Mayor de Blasio

The Mayor's Plan to Fix NYCHA Will Nix Public Housing (But Don't Blame Him)

Isaacs Houses (homebodynetwork)

Isaacs Houses (homebodynetwork)

Yesterday Mayor de Blasio announced an updated plan to fix the crumbling public housing stock in NYC before it falls into federal receivership — and even more uncertainty. The plan calls for selling air rights, allowing developers to build on NYCHA land, and most radically of all, transferring 1/3 of all NYCHA homes to private manage. 

If all goes according to the plan, these programs will still only account for 75% of the $32 billion in needed upgrades for NYCHA, leaving the remaining funding in the hands of an uncommitted Governor Cuomo and an openly hostile federal administration. 

It also doesn’t provide any new housing opportunities for the 360,000 New York families on the waiting list for NYCHA or Section 8 vouchers or the more than 60,000 homeless New Yorkers.

I don’t envy the Mayor’s position. This is his best option to find the significant cash infusion for upgrades to a vast system. NYCHA manages 176,000 homes across 2,400 buildings. Almost half of NYCHA developments are 50 years or older. Decades of underinvestment from the federal government (and years of mismanagement at NYCHA) has compounded to put many buildings on the brink of permanent decline and eventual condemnation. Over 400,000 New Yorkers live in NYCHA and deserve dramatic and fast solutions. The fact that this is the best option is not on the Mayor.

But let’s be clear what this plan represents: this is an admission that the idea of public housing in the US is over — from a progressive mayor in a progressive city with a long history of successful stewardship of public housing. 

There are 1.3 million publicly owned homes in the US, but NYCHA is by far the largest concentration of them. For 80 years, it has stood out as a well managed bastion of affordable housing, in sharp contrast to other cities that never had the political support to properly invest in a system. For every Pruitt-Igoe or Cabrini-Green in another city, there is a Queensbridge or Williamsburg Houses here. These developments aren’t perfect, but they are providing affordable homes and stable communities for thousands of New Yorkers. NYCHA showed that public housing worked.

The real story of NYCHA is how resilient it has proved to be despite a hostile federal government and indifferent public that have betrayed it at every corner over the last forty years. Just since 2001, the federal government has cut over $3 billion in operational funding. It’s only recently that NYCHA has started to fracture and it’s miraculous that it endured as well as it did under the circumstances.

 If after all of that, we’re throwing in the towel on NYCHA now, we’re throwing it in everywhere. At a time when virtually the entire country is feeling the pain of the affordable housing crisis, this is the exact opposite of what we need to do. 

One out of three American households (38 million) are cost burdened. Half of all renters are cost burdened (which has doubled over the last 50 years) and a quarter are severely burdened. Since 2000, the number of Americans living in poverty has increased by 28% to 12.8 million. In 2016 alone, 1.4 million people (including 175,000 families with children) were homeless at some point during the year. 

In New York City, it’s even worse. Half of all renters in NYC are rent burdened, including virtually all low-income households. Homelessness is at record numbers. Displacement of low-income communities is rampant. 

What is truly scary about all of this is that it is happening during one of the longest periods of economic growth in our history. 

At precisely the time where we need bold, transformative federal leadership on housing, when we need more public housing, the federal government under the Trump administration is retreating even further. 

Last month, HUD Secretary Carson sent a letter to public housing authorities outlining HUD’s plan to dramatically reduce the stock of public housing in the US. Housing advocates fear that next year they will see severe budget cuts to public housing and other housing programs.

It’s not enough to blame President Trump or Republicans. The Democratic Party doesn’t support public housing either. Despite champions like Rep. Barbara Lee, Nydia Velazquez, or Hakeem Jeffries, the party overall, and particularly during the Obama Administration, has actively supported privatization of public housing which demonstrably leads to a reduction of affordable housing. The Democratic Party has never made public housing the priority it should be and millions of Americans, not just NYCHA residents, have suffered as a consequence.

Instead, both parties have embraced subsidizing homeownership and incentivizing the private market to build affordable housing units for decades. The result of this bipartisanship is skyrocketing home and rental prices and millions of missing affordable homes.

The mayor’s plan in part reflects this ugly reality. The central component of the plan is the expansion of the controversial Obama-era Rental Assistance Demonstration (RAD) program. The mayor proposes transferring 62,000 homes — one third of the system — into private management supported by Section 8 vouchers. NYCHA would still own the properties, but private developers would be able to leverage private capital markets to make repairs and then collect rents on a 99-year lease. The mayor estimates that this process (which includes non-RAD programs as well) would generate $12.8b in repairs.

RAD has become liberal’s “best idea” for a long-term solution for public housing. That’s understandable. Given the way public housing is framed nationally, it represents the only idea to raise large amounts of capital for public housing right now. Many cities, like San Francisco, have or are in the process of converting their entire public housing stock into the RAD program. 

In NYC, developments have already been converted. The biggest so far, Ocean Bay in the Rockaways, has been viewed as validation for the program. The infusion of capital has led to renovations for all apartments and a palpable improvement in the quality of life for residents. This is of course welcome for the New Yorkers in these buildings. 

But what Ocean Bay proves is, wait for it, the quality of buildings and the quality of life for residents improves when you invest money in them. There is nothing intrinsically better about private management, other than there is political support to subsidize it. NYCHA used to be a model of property management because it used to have enough money to do it well too. 

In the short term, RAD-fueled private management might be a godsend to residents compared to a slowing and staggering NYCHA. But this is an illusion. The reality is, housing low-income residents is massively expensive, especially in older large-scale buildings. Adding the need for private firms to profit only increases the cost to the public in the long run.

At some point in the not too distant future, these private firms will no doubt come back to the table looking for more money. Roofs leak, elevators breakdown, boilers need replacing and investors change their expectations.

Incomes aren’t likely to increase for these residents, especially as the population ages, to cover higher costs. The cost of climate change (either adaption or mitigation) will eventually materialize and will likely be prohibitive given the location of so many developments near water. 

No amount of current tenant protections within RAD will stop the need to either raise rents or increase public subsidies to keep these private firms in business. 

No institution other than the federal government can handle the nation’s housing needs now or tomorrow. It is simply more efficient and more equitable to build, own, and manage these homes publicly through federal funding. 

It is bad enough that our society can’t produce economic prosperity and security for all of its citizens, but it is especially perverse to allow private interests to profit from the housing of the poor and working class, especially when it is clear that the private market is utterly incapable of meeting the affordable housing needs of our nation.

You might argue that the public shouldn’t be concerned about doing this, but you would be wrong. Unless our economy is rebooted to spread wealth and security to everybody, the increasing winner-take all society we live in will cease to have any legitimacy for the poor and working class (to the extent that it has any left). At its mildest the resulting pain will cause an exorbitant cost in social services and lost economic productivity. At its most severe, it will cause mass unrest and social revolution.

The Mayor has many flaws, but he can not carry all of the weight for NYCHA’s misfortunes. We’ll find out tomorrow in court if the Mayor’s plan is enough to avoid federal receivership. Surly the federal government doesn’t want to take responsibility for NYCHA.

That’s not good enough. We must demand that the federal government provide the funding necessary not only to upgrade existing NYCHA properties, but to expand public housing to guarantee that all Americans have a safe, clean affordable home where ever they need it. But until enough Democrats wake up about the housing crisis, we’ll keep seeing the steady, miserable erosion of public housing in the US.

The Mayor’s Housing Progress Shows Why Relying on Market Isn’t Enough

But is the Mayor listening? (propublica)

But is the Mayor listening? (propublica)

As Mayor de Blasio gears up for his re-election campaign, he has been touting his progress on his signature policy initiative, affordable housing.  In an Op-Ed for The Daily News last week, he highlights how his $41 billion plan to create or preserve 200,000 affordable housing units over 10 years is on budget and on schedule.  In the last fiscal year, nearly 24,00 such units have been allotted, the most in a single year since 1989 (for a total of 78,000 since 2014). 

The administration’s focus on affordable housing has been commendable and real progress has been made, but the larger picture is less sanguine.  The affordability crisis and the homelessness crisis in NYC (which the Mayor appears to treat as a separate issue here) will not be solved by market-based solutions alone. We need much deeper federal government intervention on a number of fronts.

The Mayor’s affordable housing plan relies on several key premises (which mirrors the national focus of the LIHTC). First, it calls for attracting private development to drive construction.  Second, it requires those developers to include a certain percentage of affordable housing units with each project.  Third, it incentivizes that private development with tax breaks. The second and third premises have been highly controversial, while the first one has not been as much. 

Starting with the second premise, in 2016, the Mayor passed his Mandatory Inclusionary Housing and Zoning for Quality and Affordability laws which require developers to set aside a percentage of units for “affordable housing” and continues a general trend to upzone new neighborhoods in the city.  These were both met with heavy resistance from neighborhood groups worried about displacement and new development, but ultimately passed the City Council.  That it takes so much political capital to create a basic environment for more development is disheartening and, despite his plan’s flaws, the Mayor deserves credit for recognizing this and following through.  However, it’s not surprising that residents would be wary of private development based on other experiences in the city.

The third premise has also run into controversy, though of the political variety.  The Mayor’s plan relies on tax incentives, notably the toxic 421a program. Governor Cuomo stunned many people when he allowed the program to expire and used it as a political football to undermine the mayor’s plan. The Governor claimed he had a better plan himself (which never really materialized) and the program has been rebranded as Affordable New York.  A recent article estimates that the subsidy costs NY taxpayers $400-600k per unit  - while not producing nearly enough units (or in some cases any affordable units, due to lax oversight). Somehow this is "just how it works."

This brings us back to the first premise, which is the original sin of all of these policies.  Relying exclusively on the private market to create (and to a lesser extent preserve) housing units is an expensive, inefficient, and inequitable way to create affordable housing.

To state the obvious, it is incredibly expensive to build in NYC.  Land, labor, materials, planning, and design – all of these things are expensive and, for the most part, there are no secret shortcuts around them.  The lack of productivity gains in the construction industry in recent decades is a fascinating sideshow to this larger conversation, but the important point is that these costs are largely fixed for any type of developer.

Once you accept this, the only way to really build cheaper is to have the federal government involved.  First, it can borrow money for a lot less than the private sector, which keeps costs down (we’re missing a golden opportunity to improve our infrastructure as a result). And second, it doesn’t have to turn a profit.  This means it can build the housing that NYC needs rather than what the market rewards. All of the tax incentives in the world will not cover the difference between what is good for the bottom line of a private company and what is good for the public interest in the housing market. 

Relying on the private sector also crowds out alternative models of housing and ownership. The Mayor isn’t staffing people with this experience, isn’t listening to housers with this experience, and isn’t drawing political contributions from people with this experience. Large-scale co-living spaces, community land trusts, or (heaven forbid) more public housing all get ignored as policy tools or goals when a market-based approach runs through planning. This is a missed opportunity to consider new ways to use existing funds and assets under city control.

A truly transformative housing approach would include market-based and non-market based solutions because the goal would be simply to lower the cost of shelter.  The goal for the mayor’s housing plan includes this, but also includes keeping powerful real estate developers happy and at least keeping neighborhood groups and homeowners from openly revolting politically.  It also internalizes a hostile Albany and an indifferent Washington.

I don’t envy the Mayor’s need to balance these political realities, but clearly a bolder vision is not only necessary, but could be very popular with voters, and serve as a rallying point to change the nature of housing policy in the US. 

Mayor de Blasio was elected on a progressive platform not seen in the city for 20 years, which remains popular (perhaps even more so after 2016). He doesn’t appear to have any major rivals despite constant badgering from the press (not entirely undeserved). And yet 27,000 arguably affordable units is the best we can get? It is under a market mindset. 

We have been tinkering with neoliberalism for the better part of 40 years at the national and local levels and it demonstrably isn’t working for 80% of the country.  Voters want new ideas.  Many technocrats want those new ideas to come from local city governments given the paralysis at the national level.  So far the Mayor has passed on matching his progressive rhetoric with progressive reforms in housing.

It’s a shame because there are lots of good ideas - some old, some new, but hardly any that are radical - that the mayor should be willing to explore. Many of them can be tried without Albany or Washington.

But the truth is the Mayor de Blasio needs the state and particularly the federal government to take on a larger role in the affordable housing crisis. There are too many macro economic forces at play with the affordable housing crisis, which is why over 99% of US counties are suffering from it. Only a stronger federal commitment to housing, to wealth equality, and to tax policy can make a difference on that level.

The Mayor can be more helpful in forcing Albany and Washington to change the status quo on housing.  NYC is the biggest city, the most powerful real estate center, with the largest public housing population in the country.  If you want to change the conversation on housing, NYC is the place to do it. That change must include thinking about housing outside of the narrow, flawed lens of the market.  The Mayor needs to think bigger and I think he would be rewarded for doing so.

The Mayor's Housing Plan Runs into First Major Test

The site would consist of two towers that span a small sliver facing both 17th and 18th street (morris adjmi via nytimes)

The site would consist of two towers that span a small sliver facing both 17th and 18th street (morris adjmi via nytimes)

Mayor de Blasio’s sweeping affordable housing plan passed in March has run into its first serious challenge in the form of a proposed development in the Ladies’ Mile historic district in Chelsea.  At its core, the issue comes down to at what scale should a development fall under the new housing policies.  As with any type of development in NYC, this is a maddeningly complicated question.  The answer, expected next week, will have a huge impact on how the mayor’s policy will play out.

Let’s review the housing plan quickly.  Back in March, the NYC City Council passed two major proposals to address the affordable housing crisis in the city.  The first was the Mandatory Inclusionary Zone plan, which requires every residential development to have a certain percentage of affordable units.  The second was the Zoning for Quality and Affordability plan, which sets out design and size requirements based on the location of a proposed development. 

Here’s where it gets a bit confusing.  Though a developer has several options for how many units (and at what level of ‘affordable’) to set aside for the mandatory inclusionary housing (MIH), the policy appears to allow some wiggle room because it doesn’t expressly state at what number of units a development falls under the policy.  The assumption could be that every residential development does, maybe every newly submitted development does, or maybe every large development does.  Whether the city allows for a certain amount of nuance and negotiation - or not - has a huge impact on future developments. 

(morris adjmi)

(morris adjmi)

Enter the current proposal by Acuity Capital for a 17-story building containing 62 condos on 6th Ave between 17th and 18th.  The site is currently a parking lot but would also encompass two surrounding buildings that are protected under historical preservation laws, though the Landmark Commission gave the development the go-ahead back in 2014 (obviously before the mayor's new zoning laws. It's unclear if there is an issue with it under the new ZQA requirements). The developer needs to build around those buildings rather than demolish them and also needs a special permit from the City Planning Commission to build a structure larger than 6 stories at that site. The air rights for the existing structures would transfer to the new development allowing them to add an additional number of stories on the existing square footage.

Because the new development would be larger than currently allowed, some leaders, including Manhattan Borough President Gale Brewer, argue that the development should be subject to the MIH requirements.  The concern here is that any nuance or exemption will create room for developers to get creative and avoid the MIH requirements in other ways.  If the goal of the policy is to require affordable housing units from every development, then it should do so.

(morris adjmi)

(morris adjmi)

The mayor’s office (and the developer) appear to think that the development is a ‘rejiggering’ of zoning rather than a full enlargement of the site that would trigger the requirements. The concern for the city is if the plan is deemed too onerous by developers, they might sue the city and threaten the laws (or just not develop more housing).  The courts have previously overturned housing requirements in other cases, so the city is eager to avoid that risk, particularly since the laws are still so new.

The City Planning Commission will decide on the issue on Monday.  According to several people interviewed for the NY Times article, even the Commission appears to be split about what to do.  There is some discussion of a compromise where the Commission would require a percentage of the additional units available through the air rights allowance to fall under MIH requirements. That would only create a handful of protected units, but might be enough to get through the Commission. They could also presumably make the argument that the development has been in the pipeline before the housing laws were passed and shouldn't be subjected, but I haven't seen that. (I also haven't seen if the development runs afoul of the new ZQA laws.)

The Commission and the Mayor seem wary of this case creating too large of a precedent going forward and that’s understandable. However, the reality is that the new housing plan is a major departure for the city and these edge cases must have even basic guidelines as quickly as possible.  It's also important, even though this specific case wasn't impacted, to clarify how the new housing laws will interact with other regulations, such as historical preservation.  If other policy tools can be used to prevent the housing requirements, affordable housing targets could be undermined.  Some level of nuance and negotiation are already accounted for in the city’s zoning laws and its ULURP process, so developers expect complexity in NYC; it’s the cost of doing business.  But for the mayor’s plan to take off and meet its goal of 200,000 affordable units, it needs to avoid costly legal battles with developers and, more importantly, get developers to buy-in.  It’s not pretty, but nothing in the built environment is.

The End of the Beginning: the Challenges Ahead for the Mayor's Housing Plan

Victory lap might be a short one for the Mayor (capitalnewyork via mayor's office)

Victory lap might be a short one for the Mayor (capitalnewyork via mayor's office)

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.

Governor Cuomo: Oh, yeah? (thewire.com)

Governor Cuomo: Oh, yeah? (thewire.com)

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.

CB15 (Sheepshead Bay) voting against the mayor's housing plan (sheepsheadbites)

CB15 (Sheepshead Bay) voting against the mayor's housing plan (sheepsheadbites)

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. 

 

What (potentially) goes up, must (inevitably) come down (citylab)

What (potentially) goes up, must (inevitably) come down (citylab)

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.  

The Senior Housing Crisis is Already Here

Mayor de Blasio discussing his plans for senior housing (mayor's office)

Mayor de Blasio discussing his plans for senior housing (mayor's office)

At the risk of beginning to sound like a broken record, this post will examine another clear and present danger within the affordable housing crisis: the lack of senior housing.  As the Baby Boomer generation passes 60 and begins to retire en masse, the numbers of seniors on fixed incomes will begin to rise dramatically and will put even greater pressure on housing needs across the nation.  With the increase in life expectancy (for some Americans anyway) this means that a lot of older people with specific housing needs will need them soon and for a very long time into the future. As is the case across the board, we are simply not creating enough housing to manage this issue.

The numbers in New York City are illustrative of the current problem and of the problems to come.  New Yorkers over 60 represent the fastest growing demographic in the city, at nearly 20% of the population - up from 12% in 2000.  Vicki Been, Mayor de Blasio's housing commissioner, told the City Council in February that the numbers of seniors in NYC could reach 1.8 million by 2040, which would double the number in 2000.

The big secondary problem with these numbers is the fact that 20% of current seniors in NYC,  including 40% of NYCHA residents, live in poverty ($11,170 a year). Of renter households headed by older residents, half are rent burdened, meaning they pay over a third of their monthly income on rent. And according to LiveOn NY, a senior citizen advocacy group, over 100,000 pay over 50% of their income to rent.  This makes older residents the most rent burdened demographic in the city and puts many at risk of losing their homes if costs keep climbing across the board.

For whom the bell tolls (nytimes/uni. of minnesota)

For whom the bell tolls (nytimes/uni. of minnesota)

Mayor de Blasio's housing plan, which is expected to pass the City Council soon, has been the most comprehensive attempt to address the crisis to date and has a number of good ideas. Specifically, his Zoning for Quality and Affordability proposal would allow taller and larger buildings with less parking closer to transit centers and reduce parking requirements for senior housing sites. This would allow more land and capital to go to building more units.

The housing plan would also increase the funding and support for the Senior Citizens Rent Increase Exemption (SCRIE) which currently freezes the rent for 53,000 seniors in NYC and covers the difference in cost for the landlord. The plan would try to cover the estimated 80,000 other seniors who qualify but are not currently enrolled.  This is a type of program that could spiral out of control if other measures are not taken to address housing costs, but it is working right now and needs to be expanded to the many seniors who can't enroll.

Finally, the plan indirectly attempts to support "aging in place" that allows seniors to remain in their homes for as long as possible and to maintain their dignity and quality of life.  The plan calls for a number of measure to preserve the existing stock of affordable housing including rent controlled and rent-stabilized apartments.  These measures have a significant impact on this issue because  65% of older New Yorkers live in these types of apartments.  Whether these residents are self-sustaining or paying through government programs, policies in Albany will have a major say in how long they are able to stay in their homes.

No plan is perfect and there are concerns that the measures won't do enough, for senior housing or for the overall affordability of the city. However, most of the outspoken critics, including Real Affordability for All,  have now endorsed the plan and it should become law.  

This type of buy-in important going forward because the plan will surely have to evolve as needs change and the proposals begin to show returns one way or the other.  Having as many stakeholders as possible involved in this process is the only way to ensure that we can make the types of policies that have a lasting affect - because many of us hope to age in place in NYC as well.

SROs: The Wave of the Past

Hotel Chelsea, a classic SRO (vanityfair)

Hotel Chelsea, a classic SRO (vanityfair)

I wanted to continue the conversation on micro-living and shared-living and include an old idea that city officials should consider: the reintroduction of single room occupancy (SROs).  SRO buildings came in many shapes and forms, but generally consisted of small rooms with a single bed and a shared bathroom and kitchen for each floor (there is no single definition of SROs in New York housing law.)  Though Mayor de Blasio's housing plan, now backed by the City Council, does not contain any proposals about SROs, the successful if limited introduction of micro-units does open a door to discuss this type of affordable housing option.  

We forget, but for much of the late 19th and early-to-mid 20th century SROs, "rooming houses" and "lodging houses" provided a large portion of housing for workers flooding American cities from New York to San Francisco during the transition from an agricultural economy to an industrial one.  The diversity of housing allowed for single men and single women to find short term or long term housing that met their financial needs. I highly recommend reading this SRO report from CUNY Law Review by two lawyers from MFY Legal Services about the history of SROs in NYC and their current legal gray zone. 

The same factors that created the demand for SROs historically still exist with today's working population, perhaps more so given demographic changes. Just for some perspective, there were 185,000 single-person households in NYC in 1960; today, there are 1.8 million.

This blog has previously discussed some of these dramatic demographic changes. For younger workers, it speaks to lower marriage rates, higher debt levels, and social preferences; the numbers also speak to immigrants (many of them illegal) who live alone and send remittances home to support their families; it also accounts for the high level of seniors living on their own in the city.    (We will devote future blog posts to immigrant housing issues and senior housing issues.) Whatever the cause, NYC and other cities have been slow to recognize the dramatically shifting profile of renters and have not created more housing diversity to accommodate them. SROs would be an impactful and easy policy pool to include.

Why aren't they? Because most cities made SROs illegal (NYC banned new SRO construction in 1955) and severely cracked down on them in the following decades. This happened slowly over time as suburbanization and deindustrialization made SROs a highly-stigmatized form of living in the American consciousness - they became the last resort for the poor, the addicted, the disabled, or the marginalized.

By 1987, the city went further and made it illegal for an apartment to be smaller than 400 sq feet and not contain a bathroom or kitchen (Mayor Bloomberg created a waver for Carmel Place, the first micro-unit building in NYC, to have smaller units).  Though only about 30,000 SRO units are still registered in the city, according to multiple sources, potentially 100,000 exist illegally, which means many people live in substandard and dangerous conditions.  The fact that so many people would still take that chance shows the depths of the housing crisis and the need for more housing diversity.

It would be simple to reintroduce SROs legally, as far as it goes, by removing the law from 1987 that requires all units to be 400ft and contain a bathroom and kitchen.  But we should go further.  First, the city should offer amnesty for registering (and inspecting) the thousands of illegal SROs already in existence, many in private homes. Second, the city should offer incentives for developers to remodel existing buildings - whether tapping into the idle or underused warehouse stock in some of the boroughs or older Class B or C office buildings, particularly around transit. Finally, with new developments, allow developers to include SROs set to targeted AMI levels as an additional option for set-aside affordable units.  This would be a much lower cost option for developers and a higher output of affordable units.

The sum of banning SROs and other policy changes (such as height restrictions, historical districts, density limits, parking requirements) that have had local support and reasonable-enough intentions going back to the Bad Old Days, has stripped NYC of the housing diversity that it so desperately needs and used to have in abundance. It has warped the market to such an extent that developers are only building luxury high rises while 60,000 people are applying for a handful of units in a single micro-building.  Even Mayor de Blasio's compromised micro-housing plan reflects a disappointing resistance to a potentially transformative idea.

I am encouraged to see micro-apartments in NYC, even if the current models are on the top end of the market.  If they can create a framework to consider more housing diversity (and encourage a growing call for housing resiliency) that goes beyond even micro-apartments and SROs, then we should all welcome them.  Rather than trying to force a percentage of affordable units into every project, if we expand the types of projects at a developer's disposal, and expand the housing options for tenants across age and income groups, we can finally start adding a truly impactful amount of units to the market that will lower the costs for everyone.  We've seen this before in NYC and we can see it again.  Sometimes the most radical ideas are the old tried and true ones.

The Microaggressions towards Micro-Apartments

Carmel Place in Kip's Bay (nARCHITECTS)

Carmel Place in Kip's Bay (nARCHITECTS)

Micro-apartments popped into the news this week in what appears to be a successful compromise with the City Council that might help pass Mayor de Blasio's ambitious housing plan.  The Mayor agreed to increase his proposed minimum size for micro-units back to 400 sq feet from as little as 260 sq feet and also limited the scope of his plan to convert parking lots to micro-housing. These actions delayed a planned protest by the group Real Affordability for All, which welcomed the moves.  

The Mayor has shown a willingness to embrace micro-apartments that was shared by his predecessor Mayor Bloomberg; on the surface it's not hard to see why.  Micro-apartments, which are generally defined as a full apartment with a kitchen, bathroom, and living space within a small, highly concentrated floor plan, have some notable upsides.  

For one, they increase the amount of units available in a single development, which is attractive in a city screaming for more housing. Second, micro-units are increasingly based on modular construction methods which means they can be built off-site and fabricated into final position, dramatically reducing their per unit costs and construction time. And third, they reflect an overdue correction in the available housing stock as only 7% of units in the city are studios, while nearly 50% of the population is single.

There are also some downsides, at least according to critics of micro-housing and of the mayor's housing plan.  The two main criticisms boil down to a lack of affordability and a lack of practical use for families.  

The second criticism seems to miss the point in my opinion.  Yes, you are not going to see a family of four in a micro-apartment, but that's not who they are being built for (at least not yet).  The argument is simple enough: if you build a critical mass of micro-apartments targeted at young, single professional types, you free up the larger multi-bedroom apartments that they are currently living in with roommates.  That stock of housing, which was intended for family living in the first place, now becomes available to families again. (I know this is certainly the case where I live in Stuyvesant Town and... in my specific apartment.)

The question of affordability is more complex, and I tend to agree with some of the criticisms, but I focus more on how micro-housing is being framed. It is not a cure-all and shouldn't be viewed as one by opponents or proponents. 

Carmel Place, which is the first and currently only micro-building available in NYC, is certainly designed with the types of flashy amenities to attract those young single professional types and is priced accordingly. The complex, located in Kips Bay, includes 55 apartments no larger than 360 sq feet. (In 2012, Mayor Bloomberg agreed to waive the 400 ft requirement that has been law since 1987).  According to this article from the Daily News, 32 of the units will be priced between $2600 and $3200, which, woof, isn't cheap. However, the other 23 units will be below market (as little as $950 for housing lottery winners) and assigned to rent burdened residents, including 8 homeless veterans.  

I didn't know West Elm made a Murphy Bed (fastcodesign)

I didn't know West Elm made a Murphy Bed (fastcodesign)

Though this last point is obviously cool, it's also good PR for the developers and boosters of micro-apartments (and was presumably mandatory for the project to go forward). It also goes towards the claim that it's a model for affordability. But, is it?

I don't think it is, per se. First, the amount of affordable units created would be a drop in the bucket relative to the need (60,000 people applied for the lottery!) the type of need (the majority of people who need housing assistance are poor with children or old) and where the need exists the most (not in lower Manhattan).  

Second, as we've already seen with the Poor Door issue in other partially subsidized buildings, it's easy to picture how potential resentments and conflicts could arise between residents sharing such small spaces (which probably doesn't justify my click-bait title, but it is a real issue to consider). This could hurt their appeal and support in the long run.

Finally, though I was unable to find much information on the financing of Carmel Place, I can imagine that there were significant subsidies put in place to get the project through (I've already mentioned how Mayor Bloomberg pushed a waiver through on the size of the apartments) that make establishing it as a model prohibitively expensive and dubious when weighed against the opportunity cost. Though modular construction represents a chance to lower costs, it's probably not a huge impact on this project since the system isn't well established in the states yet.

That doesn't mean we shouldn't encourage the construction of micro-units; we should. But we need to think of them as one part of a larger liberalization of housing options in the city.  One of the frustrating trends with housing issues in NYC is that each development, or type of development, or type of policy tool is viewed as a microcosm of the problem of affordability that must address all needs at once.

The truth is, luxury towers like 432 Park can't help subsidize affordable housing with or without 421a, the "80/20" rule can't possibly create enough affordable housing; micro-apartments can be part of the solution of providing more affordable housing in general, but that doesn't mean each individual development should provide affordable housing units.

Going back to a point I made earlier, what would be better is to create a critical mass of micro-housing that is attractive to young single professionals (who can afford them) that in turn frees up a significant portion of other housing stock for families, older residents, and other housing-burdened New Yorkers.  Carmel Place's principal designer Eric Bunge agrees with this idea as well and sees the need/opportunity for micro-housing tailor designed for different ages and family sizes.

This type of housing diversity would be a much needed realignment of priorities and methods in NYC, but surprisingly there is a large resistance to having such discussions from a wide variety of actors. Even Mayor de Blasio's compromised micro-housing plan reflects a disappointing resistance to a potentially transformative idea. The lack of diversity has warped the market to such an extent that developers are only building luxury high rises while 60,000 people are applying for a handful of units in a single micro-building.  

I am encouraged to see micro-apartments in NYC, even if the current limited amount of units are on the top end of the market.  If they can create a framework to consider more housing diversity (and encourage a growing call for housing resiliency) that goes beyond even micro-apartments, then we should all welcome them.  Rather than trying to force a percentage of affordable units into every project, if we expand the types of projects at a developer's disposal, and expand the housing options for tenants across age and income groups, we can finally start adding a truly impactful amount of units to the market that will lower the costs for everyone.  

One Big Problem with Mayor De Blasio's Housing Plan Isn't Even His Fault

Deputy Mayor Alicia Glen (center) City Planning Director Carl Weisbrod (far left) and Housing Preservation and Development Commissioner Vicki Been (near right) testify before City Council (newyorknimby)

Deputy Mayor Alicia Glen (center) City Planning Director Carl Weisbrod (far left) and Housing Preservation and Development Commissioner Vicki Been (near right) testify before City Council (newyorknimby)

Over the last two days, top officials in the De Blasio administration have been testifying before the NYC City Council about the mayor's proposals to increase affordable housing in the city through changes in zoning laws.  The Mayor has promised to construct or protect 200,000 affordable housing units over the next ten years but has faced some political opposition from tenants groups, unions, and elected officials who argue that the proposals will only encourage more gentrification and high-end development while failing to meet the mayor's goals or the city's needs.

The two programs under review by the City Council, which were approved by the City Planning Commission last week, include the Mandatory Inclusionary Housing (MIH) and Zoning for Quality and Affordability (ZQA) programs.

There are two big policy proposals in MIH that would break with the current orthodoxy - setting aside affordable housing units in new developments would be mandatory and those units would be permanently affordable. As it is now, setting aside affordable units is voluntary (part of a FAR bonus program for 20% affordable units) and those units have a defined 'sunset' where they return to market rate (35 years has been the standard).  These developers would be eligible for subsidies from the city and state.

The ZQA begins to touch on some points that I made in an earlier blog about zoning with proposals to encourage affordable housing by relaxing some zoning requirements for specific types of housing (including elderly housing) and incorporating the MIH proposals into the zoning code.  There are also proposals to encourage better street-level design and pedestrian experience (even bankers hate all the bank branches in Manhattan). 

At least it's not a bank. (NYC DCP)

At least it's not a bank. (NYC DCP)

What defines 'affordable' is usually where programs like these run into controversy, which presumably explains a lot of the protests occurring during and around the hearing. Inclusionary housing policies in the city base their definition of affordable on two factors - the income threshold to be eligible and a cap of rent-to-income percentage. Generally, as is the case with the highly controversial 421a tax exemption state law, the income level is set at 60% of the Average Median Income of the NYC region according to the US Census.  The cap on rent has generally been 30% of monthly income. 

The key point about AMI here is that it is based on the NYC region (which includes Westchester and Long Island) and not just the city's five boroughs. So for the purpose of policy creation, the AMI is $86,300.  However, the AMI of just the city is actually $50,700.  The AMI calculations are set by the US Department of Housing and Urban Development (HUD) and are obviously grossly unreflective of the nature of income in the city.

There are many people who have beef with this calculation, including Congressman Jose Serrano from the Bronx 15th District.  This number egregiously distorts policy decisions and their impact on New Yorkers who are rent burdened across the entire city, but it particularly impacts low-income families concentrated in poorer parts of the city.

Mayor De Blasio is obviously aware of this (probably has beef with it too) and has outlined for developers to set aside 25% of units for residents with 60% of AMI or 30% of units for 80% of AMI among other options. However, this can't change the fact that the baseline numbers increase the cost of subsidies to the city while limiting the scope of units available to the New Yorkers most in need of assistance.

That's a point that bears repeating.  The distorted AMI number masks the true needs of New Yorkers but it also totally ignores where those New Yorkers live - and where they need assistance.  The AMI in Manhattan is a lot different than the Bronx, for example, but that won't mean development is going to the Bronx because it's needed there.  According to an awesome report from the Furman Center,  the city's current inclusionary housing program and all of its associated subsidizes only work in developments that are located in higher-rent neighborhoods to begin with.  You might have heard of the "Poor Door" controversy where residents of high-end luxury buildings don't want to share entrances with the "20%" low-income residents.  

The policy of removing a small fraction of poor residents from a neighborhood to live in subsidized housing in a wealthy neighborhood has long been a divisive political issue in urban politics. (Here's an interesting study from Johns Hopkins on it).  I think the premise is flawed to begin with, since it relies on private developers to create new housing in areas that are economically viable and can guarantee an acceptable return. By this definition the only way new, subsidized affordable development will reach poor residents where they live is when their neighborhood becomes attractive enough to developers to build.

Trying to squeeze developers for a small fraction of affordable units in a select amount of hot neighborhoods based on faulty calculations doesn't solve the housing problem and costs the city a lot in subsidies. Though Mayor De Blasio's plan has a number of good ideas and a lot of buy-in from various stakeholders, it still relies on a premise that hasn't proven to work.

There are alternatives that could be explored.   Reintroduce SROS.  Explore Community Land Trusts.  Or encourage local neighborhood groups that provide economic justice in underserved areas.  Some of these, and many others, can surely work in NYC.  It won't be one mayor or one plan or one idea that changes the game for affordable housing, but we need to encourage policy makers to consider every option.  It would also help if policy makers use the most accurate data for us to work with.