incentivize the constructionor preservation Offeringbreaks tax to realestate developers may WHY ITMATTERS YO RK UNIVERSITY 2 1 Buildings Buildings constructed under the 421- These tax expenditures These tax represent an Annual Report onTax Expenditures. CENTER 3 Developers in “Geographic E 4 andsubjecting (CONT’D) Re - - -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE rent stabilization. affordablethe property’s units tosubject and yearsexchange30 in forkeepingpercent of 20 revenuefor rental gross of percent 31 to 28 at reaching theendofitsaffordabilityrestrictions the property421-a building of a liability tax fixed The proposaltheir buildings. suggestscapping that of end period to preserve affordablewithin units the reaching provide properties cap—to tax incentives for theowners of421-arental property benefit—a A recent proposalfor calls offeringnew a vacates. them atmarket rates once the existing tenant rent to free are owners which after years, 35 421-a programremain must rent stabilizedfor in rentalproperties constructed under the units for below-market prices. Affordableunits the unitsto rentor stabilization, by sellingthe upon benefitexpiration. landlords to maintainstabilizationfor existing tenancies 5 The latest amendmentto the421-aprogram requires earning 60percent ofthearea medianincome. to settheserents atalevel affordable to ahousehold revenue inFY2013. $1.1 billioninforegone which costthecitynearly apartment buildings, construction ofnew 421-a programforthe expenditure isthe housing-related tax New YorkCity’slargest YO 5 RK UNIVERSIT INSTITUT E Y 3 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC rental properties. 7 The property taxcapproposal appliesonly to 421-a Citys_Property_Tax_11.pdf files/sotc/Distribution_of_the_Burden_of_New_York_ Tax.Property hoods 2011:Distributionofthe Burden ofNewYork City’s (2012). den.pdf; Furman Center for Real Estate andUrban Policy. furmancenter.org/files/FurmanCenter_ShiftingtheBur able Properties inNewYork City. Examining the Undertaxation ofSomethe MostValu Estate andUrban Policy. (2013,July). in two recent publications.SeeFurman Center for Real condos. TheFurman Center examined thesedisparities buildings, relative to single family homes,co-ops,and address thedisparitiesineffective taxrates for rental 6 Some have argued that421-asubsidies are criticalto rentalrevenue forgone by offering 20percent owner to preserve affordable rentalunits. The the levelreliefof tax necessary to encouragean rented, difficult. less is constructedbuilding a Once its units and is however, built, is building a Calibrating incentives designed to be used after very difficult. is of units (or sale) leasing construction and to beappropriately generous prior to the market conditions), calibratingincentivestax market forecasts, andrisk tolerances (letalonefuture models, financing developers’ these developers. Because the cityis not privy to provideit will unnecessary windfall an to profitability,of however,threshold the beyond unused. Ifthecitysets incentive levels too far sit will program the units, affordable required outweigh the forgone revenue from the developers believeprogram’s a savingstax incentives, however, is a trickymatter. Unless housing unitsintheirplans. incentivize developers to includeaffordable evensheet, relief partial enoughbe can to on anyliability real estate project’s balance Because property taxes representlarge a the behaviorreal of local estate developers. policy levers itsdisposaltothe cityhasat affect The propertyis one tax of the mostpowerful CONSIDERATIONS QUESTIONS & YO State ofNewYork HousingandNeighbor City’s 7 RK UNIVERSITY it is easierfor it to thecity understand Retrieved from http://furmancenter.org/ CENTER Retrieved from http:// E 6 Calibrating these Calibrating Shifting the Burden: - - -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE of theavailabilitytoof thesedata helpset affordable units would nottake advantage 421-a rental property owners to retain Using apropertycap to tax persuade expiring tax incentive. considerably easier to design awell-calibrated rentaloftenas units necessary, as it making cost to developers of preserving affordable policymakersdata, estimate can thetrue the DepartmentofFinance. with file owners Statements Expense and Income properties throughReal theannual Property market-rate tenantsof these all in almost has access torents theactual beingpaidby other 80 percent of units. the market-rate rents beingcharged inthe difference the (roughly) between themandated affordablerents and is estimate—it to forof units below-marketrents isfairly easy it hasthecapacity andauthorityto gather these data. quirement to file adetailedrent roll inFY2012,itisclear 9 Although theDepartmentofFinancewaived there existing market-rate units. market rents they would commandmight belower than of finish(e.g.,lessexpensive appliances),andthusthe location inthebuilding(e.g.,onalower floor)orlevel may notbeasdesirable asmarket-rate unitsdueto their 8 This isarough estimate becauseaffordable units units affordable. revenue forgone by keeping 20percentof their to property owners wellin excess of rental years, the citycouldendupproviding a subsidy 30 next the rental over significantly to raise buildings applied rates tax property Should incentive offered unpredictableto thecity. property owners,render but thesize of the cap would provide valuablepredictability to tax property 30-year a Finally, benefits. new tenants to theproperty after the expirationof initial benefit only would cap with tax the associated requirements affordability least withrespectat to new421-a projects, the duration of any existing tenancies. Thus, benefit, developers keep affordable the units affordable for of expiration upon that, require most recent amendmentsto the421-aprogram appropriately sized incentives. Moreover, the YO RK UNIVERSIT INSTITUT 8 The city already E Y 9 Usingthese - 4 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC between the affordable rents andmarket rents. subsidy needed to make upthedifference instead ofamore nuancedassessment of the used be should cap flat candidates a why explain Mayoral should questions. of number a owners to preserve affordableraisesunits persuade expiring 421-a rental-property Using apropertycap asanincentive tax to grow iftaxrates were to increase). still could size benefit the (though otherwise the windfallsto developersmight that accrue marketchanging with conditions, minimizing pegged to gross rentalrevenue would adjust Second, lost. unlikeexemption,tax a be propertya cap tax otherwise might that units encouragepreservationthe of affordable affordablecap would,a of course, First, units. a property capasanincentivetax to preserve using to benefits certain however, are, There YO RK UNIVERSITY CENTER furmancenter.org E

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE balance between thesecompetingvalues. explainwhat they believe to rightthe be should Candidates housing. affordable more funds could beused instead to generate even neighborhood diversity, andthose a cost, at but helps to deconcentrate poverty andpromote city the neighborhoods, affluent more in units comparatively high. By subsidizingaffordable YorkersNew low-income is to affordable units accordingly, the subsidy required to make these mostexpensivethe city’s neighborhoods and, contain affordableunits tend to belocated in and why. The421-arentalthat buildings affordableunits in421-aprojects apriority, they believe thecityshouldmake preserving More broadly, candidates shouldsay whether YO RK UNIVERSIT INSTITUT E Y FURMAN CENTER MOELIS INSTITUTE FOR REAL ESTATE & URBAN POLICY FOR AFFORDABLE HOUSING POLICY NEW YORK UNIVERSITY NEW YORK UNIVERSITY SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE SCHOOL OF LAW • WAGNER SCHOOL OF PUBLIC SERVICE

10How should the next mayor prioritize the preservation of existing affordable housing units? Over 45,000 existing units of affordable housing will expire from their current affordability restrictions and require new subsidies

during the next mayor’s first term. Resources for preserving those accordingly will have to make hard choices between funding the units likely will be quite constrained. The next administration construction of new affordable housing or preserving those currently affordable units, and will have to set priorities about which units to

preserve, and at what cost.

#NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR WWW.FURMANCENTER.ORG | @FURMANCENTERNYU 2 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC Source: Subsidized HousingInformation Project (SHIP) by theSHIPDatabase TABLE 1: properties entered rent stabilizationafter theirsubsi restrictions through those programs. Additionally, many included intheSHIPdatabaseandhave affordability financing through subsidy programs thatare notyet 1 It ispossiblethatsomeproperties have received properties. free, searchableof subsidized database Center’s Furman the database, (SHIP) Project trackedInformationSubsidized Housing the in these programs, havesubsidy all left programs units ever subsidized in New York City under properties, representing over 25 percent of stabilization. far,Thus Tableas 362 rent in units shows,68,000 1 or rate market to convert units the let and program the of out opt or it), affordabilitywith offersrestrictionscity the (if financing of infusion new a accept exists), still it (if subsidy the renew to choose can property owner the point, that At years. of number the programs, these affordabilityrequirements expire afterset a of each With Credit Tax(LIHTC). Housing Income Low federal the and Mitchell-Lama, State York New and City Urban and HUD project-based rental assistance, New York Housing insurance, and financing of (HUD) Development Department U.S. categories of government subsidy programs: 50 yearsthe last underthefour largest have beendeveloped inNewYorkCity in publicly subsidized affordable rentalhousing Over 250,000 unitsof privately owned and THE BASICS Total No LongerSubjectto Affordability Restrictions Currently Subjectto Affordability Restrictions YO RK UNIVERSITY Subsidized Affordable Properties Financed Through Any Programs Catalogued 1 CENTER E -

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE rpris n te 850 nt ta i did it that units affordable 28,500 any the preserved and properties not city the Had Program).Repair Owner Small the Programor the in Loan Preservation the as (such captured database SHIP not programs city-funded but database were preserved as affordable housing using SHIP the in tracked all programs left that properties as well as programs), the through RenewalAsset TrustHousing Housing Fund or developed properties as (such database SHIP the in catalogued not are that Marketplace plan because that plan counts units preserved of units reported under the Mayor’s number New Housing the than fewer is affordability This their extended restrictions and 59,400 new units came online. units 28,500 and while database, 2000 SHIP the in tracked programs between affordability all left that units 33,700 about 2011, shows 1 Figure Section 8vouchers. rate, thetenants atthetimeofoptout often received properties, while therents may have increased to market for taxabatements. Inmany formerly HUD-subsidized dy expired dueto previous agreements orinexchange units since2000. would have actually hadanetloss of affordable preserve hadinstead exited affordability, it 2,582 2,220 Properties 362 YO RK UNIVERSIT 14% 86% INSTITUT 250,229 182,061 68,168 Units E Y 27% 73% 3 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC if orwhen they leave theirsubsidy programs. 2 Many ofthese properties willenter rent stabilization Policy Housing for Center the building, each varies based onthe uniquecharacteristics of cost exactof either preservation or newconstruction the Although unit. of housing short-term, construction new a the financing the than cheaper in preserving existingan alwaysis almost unit favoring First, for arguments preservation. several are There financing. and consofeach. preservation pros the balancing mean will plan a Designing and next construction the for plan four yearslikely will involve amixof new housing affordable Any & CONSIDERATIONS QUESTIONS if, asislikely, housingdollarsare limited. administrationhave will to make hard choices affordable,these numbersshow the next that to requirewill preservation money to remain difficult is it predict exactly howmany andwhich properties Although desirable. more opting outof a subsidy program may become realestate market beginsto heatupagain, the As yet. so done not havethey though time, any at out opt with to option the have propertiesunits 7,700 Mitchell-Lama 26 Further, subsidy. additional seek will properties time some which at term subsidy 15-year their of end the reach will units with rental 16,000 properties nearly LIHTC 392 2017, and 2014 affordable. remain to infusion of subsidy from thecityinorder likelyand thuswill require anadditional will units) expire from aprogram thatisnotrenewable 14,000 (with properties these of her property to remain affordable,nearly half subsidy program,even but if an owner wants the of opt-out every to choose Not will owner property programs. subsidy their leave to rental 23,000 expire,units will giving owners theoption nearly with properties affordability Lama and Mitchell- and subsidies HUD 129 governing restrictions the term, mayor’s first next the during that, shows 2 Table YO RK UNIVERSITY CENTER 2 n diin between addition, In E

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE 20,000 40,000 60,000 Source: Subsidized HousingInformation Project (SHIP) 2000 -2011 Created, Preserved, orExited Affordability, Four MajorSubsidy Programs thatwere FIGURE 1: media/files/CostComparison_NC_AR.pdf ing Lifecycle Costs. Rental Housing: Applying aNewMethodology for Estimat struction andAcquisition-Rehab inAffordable Multifamily J., &Wilkins,C.(2013). 3 Brennan, M.,Deora, A.,Heegaard, A.,Lee,Lubell, and perhaps impossible, to know which difficult, is it First, preservation. prioritizing However, there are also some arguments against neighborhoods. residents to live inamore diverse range of Third, existing affordable units may allow low-income preserving construction. neighborhoods, lowest-cost the in new than construction islikelybecause new to occur faster is generally preservation Second, construction. the samenumberofdollarsspentonnew than households low-income more to housing dollars spentonpreservation can provide on average than the cost of preservation. approximately 25to 45percent higher per unit of lifecycle construction is thecostofnew a building, 50-year the over that estimates 0 YO Subsidy Expirations

RK UNIVERSIT Preserved Affordable HousingUnitsin Exited Retrieved from http://www.nhc.org/ INSTITUT Comparing the Costs ofNewCon Newly Subsidized E Y Created 3 Thus, - - 4 #NYChousing | 10 ISSUES FOR NYC’S NEXT MAYOR FURMAN NEW FOR REALESTATE&URBANPOLICY SCHOOL OFLAW•WAGNERPUBLICSERVIC housing unitsoverall. leavingunits, fewerwith city the affordable restrictionsreplacethe citycan than new with deemphasized, is more properties could optoutofaffordability preservation if However, City. York New in units the affordable of and number households low-income of number remedycannot theexistinggap between the stock ofaffordableunits andaccordingly properties not actuallyalone will addto the preserving Second, affordable. remained have money“preserving” propertieswould that of apreservation offer, thecitymay spend how individual owners actintheabsence will predict perfectly to able being Without funds. affordabilitylevels even additional without which may choose totheir current maintain toinfusion ofcapital remain affordableand ownersbuilding require will anadditional TABLE 2: Source: Subsidized HousingInformation Project (SHIP) Total Current Mitchell-Lama thatcanoptoutatany time LIHTC "Year 15" Expiring from allprograms YO RK UNIVERSITY

Affordable Properties Eligibleto ExitAffordability, 2014-2017 CENTER furmancenter.org E

MOELIS FOR AFFORDABLEHOUSINGPOLICY NEW SCHOOL OFLAW•WAGNERPUBLICSERVICE promises toas previous doasmuch ofboth construction endsinoverlynew optimistic Often thediscussion over preservation versus allocate to preservation. choose howto spendthefundsthey decide to set forth the criteria they generallyuse to will different considerations, candidates should somewhat involve prioritize. will to property every which While about made be to have will choices difficult properties,preserve to all aren’tsufficient availablesubsidies if addition, between preservation and new construction. In grapple with what criteria to to useto allocate funds ready be and head-on, resources candidates But should confront theproblemof limited done. have administrations YO Properties RK UNIVERSIT 547 392 129 26 INSTITUT E 46,535 Y 15,899 22,936 7,700 Units