This week, an affordable housing lottery in Stuyvesant Town (where I live) opened to the public, which offers a useful illustration of how backwards our thinking on affordable housing is: to qualify for a$2800 1 bedroom apartment, you must have a household income between $84k-$119k. When Blackstone bought the property for $5.3b last fall, the city gave it $221m to keep 5,000 of the complex’s 11,000 units in an affordable housing program. This lottery is that housing program at work.
Stuyvesant Town and Peter Cooper Village were built in the 1940s by Metropolitan Life Insurance as part of a government-subsidized housing program. It was (for a time, a racially segregated) working class complex that offered nice, modest living conditions protected by rent regulation
That all changed in 2006 when MetLife, getting greedy, sensing a bubble, or both, decided to sell the complex. This caused a feeding frenzy in the real estate market and ultimately led to the largest residential real estate deal ever. Tishman Speyer won with a $5.4 billion bid.
The deal was a disaster from the beginning (and has a lot of fingerprints from city, state, and federal elected officials who should have known better). It relied on the continuing trends of vacancy decontrol and rising rents to make the numbers work with little regard for affordability or sustainability.
In 2006 the deal looked like a safe bet, by 2009 not so much. The twin killings of the market blowing up and the Roberts court case (which reregulated 4,400 units - including my own) led to Tishman walking away from the property. Tishman still made a profit while taxpayers ate $2b of debt through Fannie Mae and Freddie Mac.
After a few chaotic years, Blackstone jumped in to purchase the property for a slightly less historic $5.3b. Mayor de Blasio and other elected officials, sensing some political leverage given the previous disaster with Tishman, were able to get Blackstone to agree to ‘preserve’ nearly half of the complex’s units in an affordable housing program for 20 years in exchange for around $220m in waived fees or tax subsidies.
A lot of people at the time hailed the deal as a win for affordable housing and tenants, but others questioned the rhetoric and scrutinized the details - and weren’t so sure. With its fuzzy definition of affordable housing, the continued market pressure on the rest of the tenants, and the underplayed granting of air rights to Blackstone (which will likely represent hundreds of millions of dollars of additional income), the victory seems firmly in Blackstone’s corner rather than the public’s.
I’m not blaming Blackstone. They are worth billions of dollars and certainly don’t need any tax breaks, so agreeing to any type of affordability deal wasn’t necessary for them. But if they can score $220m in subsidies by agreeing to some vague promises for political points, why not?
But it’s obvious that our elected officials at all levels failed the public interest on this deal and on the larger challenges of the affordability crisis. The lottery in Stuytown shows why.
No one can claim with a straight face that $2800 for a 1 bdr is affordable or that someone making $100,000 needs rental assistance. The fact that everyone involved with this deal actually is saying that should shock you out of any remaining complacency.
Some of this “tragical” thinking stems from the flawed logic used by the Department of Housing and Urban Development (HUD) in determining affordability that relies on the Greater New York average median income (AMI) which is $90,000, rather than NYC proper which is closer to $50,000.
That higher AMI is the basis for all state and city affordability requirements including the lottery run by the Housing Development Corporation. Even when the city requires or negotiates a certain number of units below that AMI, it still means a lot of New Yorkers can’t touch any of these units.
Fixing AMI standards would create more accessible, sustainable affordable housing, but it wouldn’t fix the other two major flaws surrounding the Stuytown deal. Namely, relying on the private market to solve the affordability crisis and treating housing needs differently than other needs-based programs like food stamps or Medicare.
Putting it more simply, we should demand that housing be treated as a basic right and form policy from there.
For decades, New York City has been attempting to survive the affordability crisis with policies designed to promote private development first, and affordability second. Whether its tax policies like 421a, rezoning, even occupancy laws, housing policies have been billion dollar gifts to private developers. If this created or preserved a lot of truly affordable units, fine. But look at the recent history of Stuytown and tell me that it does.
Until our elected leaders reject the premise that the market should be driving housing policy, we’ll never get more affordable housing and we’ll never get a better return on our tax dollars.
This doesn’t mean that the government should replace private developers altogether (though public housing is underrated and due for a cultural comeback) but it does mean the goals should be reversed: affordable housing first, profit second. Whether it’s looking into community land trusts, dusting off limited-dividend programs like Mitchell-Lama, or creating a state-level Section 8-style program, we have proven models to explore.
For this to happen, there needs to be political change from the bottom-up. Regulated and market rate tenants should ban together with smaller landlords to counter-balance the political power of big developers who dictate state and city policy. Tenant groups and affordable housing developers should embrace new technology both to organize and to promote alternative housing models. Landlords should actually accept the premise of rent regulation in order to reform its more outlandish abuses.
Too many actors in housing have been divided politically and have collectively suffered in our current paradigm, while a wealthy few benefits. Only by breaking this cycle can we introduce, or in some cases reintroduce, innovative thinking to break the affordable housing crisis as well. We must start by acknowledging that housing is a right, not a lottery.