While the term "affordable housing" evokes government-subsidized multifamily rentals to many people, New York's epic
The plans skew mainly toward rental units, but there is a homeownership component, as well as a foreclosure relief plan. Flood insurance relief for homeowners is in the plan as well, reflecting the extensive damage the city received during Hurricane Sandy.
More than $11 billion of the $40 billion price tag will come from financial institutions, according to the blueprint for Housing New York put out by the administration of Mayor Bill de Blasio.
A lot more will come from other private and public-private partnerships where governments provide subsidies to encourage private firms to get involved. These include low-income housing tax credits, housing finance agency bonds and investments by the city’s five pension funds. All in the private and public-private funding comes to an impressive total of just over $30 billion.
In fact, just $11 billion is projected to come directly from the city, New York State and federal governments. (The mayor's press office did not return several requests to break down the private participation and the number of ownership units involved.)
What prompted this endeavor, which its creators bill as the biggest affordable housing program ever in the United States? A huge affordability squeeze that has developed as housing prices have increased far more than incomes for the very-low through middle-income residents targeted for the effort.
"The private marketplace has not produced enough housing for existing residents, let alone enough to accommodate the growth that the city has experienced," according to the plan blueprint. "Despite considerable public investment to stimulate the production of housing that is affordable to low- and moderate-income New Yorkers, the supply of publicly subsidized housing meets the needs of only a fraction of the people in those income groups."
There is a little gentle social engineering in the effort. On the ownership side, this involves requiring new condominium and cooperative developers to agree to create affordable rentals nearby. They will have two choices: "The options will include requiring developers to either construct off-site affordable rental units within a prescribed geographic radius of the market-rate homeownership units, or make payments into a fund to be used for that purpose."
Jose Gonzalez, president of the
"I applaud the mayor’s focus on building homes that are affordable," he says. The district bank "is an active participant in New York's affordable housing community, and our city has many tremendous nonprofit groups whose missions will benefit from the mayor’s plan." Some of its members will be part of Housing New York by providing gap, or partial, financing for affordable housing in the city through the district bank's community investing and affordable housing efforts.
For instance, one of its fundees in 2013 got a grant of $1 million to finance the
This East Harlem project is one of 11 singled out as examples in the Housing New York summary. It "will include 18 units affordable to households earning 40% of area median income and 71 units affordable to households earning up to 60% of AMI."
The city projects the Housing New York program will provide living space for 500,000 people, ranging from very low income (below $25,000 for a family of four) to middle income (up to a maximum of $138,000). Sixty per cent of the units will be "preservation" (rehabs) and 40% new construction.
Seventy-eight per cent of the units are planned to go to low- and very low-income residents, and 22% to moderate- and middle-income residents.
At least one new homeownership program will be started, and an attempt will be made to revive an old one.
The city will launch two aligned new programs, the Neighborhood Construction Program and the New Infill Homeownership Opportunities Program. These programs "will aggregate sites to develop affordable housing, including one-to-four family homeownership opportunities and up to 20-unit rental buildings," according to the plan.
Under NIHOP "sponsors will purchase city-owned land and construct one-to-four family homes, cooperatives or condominiums." The city will target small developers and local community development corporations to work with financial institutions.
Housing New York will also explore reviving the Housing Preservation Department’s Alliance for Neighborhood Commerce, Homeownership, and Revitalization Program and "will look to expand the use of public financing tools such as federal New Markets Tax Credits."
The plan "will continue to support aggressive neighborhood-based efforts to prevent foreclosure and combat predatory practices targeted at homeowners and homebuyers," the blueprint states, and it will help owners reduce flood insurance premiums and make improvements to forestall further flood damage.
All five boroughs of the city will see new affordable housing investment. Developers and builders should benefit, as well, from construction for new and existing housing, with a projected 194,000 construction jobs to be created to supply the demand along with another 7,000 permanent jobs.
Housing New York is an immensely ambitious plan with what looks like hundreds of moving parts that will all have to mesh smoothly for it to deliver on its mammoth goals. It takes more than 100 pages to spell it all out, even in broad strokes.
Doubtless not everything envisioned will happen. If even half of it gets done, that would really be something.
Mark Fogarty is Editor at Large for SourceMedia's Mortgage Group and has written about the mortgage industry for more than thirty years.
