December 21, 2006
A Victory for Affordable Housing
Developers are grumbling, but they'll have to adapt. The tax breaks they have enjoyed for the past 35 years in exchange for building new housing units in NY will now come with more strings attached. Specifically, the new plan approved by City Council on Wednesday aims to create more affordable housing and staunch the flow of taxpayer subsidies toward luxury housing. The New York Times, which endorsed Speaker Christine Quinn's plan before it passed, has the scoop today.
Starting in 2008, this revision of the law known as 421-a, will:
- Expand the Exclusionary Zone, or area in which the construction of new market-rate housing requires the corollary construction of additional affordable units in order to qualify for the tax break. Newly added areas include Lower Manhattan and parts of Harlem, Brooklyn's Downtown and brownstone neighborhoods, plus swathes of Greenpoint, Williamsburg, and Bushwick.
- Raise the minimum proportion of affordably-priced units to one out of five. Up to now, a mere 8% of the 110,000 units benefiting from the program could be called affordable, according to a report cited by Gotham Gazette. "Affordable" is defined by the city as no more than 80% of the median household income, or about $57,000 for a family of four.
- Require that the lower-priced units be included within each building and not erected elsewhere in the city, as was previously allowed.
- Set aside $400M for an affordable housing trust fund in poor neighborhoods.
As welcome as the new policy may be to advocates of affordable housing, it remains unproven as a means of substantially ameliorating the city's housing crisis. It represents a type of public-private strategy that has evolved in lieu of direct public housing subsidies since free-market practitioners gained the upper hand in the late 1970s. Will private developers build affordable housing for New Yorkers given the right tax incentives and requirements? Can the new guidelines be consistently enforced?
Links:
Housing Here and Now!, which supported the plan and calls for further reforms.
Real Estate Board of New York, which opposed the plan.
Dec 19: Gothamist: Tax-free Housing for the Holidays
Dec 6: Gothamist: Quinn to Offer Revised Housing Tax Abatement Plan
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Here's my question: How does one get in on these fabulously affordable apartments in the new buildings? Is there a good way of finding out about these buildings when they're under construction?
In typical fashion the income cutoff will probably be too low for the truly middle class. Politicians think you're rich if you make a dime above the median.
no more than 80%? of household income? That does not sound right, or affordable.
so a family of four making 60K is on their own
yeah, way to help the "middle class"
this only shows that politicians only care about the rich and poor
moxie, go to the NYC Affordable Housing Resource Center website.
Prediction: This will lead to less housing being built overall and less affordable housing.
The whole way that housing affordability is addressed is so skewed its ridiculous. People need to step back and realize a simple rule.
The price of something is highly related to the cost of something. Developers don't build luxury housing because thats their favorite thing (even if it might be), they do it because its the only thing that you can build in this city and earn a return on your investment.
I know its out of the grasp for most non-developers to try to do, but pencil out how much it would cost you to buy a piece of land, spend upwards of $175-200 per square foot in construction and labor costs, and also pay for financing and interest costs in order to wait the multiple years it takes to get approvals for most any kind of project, then pay for the construction and permanent financing fees.
You literally can not make it work in many cases. Anywhere it does work you realize things like - "Wow, I need to sell these one bedroom apartments for half a mil a piece to many any money at all!"
The people in power, if they actually cared about housing affordability for all of us, would find ways to actually reduce the cost of building, so that people that actually do it can get it done at a cheaper price.
How about NO subsidies for luxury developers, period? Why should we pay for something that we can't use? The poor pay little taxes, the rich don't carry as much of the tax burden, compared to the middle class. The middle class takes the brunt of the taxes, but are too "rich" to be eligible to live in the very housing that their taxes paid for.
Oh wait, we like this scheme. That's why we re-elected Bloomberg with our eyes wide open. Bloomberg used this very same nonsense scheme for many projects over the past few years.