21St Century Sros

POLICY BRIEF | JANUARY 2018 21 st Century SROs: Can Small Housing Units Help Meet the Need for Affordable Housing in New York City?

Introduction Throughout much of the last century, single-room occupancy (SRO) housing was a commonly available type of low-rent housing in New York City, providing housing to people newly arrived in the city, low-income single New Yorkers, and people needing somewhere to live during life transitions. SRO units typically consisted of a private room with access to full bathroom and kitchen facilities that a renter shared with other building occupants. As the city fell onto hard times, so did SRO housing. During the second half of the last century, many SROs came to serve as housing of last resort, and policymakers enacted laws limiting their construction and discouraging the operation of SRO units. Many SROs were converted to other forms of housing, resulting in the loss of thousands of low-rent units in the city.

New research and analysis from the NYU Furman Center addresses the question of whether small housing units (self-contained micro units and efficiency units with shared facilities) can and should help meet the housing need previously served by SROs. In this policy brief, we present a summary of the paper, 21st Century SROs: Can Small Housing Units Help Meet the Need for Affordable Housing in New York City?We provide an overview of the potential demand for smaller, cheaper units, discuss the economics of building small units, ana- lyze the main barriers to the creation of small units that exist in New York City, and suggest possible reforms that New York City can make to address these barriers. WWW.FURMANCENTER.ORG | @FURMANCENTERNYU WWW.FURMANCENTER.ORG | @FURMANCENTERNYU 2 21ST CENTURY SROS The CaseforSmaller Units The large number of New number The large Yorkers living alone Today, there isalimited supply to ofsmall units In 2015, In addition, in 2015, more than437,000In addition,in2015, New York 1 In this section, all references to ACS/IPUMs 2015 dataare derived 2015 allreferencesto ACS/IPUMs 1 Inthissection, holds had either low or moderate incomes. holds hadeitherlowincomes. ormoderate lower-rent units. 310,000) hadlow incomes. ormoderate meet the needs of the city’s single adults. As of of ofthecity’s As singleadults. theneeds meet rent-burdenedmately ofthese 85percent house more thanhalfoftheirincomeonrent. Approxi more than250,000 Figure 1).Ofthose, rent (see were unit. Most of these individuals (approximately ofthese unit. Most Part I: Source: IPUMS-USA, NYUFurman IPUMS-USA, Source: Center they spent more than 30 percent of their income on more of their income on than 30 percent they spent alone inthecitywere rent-burdened, that meaning Households by Income,2011–2015 Figure 1. NumberofSingle-Person, Rent-Burdened from five-year estimates (2011-2015).from five-yearestimates or with roommates and struggling to pay andstruggling or withroommates rent ers liveders inarental withunrelated roommates suggests thatthere wouldamarketforsmall, be suggests severely rent-burdened, thattheyspent meaning n HUD AMI HUD AMI ($18,150) 164,905 215,085 Severe Rent Burden (50%+) <= 30% <= 30% 50,180 1 more than436,000 wholived singleadults 30%-50% 30%-50% HUD AMI HUD AMI ($18,150- $30,250) 84,558 31,007 53,551 53,551 50%-80% ($30,250- HUD AMI HUD AMI $48,350) 70,384 48,631 21,753 n Moderate Rent Burden (30-50%) 80%-120% ($48,350- HUD AMI HUD AMI $78,550) 46,078 37,126 8,952 ($78,550) HUD AMI HUD AMI 20,603 > 120% > 120% 19,522 19,522 1,081 - - - 900 dls ihu cide lvn i home- in living children without adults 19,000 also are There city. the in roommates unrelated would be indemand,ifitwerewould be more readily built. To o determine whethernewconstruction 2014, there were ap housing k houses,” SROs. and illegal These basements, illegal 100,000 shelters, and another less are estimated ment. W micro un to com financial modeling we units, for larger used small units of building and operating pare the costs Part II: units can units to the costs associated with a traditional apart associated to the costs to live housing such as “three-quarters in illegal to the nearly 1.2 million renters living alone or with Signi Can SmallUnitsResult in a 225 square foot efficiency unitwith efficiencyshared foot square a 225 a overand just 17 a total ofonly 210,000 incomparison smallunits, Fi studio apartment as a point ofcomparison. asapoint apartment studio shared kitchen and bath. We foot a 400 square used statistics suggest that smaller, housing suggest cheaper statistics K K itchen, an gure 2. UnitTypesgure UsedforComparison 2. B B B K ficantly Lower Rents? K , e looke illustrate it that contains a bathroom andkitchen,it thatcontainsabathroom result in lower rents than those n inlower result thanthose rents B d a 160 square foot efficien foot d a160square d atthre Studio Apartment kitchen andbath Efficiency withshared Efficiency withshared kit Micro Unit 7 ,000 in the city— units studio d inFigur p roximately 30,000 SRO un e differ

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of f small 400sf 160sf 225sf 300sf Unit Size eeded e foot small

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3 21ST CENTURY SROS “family” under the Housing Maintenance Code. Code. undertheHousing Maintenance “family” “[n]ot more than three unrelated persons occupying adwelling occupying more“[n]ot thanthreeunrelated persons The Difference between Apartment However, of inasituationwhere theoccupants New York City. apart those And,inmany cases allthetimein share apartments Roommates household is deemed to exist if every mem to if every exist is deemed household household. (whichlated adults thelaw callsa“family”) them.Thisdistinc between distinction legal in an apartment where on there arein anapartment nolocks may live ofacommon iftheyare part together regulate how manynance Code unrelated ing acommonkitchen andbath.Althoughrental liketheSROs ofthe alot mightlook ment shares from one another (wherefrom oneanother theyhave on locks past: roommates who did not previously who did not know roommates past: Occupancy rules in the Housing Mainte rules Occupancy Shares andEfficiency Units of New York, tit.27, ch.2, §§27-2004(a)(4)(b) &(c)(hereinafter 2 The definition of “family” under the Housing Maintenance Maintenance undertheHousing 2 Thedefinitionof“family” 3 Housing Maintenance Code §27-2004(a)(4).3 HousingMaintenance Code tion that no common household exists.”tion thatnocommonhousehold onhow aspaceisdesigned, based tion isnot the same apartment are living apartment the same independently the unitare likely to thedefinition ofa meet bedroom doors and there is a single lease for andthere isasinglelease doors bedroom ofthe to allparts ofthefamily hasaccess ber onhow aspaceisused. but ratherbased adult roommates living together as a household living asahousehold adult roommates together mayadults live together. Up to three unre units andefficiency shares apartment may,in Code includes “[n]ot more than three unrelated persons occupy more “[n]ot thanthree unrelated persons includes Code maintaining acommonhousehold.” oftheCity Admin.Code unit inacongregate housingorsharedliving and arrangement dwelling unit establishes arebuttable presump dwelling unitestablishes ofthe to allparts dwelling ofaccess unit.Lack living other each inprivate butshar bedrooms Housing MaintenanceCode). ing adwelling and unitand maintainingacommonhousehold;” some cases, look similar, look cases, some there is animportant 2 According to thelaw, “[a]common 3 Thus, Thus, ------Yorkers whichrequire shares, thanapartment Appendix Cofthefullpaper.Appendix matter, apolicy As oneffi we focus thereason 4 Housing Maintenance Code §27-2004(a)(15).4 HousingMaintenanceCode we are as defined contemplate—they “room with thelandlord), theywould likely qualify The legal distinction between family between occu distinction The legal Housing Maintenance Code limits the creation the creation limits Housing Maintenance Code located inanapartment. located ing units;” and those rooming units can be units rooming ing and units;” those roommates. The difference between Thedifference shares roommates. of hundreds of of thousands singleneeds New living of one another families independently forsingleroom used andunits units rooming pancy and single room occupancy isimpor occupancy andsingleroom pancy this latter scenario thatwethis latter scenario contemplate forour leases and independent doors their bedroom tenants to find and negotiate theshare with totenants findandnegotiate that theyare afarmoreanswer realistic to the relevant the Most for our discussion, types. housing oftheregulation ofthese tant because but containsnoprohibition ontheircreation. as single room occupancy (SRO) occupancy tenants. Itis as singleroom and SROs, and how they are regulated, are dis units, occupancy singleroom regulates also occupied for single room occupancy have occupancy forsingleroom occupied a being Whentheunits unittypes. efficiency cussed further in Section II, Section III,and II,Section inSection further cussed is shares, from apartment distinct units, ciency occupancy. The Multiple Dwelling Law (the provi andhasseveral units of newrooming 5 N.Y. Mult.Dwell.Law (McKinney). §4(7) shared kitchen and/or bath—again, the model state lawstate with3ormore buildings thatregulates of sions thatregulate conditions anddesign 4

5 ) ------

4 21ST CENTURY SROS As units get smaller, get units As canfitmore adeveloper of We didnot thatthedensityfactor assumed also Table inabuild 1shows ofunits how the number In our financial analysis, of series we made a 6 housing type, we modeled a mid-rise building amid-rise housing type, we modeled For Aofthefullreport. each inAppendix located %Increase inUnitsvs. SmallStudio #Units Unit Size (sqft) Table 1:Potential to HouseMore withSmaller Individuals Units *We assumeonekitchen forevery sixpeople, andonebathroom forevery sixpeople. Total square feet Shared batharea (@65sqft/bath)/building* Shared kitchen area (@80sqft/kitchen)/building* Manager’s Unit A. Smallunitsresult inmoreA. units ing can increase as the size of the units falls. of theunits asthesize ing can increase of small units, consequences of these ing both aside for common space. set Reflect ing to be with falls)andsmallunits asunit-size increases required by law. IIIbelow). Wein Part with thatbuildings assumed is return. A full explanation of our assumptions them into a given space. However, smaller units in agiven space,butthey don’t building received taxexemption afullproperty are harder to lay out efficiently (the “loss factor” are harder to lay factor” “loss outefficiently (the apply discussion to ourmicro unitbuilding(see to parking requirements.and was subject not maintenance, construction, about assumptions derived a per-unit cost. Wederived cost. aper-unit thateach assumed onlyconsisting ofthatunittype,from whichwe financial andrequired landcosts, operations, efficiency units units efficiency have asuperintendent’s unit,as shared facilities also require more also ofthebuild shared facilities scale up perfectly. See N.Y. Mult.Dwell.Law (McKinney). §248(15) 6

Small Studio

50,400 126 400 N/A N/A - - -

wanted to include more common space for lounges, with sharedbathsandkitchens. In our hypothetical mid-rise building, adevel building, mid-rise In ourhypothetical Notably, we include any did not in our modeling, land costs) compared to compared whatwe show forthisland costs) fourfewer Withfewer units. house residential residential units generating rent, generating allrentsinthe units residential If a developer fortheshared facilities. is needed wereif the units with shared kitchens; efficiencies units withsharedkitchens,units thebuilding would drop,unit sizes thatwould infewer result units $19/month (forthebuildingwithnolandcosts) building type inTablebuilding type 2below. building would approximately upbetween go smaller, get asbuildings units than what other and $33/month (for the building with the highest and require higherrents.For example, ifadevel additional commonspaceinourhypothetical were moreiftheunits units and 125 efficiencies oper could fit 126 traditional 400 square foot stu square foot 126 traditional400 could fit oper common spaceinourbuildingwithefficiency wanted tooper add1,000 ofadditional feet square as or similar communal amenities computer labs, same 37 moreinthe Shecouldfitunits dio units. space if those units were units 73more micro units units; space ifthose Micro Unit 48,900 29% 163 300 N/A N/A

Shared Kitchen Efficiency w/ 48,228 2,653 58% 199 225 800 N/A Shared Kitchen/Bath Efficiency w/ 47,026 2,719 3,347 99% 251 160 800 - - -

5 21ST CENTURY SROS Land Costs=$0/sq ft Given Different LandCosts Table Estimated Monthly 2: Rent Neededto SupportNewConstructionofSmaller Units, Total Hard +SoftCosts/Unit #Units Total Hard +SoftCosts/Building Table 3:Estimated Hard CostsofNewConstructionby UnitType +Soft (Excluding LandCost) Land Costs=$450/sq ft Land Costs=$200/sq ft Land Costs=$50/sq ft to develop traditional studios. report, we estimate the amount of subsidy needed needed theamountof subsidy we estimate report, incomefrom rent torequire cover less thecost B.Rents neededto supportthe provide subsidy in addition to the property taxprovide in addition to subsidy the property income(AMI)in2017, ofareamedian percent or Thisrent was construction. monthto support per units become cheaper to build,and therefore cheaper become units Our modeling revealed that, as unit size decreases, decreases, revealed that,asunitsize modeling Our $59,452 year. per However, unitwith anefficiency able to a single-person household earning 51per earning household able to asingle-person approximately month, which was $840 per afford earning 89 household affordable to aone-person exemption we Bofthefull assume. InAppendix even lower thegovernment ofcourse, rents, could cent ofAMIin2017, or$34,068 year. per To reach Tabledevelopmentof (see 2). For example, a small development ofnewsmallunitsare shared kitchen andbathwould require arent of rent ofapproximately unitrequires studio $1,480 substantially lower thanrents needed Corresponding AMILevel Cost Compared to SmallStudio Cost Compared to SmallStudio Corresponding AMILevel Corresponding AMILevel Corresponding AMILevel

$27,117,900 Small Studio Small Studio $215,220 $2,360 $1,820 $1,590 $1,480 100% 100% 142% 110% 89% 96% 126 - -

The greater affordability of small units can also The greater affordability canalso ofsmall units with inaffordability corresponding This increase level and unit-level costs are cheaper for efficiency level forefficiency andunit-level are cheaper costs 3). The costs 3). Thecosts for smallstudios. percent of AMI, which would be $501 per month. ofAMI,whichwould$501per percent be unit are lower for as shown small units, in Table 4, andkitchens withsharedbathrooms than units withshared kitchens units andefficiency units though total building operating costs increase. costs though total buildingoperating building- tion isdivided amongmoreBoth units. ofconstruc thecost because the small-unittypes Butthe needed. the additionalpipingandfixtures earning 30 to make rents affordableperson to a be attributed to the fact that operating costs per per costs thatoperating attributedto thefact be costs costs of because compared to standard smallstudios Table (see unitforsmallunits per opment costs smaller unit sizes is due, in part, to isdue, thelower inpart, develsmaller unitsizes $28,800,450 per $176,690 Micro Unit Micro Unit $1,920 $1,500 $1,330 $1,240

106% 115% unit 75% 82% 90% 80% 163 per building of construction islower forallof ofconstruction

Shared Kitchen Shared Kitchen $30,437,530 Efficiency w/ Efficiency w/ $152,960 $1,780 $1,410 $1,250 $1,170 112% 107%

are higherformicro 71% 71% 85% 75% 199 Shared Kitchen/Bath Shared Kitchen/Bath $23,290,470 Efficiency w/ Efficiency w/ $92,800 $1,340 $1,040 $910 $840 51% 43% 63% 55% 86% 81% 251 - -

6 21ST CENTURY SROS While small units may be cheaper to build, and the may toWhile smallunits build,andthe cheaper be weekly thereafter. It is important to note that the costs of operations ofoperations to thatthecosts note It isimportant 7 9 N.Y. Mult.Dwell.Law (17)(McKinney);Housing §§248(15), #Units CostCompared to SmallStudio Total AnnualOperating Costs/Building Table 4:Estimated AnnualOperating Costsby UnitType CostCompared to SmallStudio Total AnnualOperating Costs/Unit recommendations of whatthe city might do to programs containprovisionsing housingsubsidy andseveral exist Resolution, Zoning nance Code, building, ical apartment more Inadditiontoandjani units. thecleaning ing requirements thelaw with forunits mandates space. withshared ings andstaff Maintenance units. Here,units. we andprovide identifykeybarriers islikelyunits toinNew exist York City, anumber thoroughly room each priorto clean must units thanthe isless butwe theincrease units; estimate Barriers &Recommendations Part III: torialrequirements thatapply staffing tothetyp that prohibit or discourage thecreationofsmall that prohibit ordiscourage their creation.New York City’s HousingMainte Maintenance Code §§27-2051,Maintenance Code 27-2080. §§27-2012,Maintenance Code 27-2053, 27-2054. also must have must also wholives amanager onsite. areand management hard forbuild to estimate 8 N.Y. Mult.Dwell.Law (McKinney); HousingMaintenance §248(13) Code §27-2012.Code occupancy and ensure sleeping rooms are cleaned are andensure rooms cleaned sleeping occupancy across costs other operating ofspreading effect do our driveefficiency of operating up the cost encourage production ofsmall units. production encourage impede ofsmallunits toof barriers construction thatdemandforsmaller, data suggests cheaper shared facilities, but not for self-contained units, units, forself-contained butnot shared facilities, See N.Y. Mult. Dwell.Law §§80, 83(McKinney);Housing

8 Buildings with efficiency units units with efficiency Buildings 7 operators of efficiency ofefficiency operators

Small Studio

$631,200 9

$5,010 100% 100% 126 ------

The Zoning Resolution rule that limits thenum rulethatlimits Resolution The Zoning (referred to as the “density factor”) is the most (referred isthemost to asthe“density factor”) If the city is interested inencouragingthedevelIf thecityisinterested 10 NYC §23-22. Resolution Zoning home to multiple people and these smallunits andthese home to multiplepeople more as many are people, units larger existing thatareremoving inlocations thedensityfactor dwelling residential mined foreach unitfactor permitted residential floor area by a predeter floor residential permitted units as a large share inthebuilding asalarge oftheunits units they are “rooming “dwelling units” not units”) area. tial floor Notably, (because units efficiency Dwelling UnitsPermitted onaZoning Lot. Factor Regulation Caps theNumberof #1:Barrier The Zoning Resolution’s Density Higher-Density Areas nearTransit Hubs. Factor Regulation intheZoning Resolution in Recommendation #1: EliminatetheDensity zoning district (R1through R10). district zoning ber of dwelling units permitted on a zoning lot lot onazoning ofdwelling permitted ber units because it makes it impossible to includemicro itimpossible itmakes because appropriate for these units, especially higher- especially units, appropriate for these to thiscap.are subject not oralloftheavailable most use and still residen theinclusionofmicro innewbuildings units ages over, bring necessarily morewillnot smallunits More transitoptions. good near density areas opment ofmore micro itshouldconsider units, discour ofdwellinglot on thenumber per units of newmicro inNew units York City. Theden sity factor iscalculated bysity factor dividing themaximum to creation impediment significant regulatory $727,400 Micro Unit $4,460 115% 89% 163

Shared Kitchen Efficiency w/ $842,530 $4,230 133% 84% 199 10 Shared Kitchen/Bath This limitation Thislimitation Efficiency w/

$999,690 $3,980 158% 79% 251 ------

7 21ST CENTURY SROS “substantial assistance” is not defined. Thecity defined. assistance”“substantial isnot would be permitted under the current law because underthecurrent law permitted would be because ortwo-person single-person would likely serve The Housing Maintenance Code prohibits the The HousingMaintenance Code (HPD) Commissioner andbuiltusingsubstan (HPD) Commissioner Building Code, Housing Maintenance Code, and Code, HousingMaintenance Building Code, Multiple DwellingLaw will ensure thatresidents 12 Housing Maintenance Code §27-2077. Code HousingMaintenance 12 habitable every thatapply to rules allapartments, 11 Pursuant households. Also, room-size regulations inthe regulations Also,households. room-size § 31(2)(a) (McKinney). Rooms must also be at least 8 feet highfrom 8feet atleast be § 31(2)(a) also (McKinney).Rooms must not be subject to inhumanely smallliving subject spaces. be not is unclear whether mixed-income efficiency units units efficiency whether mixed-income is unclear market-rate It units byfor-profit efficiency entities. market-rate units. rooming permitted to create new, are not for-profit entities and/orroom kitchen, units) like our efficiency profit educational, profitreligious, orcharitableinsti Creation ofMixed-Income andMarket-Rate used, or operated by anonprofitgovernment or oroperated used, or non- by the a hospital unit is operated unless Currently, thelaw of prohibits theconstruction which would ourmicrooneliving encompass units, (not room 31(2)(d) (McKinney). tial assistance from thegovernment,tial assistance orowned, is approved or the project uses, tution for specific Efficiency Units. Recommendation #2: Consider Amending Limits theCreation ofNew EfficiencyUnits. #2:Barrier The Housing Maintenance Code Multiple Dwelling Law has a less restrictive minimum of 132 square square Multiple DwellingLaw restrictive minimumof132 hasaless apartment must have must apartment alivable feet. than80square less areaofnot by the Housing Preservation andDevelopment by theHousingPreservation room must be at least 80 square feet, except for bathrooms and and exceptforbathrooms feet, 80square atleast be must room floor to ceilingandlivinghavefloor must rooms 8feet. awidthofatleast after 1929. constructed forallbuildings feet N.Y. Mult. Dwell. Law of “substantial assistance”of “substantial inthiscontext. And, entity. withoutabath (units units ofrooming creation N.Y.C. (2014); §1208(1) N.Y. BuildingCode Mult.Dwell.Law §§31(2)(c), §27-2075(1).Housing MaintenanceCode Aapartments, Inclass an occupying Law person (McKinney).Inaddition,each §31(2)(b) kitchens. N.Y.C. (2014); N.Y. §1208(3)(1) BuildingCode Mult.Dwell. if constructed after 1955. Housing Maintenance Code §27-2074. after 1955.if constructed HousingMaintenance Code The feet, square 150 including kitchen,contain atleast bath,orhall)must the Housing Maintenance Code toPermit the 12 There isnopublicly available definition

11 - - -

ysis, cannot be counted towards be ysis, cannot the affordable struction. U programs and,asaresult,discouragestheircon- with shared fa The Zoning Resolutio The Zoning not To does Resolution ensure that the Zoning Program, efficiency units with sharedbathroom with units Program, efficiency law could add to this level existing of oversight s housing, it is concerned about conditions.Thecityshould, about it isconcerned in ment andmaintenance spaces oftheshared approval HousingCommissioner requires forthe inclusion run units run units under thislaw entails. unnecessaril unit requirem Sha Sha to enhanced monitoring of this type of housing, if toof housing, monitoring enhanced of this type includingthecapacityto address the building, plan for manage a detailed to present the need that can be put in place, short of this strict prohi putinplace, ofthisstrict that canbe short Ba Resolution Definitions Applicable t Rec Incl I bition, thatwould facilitate ofwell- thecreation at minimum, clarify what “substantial assistance” address this provisionaddress thatdisfavors them. The thecityshouldamendit to units, able efficiency a could also devote code enforcement resources devote enforcement resources could also code tenants. The between city that arise disputes A ofthistype. ofnewunits creation o city shouldexpand thedefinitionof “affordable should consider whether there are protection ti t n h nd/or as permanent kitchens for intended use f this sort can be countedasaffordablefor units canbe f thissort on ofAffordable EfficiencyUni c e Construction ofNew Efficienci r lu r o u red Facilities. red Facilities initsRegulations ier #3: The Zoning Resolution Dis m sionary Housing to Facilitate sionary Housing. m end ar with shared facilities. Thelawwith shared facilities. already uch a y h nder theInclusionaryHousing ation #3: Amend theZoning y impe cilities in its inclusionary housing inclusionary inits cilities ousing. ent. Notably, housing temporary s those de theconstruc n disfavo considered i units efficiencyrs ts with es Cons tion ofafford- o of n amended n amended with n o

truc urages ur a

- nal s s - - -

8 21ST CENTURY SROS While micro have units amore accepted become with shared kitchens and/or develop bathrooms, including deter a varietywould serve of purposes, with shared baths andkitchens; would theother units ofefficiency would entirely be comprised To help resolve some of the uncertainty around new To around new oftheuncertainty some helpresolve 13 To remedy this problem, subsection (b) ofthedefinition To (b) 13 “afford - remedy thisproblem, subsection levels, determining demand for efficiency units levels, units determining demandforefficiency have with financingunits concernsabout particular are lenders inrecent years, some housing model units, rooming housing unit”to includepermanent keted alongside larger units in the same building. inthesame units larger keted alongside ing set aside in the inclusionary housing program. housingprogram. asideintheinclusionary ing set (or theunits efficiency units manent rooming we ones. temporary just not ment, and testing construction and operating costs. andoperating construction ment, andtesting manage forproperty practices best ing andtesting atdifferentmining demandforsmallunits rent tend to also favormate. with a mix Lenders projects andthe asthatformicro aswell units, not tested not clear if these housing types can be easilymar canbe housingtypes ifthese clear not Costs, andOperations. two, small-unit demonstration projects. Both proj two, Both projects. small-unitdemonstration this housing type, and because oftherisksassoci this housingtype,andbecause Projects ofSmall UnitstoTest Demand, Recommendation #4: Support Demonstration #4:Barrier Traditional FinancingSources able housing unit” in Section 23-911 of the Zoning Resolution must must Resolution oftheZoning 23-911 able housingunit”inSection amount of space. The demand for such housing is amount ofspace. Thedemandforsuchhousingis withhavingated agiven occupying more people of unit types, which helps spread the risk, and it is anditis spreadtherisk, whichhelps of unittypes, are hard to esti andcosts challenges operational here) to count towarddescribe the affordable hous contain a mix of small unit types. These projects projects These contain amixofsmallunittypes. Oneproject ofincomes. arange would serve ects thecityshoulddevelop ofsmallunits, construction the existing “classthe existing Boccupancy.” shared facilities because of unknown demand for ofunknown demandfor because shared facilities Some of financing small housing units. wary still are Wary ofSupporting Small Units. be amended to reference “class A or class B occupancy” instead of to of amended reference instead be “class Boccupancy” Aorclass 13 This fix will permit per permit Thisfixwill

------421-a tax exemption program (now the Affordable The Design Guidelines that govern affordable units thatgovern affordable Guidelines units The Design New York thatatleast requires HousingProgram) Design Guidelines do not currently donot contemplate Guidelines Design 16 NYC Zoning Resolution § 23-96(d)(1). These unit-size require unit-size These 16 NYC §23-96(d)(1). Resolution Zoning NYC §23-96(c). 15 Resolution Zoning 14 28RCNY §6-08(g). 17 NYC Department of Housing Preservation and Development. (2 andDevelopment.(2 17 NYC ofHousingPreservation Department 65 percent or as many floors as possible (NYC Zoning Resolution § (NYC Zoning possible Resolution orasmany 65 percent floors half of the affordable units created must havehalf oftheaffordable created must units two room mix between market-rate mixbetween room andaffordable acomparablebed orthat there be room, must thateitherexplicitly or implicitlyrules encourage in thecityare available buthave forsmallunits ment Corporation (HDC) subsidies require that subsidies (HDC) ment Corporation builtwithHPDorHousingDevelop in projects is comparableto thatofmarketrateinthe units permits smaller units aslongtheiraverage smallerunits permits size units. units with shared facilities. Moreover, withshared facilities. units many 23-96(b); 28RCNY §41-21),23-96(b); housingandcan apply donot forsenior the development For units. oflarger example, the these requirements could discourage the creation the creation could discourage requirements these program the mandatory than feet; 400 square Programs Discourage Creation ofSmall Units. #5:Barrier Many Commonly UsedSubsidy May 2016). HPD Design Guidelines forMultifamily New- May Guidelines Construc 2016).HPD Design addition, the voluntary Inclusionary HousingPro Inclusionary addition, thevoluntary assets/hpd/downloads/ pdf/HPD-Design-Guidelines.pdf. position parity between market rate paritybetween andaffordable(NYC units Zon- position com- programsrequiringbedroom inboth alongwithothers ments, of the affordable units can be less than one bed thanone be less of theaffordablecan units andnomore thanonequarter or more bedrooms programs subsidy ofthecommonly used Some of affordable smallunits. fromdemand forsmallunits market-rate tenants, requirement. contain a similar bedroom-size of HPD’s require programs newconstruction gram prohibitsthedevelopment ofany unitless tion and Senior Housing.Retrieved fromtion andSenior https://www1.nyc.gov/ ing Resolution § 23-96(c)) and that affordable units be distributed on on be distributed andthataffordable units §23-96(c)) ing Resolution studios be 350 to in 350 size. feet 400 square be studios building.same be waived be circumstances. by HPD undercertain 14 The city’s inclusionary housing programs housingprograms Thecity’s inclusionary 16 If developers are unsure of the 17

The - 15 In - - - -

9 21ST CENTURY SROS with 421-a and the inclusionary housing programs, with 421-a housingprograms, andtheinclusionary ofnewsystemsfor would allow forthedesign also would to allowevaluate theagency different build If the demonstration projects are successful, the city the city are successful, projects If thedemonstration 19 19 andDevelopment. 18 NYC ofHousingPreservation Department housing type. Theexistenceofanewhousingpro larger. ing management and operations protocols in order inorder protocols andoperations ing management Theprogramshouldprovideities. capitalsubsidy Term Retrieved Sheet. from https://www1.nyc.gov/assets/hpd/ (g)(ii) (2017) (“Unless preempted by the requirements of a federal, by preempted therequirements ofafederal, (2017)(“Unless (g)(ii) Program Affordability (ELLA) &Low-Income (2017). ExtremelyLow downloads/pdf/developers/term-sheets/ELLA-Term-Sheet.pdf; with both theregulationsofsuchFederal, program Statewith both orlocal waive such…requirementsforany affordable #newconstruction to facilitate the development of best practices. It It to facilitate practices. the development of best and developers towork intandemwith qualified in of new units that a minimum of 30 percent the unit-size rules may be able to be modified based based may modified rules abletothe unit-size be be New Construction Program atHPD. Recommendation #5: Create aSmall Unit Mixed IncomeProgram:Mix&MatchTerm Retrieved Sheet. from and those of this Section[.]”); N.Y. ofthisSection[.]”); and those REALPROP. TAX LAW §421-a (16) both of which contain provisions that suggest that that of which contain provisions that suggest both ate a new set of requirements about required unit requiredunit ofrequirementsabout ate anewset or units two-bedroom a development be must program wheresite# such#generating or#MIHsite#comply cannot more thantwenty-fivepercent oftheaffordable housing units percent oftheaffordable fifty housing or(B)atleast market units, units inaneligiblesiteunits shallhave andno two ormore bedrooms inaneligiblesiteunits shallhave to the aunitmixproportional oversight and support for these housingtypolo forthese oversight andsupport taxexemption programs. Suchaprogram existing withsharedfacil includingsome of various sorts, on a conflicting local housingprogram. local on aconflicting explore whether and how to make the program work gram would also provide an opportunity for HPD to forHPDto gram would provide also anopportunity Finally,gies. thecitycouldcre fortheprogram, NYC Department of Housing Preservation and Development. (2017). andDevelopment.(2017). NYC ofHousingPreservation Department housing# that either is participating inaFederal,housing# thateitherisparticipating State orlocal http://www1.nyc.gov/assets/hpd/downloads/pdf/developers/term- shall have thanonebedroom.”) less housingprogram,either(A)theaffordable housing state orlocal sheets/mixed-income-mix-match-term-sheet.pdf. size and parity requirements, appropriate for this andparityrequirements,appropriatesize forthis withsmallunits ofbuildings construction support should plan and implement a housing program to See NYC Zoning Resolution § 23-96(c), (d).(,“#HPD#may NYC §23-96(c), Resolution also Zoning 18

- - - - - York that housingmodel anupdated Cityneeds lations impede the creation of small units, the thecreation ofsmallunits, lations impede cen SROs inthelast filled theneeds meet helps

further study of demand, and encourage the study ofdemand,andencourage further Given the significanthousingaffordability crisis tury. We have thefinancialfeasibility modeled today, to considerwhetherNew itisimportant Conclusion city has the power to reduce these barriers, allow barriers, city hasthepower to reducethese one way to providesome affordable housingfor withsharedfacilities efficiencies may represent and thatmicro andbelieve units of smallunits development ofsmallunits. some current housinglawssome regu andlanduse Though low-income households. single-person, - -

10 21ST CENTURY SROS “rooming units” The HousingMaintenance Code The Zoning Resolution’s

(HMC) limitswhocanbuild (HMC) (e.g., 421-a andthe inclusionary 21 Housing Maintenance Code §27-2077.21 HousingMaintenance Code 20 NYC §23-22. Resolution Zoning In thecity’s Many Barrier Table 5. SummaryofSmallUnitBarriers &Recommendations Some housing programs), housing ofthissortcanbe. ber of“dwelling units”(ormicro for smallunitsbecause themodel is untested. unit requirement, while temporary units). units) thatcanbehousedonalot. larger units. counted towards theaffordable programs shared facilitiescannotbe factor gram rules guidelines existing subsidyprograms lenders regulation limitsthenum 21

, efficiencyunitswith , andmany encourage creation of inclusionary housing

are oflending wary (orefficiency HPD design HPD pro density

new - - 20

Amend subsection (b) ofthe Amend subsection(b) Amend HMC§27-2077 to permit A or class B occupancy” instead of A orclassBoccupancy”

Reduce oreliminate the density Reduce Create anewcapitalsubsidypro Recommendation Support twodemonstration proj market-rate andmixed-income both withandwithoutshared facil factor requirement inhigherden for thecreation ofnewsmallunits, ities. Theseunitswould besubject ing Resolution to reference “class the zoning mapandtext. to a newly created setofguide types. Both projects would serve lines addressing thishousing type. inSection23-911unit” oftheZon gram thatestablishesparameters oversight. efficiency unitswith government ciency unitswithshared facilities, ects to tests theviabilityof only “class Boccupancy.” definition of “affordable housing sity, transit-rich areas by amending small unitmodel:onewitheffi a range ofincomes. and onewithamixofsmallunit

------

York CityCouncilapproval Zoning Resolution mapandtext A Zoning Resolution text amend Actor andProcess

2/3rds oftheCityCouncil. 25 25 New24 York §37. CityCharter New23 York §28. CityCharter 22 New York §197-b. CityCharter HPD would create andmanage HPD would facilitate andmonitor Planning Commission,CityCoun HMC amendmentsrequire New City Council. City Council, andthemayorCity Council, or ment requires approval oftheCity the program. the demonstration projects. of theCouncil cil, andthemayorcil, or2/3rds of the of theCityPlanningCommission, approval by themayor or2/3rds and approvals, including approval amendments require ULURP review Id . 25 24

22 23

and

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11 21ST CENTURY SROS We would liketo thankthefollowing also people We thanktheJ.P. Foundation Chase for Morgan We VickiBeen, aregrateful very to our colleagues Traci Sanders for their assistance withthisproj fortheirassistance Traci Sanders Lila Nojima, andCarolinePerifortheirexcellent YagerEric Stern andJessica Acknowledgements Authors Mark Willis, Allex Desronvil,Mark Stephanie Rosoff, and on housing, neighborhoods, andurbanpolicy. The NYU Furman Center advancesresearch anddebate Dunn Development Martin Dunn Monadnock Construction Frank Dubinsky Slater &Beckerman, P.C. Stuart Beckerman Breaking Ground David Beer and Development of HousingPreservation New York CityDepartment Nancy Batterman Borough President Office oftheManhattan Adele Bartlett of Buildings New York CityDepartment Lisa Amoia Capalino &Company Claire Altman responsibility of the authors and do not neces and donot oftheauthors responsibility aswe pre andfeedback for providing expertise ofthisresearch. generous support its assistance. research pared this report. Affiliationslisted were currentpared thisreport. als ororganizationswe thank. arethe solely inthispaper and viewsexpressed at the time of our conversations, and may have changed since. Please notethattheconclusions since.changed Please Weect. Amy DeHuff, Beekman, thankWinston sarily represent theviewsofanysarily represent ofthe individu

of Buildings New York CityDepartment Joshua Florsheim Breaking Ground Lauren Foley Development Corporation New York CityHousing Eric Enderlin Merrill Lynch Bank ofAmerica Todd Gomez Curtis +Ginsberg Architects Mark Ginsberg Dunn Development John Gearrity Housing Senior andSupportive West SideFederation for Paul Freitag

- - - - Leon Hovespian Housing Gateway Ted Houghton of CityPlanning New York CityDepartment Christopher Holme Settlement HousingFund Judy Herbstman Housing for SeniorandSupportive West SideFederation Stephanie Green FundThe Doe Larry Gordon Monadnock Construction Kirk Goodrich Planning Council Citizens Housing and Jerilyn Perine Development of HousingPreservation and New York CityDepartment Matthew Murphy FundThe Doe John McDonald of Buildings New York CityDepartment Tim Martin of CityPlanning New York CityDepartment John Mangin Monadnock Construction Alphonse Lembo SKA Marin Sydelle Knepper Development of HousingPreservation and New York CityDepartment Jessica Katz Bowery Residents Committee John Johnson of Buildings New York CityDepartment Archana Jayaram Development of HousingPreservation and New York CityDepartment

Alexa Sewell Committee Bowery Residents Muzzy Rosenblatt Breaking Ground Brenda Rosen Housing Corporation Fordham Bedford John Reilly Deborah Rand Development Corporation New York CityHousing Jim Quinlivan Corporation Community Preservation Elizabeth Propp Selfhelp CommunityServices Evelyn Wolff (formerly MFYLegal Services) Mobilization forJustice Marti Weithman Phipps Houses Adam Weinstein Planning Council Citizens Housingand Sarah Watson JP Morgan Chase David Walsh The RichmondGroup William Traylor Housing for SeniorandSupportive West Side Federation Laura Tavormina Bowery Residents Committee David Tatum of CityPlanning New York CityDepartment Howard Slatkin (formerly MFYLegal Services) Mobilization forJustice Brian Sullivan Breaking Ground Claire Sheedy Settlement HousingFund