Only a week has passed since the City Council approved Mayor de Blasio's ambitious housing plan, but already some observers have begun to discuss the many hurdles facing it that could spell trouble. Though it will be years before anyone can assess the true scale and impact of these changes - and if they will deliver on the promise of more affordable housing - we can at least start to consider what this trouble could look like. Though there are a number of factors to consider, for this post, I will focus on three that seem particularly important to watch.
1. Albany: 421a's & Heartbreak
The Mayor's plan has solidified political support in the city, but much of its success will depend on what transpires in Albany in the coming months and there are a lot of unknowns. As I've outlined previously, Governor Cuomo has made his relationship with Mayor de Blasio something of a bloodsport; he has taken every chance to exert power over the city by withholding housing funds and creating excessive state oversight on projects wreaking havoc with city officials and developers alike. It's not a stretch to see how much the governor would enjoy toying with the mayor over his signature policy achievement.
Perhaps no issue in Albany in the hands of the Governor could determine the fate of the housing plan more than the status of the expired 421a tax exemption. I've gotten on my soapbox about 421a before, but the reality is that it was a major, if wildly flawed, tool for encouraging development of affordable housing.
Lawmakers, including officials from the de Blasio administration, had agreed on significant changes to the program when it came up for renewal in January, but the Governor surprised many and killed the talks by backing a call for developers to agree to new union contract stipulations to qualify.
As a result, 421a is off the books and many projects have been thrown into serious doubt while new projects will likely slow down as well. There is no doubt that its previous form was a huge handout for high end developments that didn't come close to producing the needed affordable units, but simply killing it was political brinkmanship at its worst. Many people in real estate question if the mayor's plan can even work if 421a does not get extended. Though the industry has a clear incentive to get 421a back as-is, the reality is tax policy is a major component of the mayor's plan and without buy-in from Albany, it's hard to see how the units get built.
Some of the Governor's political maneuvering might make more sense when he announces his own housing plan soon. As I've speculated, if his plan greatly resembles the Mayor's but with more power and credit going to the Governor, it will be hard to defend. If, on the other hand, it spells out a new direction in housing, and solves long lingering flaws in policy like 421a, then we might have something worthy of discussion. In either scenario, the Governor has made it clear that the Mayor's plan must go through Albany first and it remains hard to picture that being a pleasant journey.
2. Local Opposition: CB86'd
Though the City Council supported the plan by votes of 42-5 and 40-6 on the two major proposals, all but a handful of the city's 59 Community Boards rejected it. CBs are made up of local residents and business owners and their votes are only recommendations, but their near-universal opposition was a chilling rebuttal to the Mayor and a potential sign of the pitched resistance these groups might undertake in the months and years ahead.
This opposition has practical implications because these same bodies review every development proposal in their districts under the city's ULURP land review process. Again, these votes are only recommendations and can be overcome through other city agency approval, but when time is money, opposition from a CB can delay and even derail projects. If many residents have already opposed the plan overall, you can expect that this will continue with specific projects. For example, CB5, which includes East New York - singled out by the Mayor as a major focus of the plan- unanimously opposed the plan. It isn't likely that they will be open to the many projects already being discussed.
The philosophical implications of local opposition are also important to consider. Though it is easy to dismiss some of these votes as naked NIMBYism, as the Mayor has unfortunately been close to doing, the issue is much more complicated. No doubt, though, some of these positions are based on the more disappointing aspects of NIMBYism and resistance to the inevitability of a changing city.
Preventing more density, more height, and more transit-focused development could have dire economic and environmental consequences for the city and the region, but it's hard for an individual to accept that when it means their trains or schools might get more crowded, their neighborhood might become a construction site and look very different at the end, and their parking could disappear. These are entirely understandable, if intractable, concerns.
However, it isn't just NIMBYism at play here, as many neighborhoods have built up mistrust towards the city over decades - whether it's from the scars of urban renewal projects, the slights of feeling overlooked by programs and services, or the perceptions of forced integration and change, community boards evolved from a resistance to top-down management and have long been wary of city-wide policies. New Yorkers have seen large scale, Big Idea type-plans before and are right to be wary of their true costs and benefits.
It is up to the Mayor to outline these issues, outline the underlying causes, and explain why this plan is different and why it will be better for New York and for New Yorkers. There may well be many benefits in the housing plan for these communities, but there will also surely be trade-offs and negative consequences. The Mayor has obviously not done a good enough job of framing this discussion around those realities or to speak to the legitimate hopes and fears of New Yorkers regarding the plan. For a Mayor who campaigned and won by recognizing the populist mood in the city, so far he has missed the opportunity to approach this plan through the same lens and vernacular.
The Mayor and his administration must do a better job of selling the tangible benefits of this plan while acknowledging the unavoidable pain of change. Though the CBs are only advisory boards, their near-universal rejection of the plan could create havoc for his plan in the short term and greater consequences as the next election approaches in 2017.
3. The Market: The Giveth and Taketh
The real estate market is the easiest factor to overlook in all of these discussions, but ultimately it will have the final say in the future of the housing plan. Many of the assumptions built into the plan, from the tax incentives available, to the expected population growth, are based on an ascendant market. There are some early signs that the market may be headed for a correction or even something larger. Given that the housing plan relies on the market to drive it, if the market tanks, it's unlikely that many units will be built, affordable or not.
Relying on the market has been a criticism voiced by many housing advocates as the Mayor's plan went under review, but given the power of the real estate industry and the construction unions in the city and the state, I don't think it would have been possible for the Mayor not to get their buy-in and still deliver a plan. It might be incremental, but it is a necessary step in this political environment and the need demands that some action be taken right now.
The problem with a market-first approach, however, is relying on a market that is not healthy or functioning well to begin with. Even what we talk about when we talk about 'the market' isn't terribly useful. It hides the fact that in reality, there are two markets in the city: the "asset" market and the "shelter" market.
The asset market has produced 432 Park on the high end and thousands of shiny doorman condos on the other end, many of which will sit empty for the majority of their ownership; this market has had severe ups and downs as would be expected when it is a function of the global economy, but it has created most of the new housing units in NYC over the last decade. This operates more or less as a market should.
The shelter market is much larger but has not operated as a market should; it has had relentless pressure put on it without the necessary relief. With the population of NYC expected to continue to rise, and the demand for all types of housing only increasing, a healthy market in theory should offer the incentive to produce a corresponding number of units.
The fact that this isn't happening owes to many complicated reasons, most of which we have discussed in this blog previously, but the main takeaway is that we're in a housing mess because the overall market is terribly distorted and there isn't much discussion about how to change it or even if it should be changed. As a result, relying on said market, unaltered, to fix it is potentially a fool's errand.
Much remains to be seen about the future of Mayor de Blasio's housing plan because so much of it falls outside of the Mayor's control, or anybody's for that matter. The Mayor has much work to do in order to see the plan implemented and to see the types of benefits he, and many others, believes will result from it.