As part of a complex deal with the federal Department of Housing and Urban Development, the state, and private groups, 21 of the city's most dilapidated public housing complexes finally became eligible for annual federal subsidies today, as well as an investment of more than $400 million. The deal is one of many helping to keep affordable housing afloat during the downturn, as chronicled in the following story from Issue 05.
Whether it is the past boom or the recent bust, affordable housing seems always to be in urgent demand. During the good times, rent-controlled and rent-stabilized units vaporized, and now sky-high rents have still not come back to earth.
Blame for these developments often falls on the business-friendly Bloomberg administration, but affordable housing advocates and developers argue that, were it not for the mayor's efforts, the city could be in much worse shape. “Their affordable housing plan is one of the foremost in the country,” said Josh Lockwood, executive director of Habitat for Humanity New York City. “It’s pretty amazing that they’re on track in the middle of this recession.”
Lockwood was referring to the New Housing Marketplace plan, updated on February 22. The centerpiece of the Department of Housing Preservation and Development’s affordable housing efforts, the plan was first laid out in 2002, and greatly expanded in 2005 on the eve of the mayor’s first re-election. It called for 165,000 units for some 500,000 residents by 2013, half of which would be created through new construction, often within market-rate developments, half through preservation of existing affordable units.
The mayor announced that the program was indeed on track (with just under 100,000 units so far), but it will now take a slightly different tack, emphasizing retrofits and preservation over construction. In spite of the plan’s continued success, it is not immune to the current economy: Keeping it afloat will cost the city an additional $1 billion, and the completion date has been pushed back to 2014.
Holly Leicht, Deputy Commissioner for Development at HPD, sees these changes as a virtue, not a failure. The city initially capitalized on new construction, leveraging inclusionary zoning and tax credits to entice developers to build in affordable units to their new "luxury" projects. With construction credit still frozen, almost no units are being created through this route, so the department has shifted its money to the other half of the equation, preserving units through tax credits and low-interest loans.
“A lot of owners, particularly in Mitchell Llama housing, may have seen a pot of gold before, but now that pot of gold is gone, and they are much more interested in talking to us,” Leicht said. This is an especially enticing approach for the department because it has already committed heavily to such developments. Keeping them affordable now extends that investment. It also has a faster turn around than new construction, where many promised units remain unbuilt. “It’s taking longer, but we always anticipated this would be a long-term strategy,” she said. Still, Leicht said she believes the worst is over, and the department still managed to realize 12,500 affordable units last year, down from a high of 17,500 in 2008.
New programs have also sprung up to help the city in its quest for more affordable housing, though they are experiencing varying degrees of success. The city has received two rounds of Neighborhood Stabilization Program funding from the federal government, which uses innovative data-tracking to fund small-scale projects, from homeownership assistance to foreclosure purchasing, helping head off the sort of disinvestment that plagued the city in the 1970s and ‘80s.
One program that has yet to bear fruit, however, is one of the most celebrated, at least by the politicians who created it. With upwards of 600 stalled construction projects in the city, City Council Speaker Christine Quinn proposed the Housing Asset Renewal Program, or HARP. The program, announced last summer, would use city money to provide bridge loans to stalled projects, with $25,000 to $50,000 provided for each unit the developer converted to affordable housing. The goal was to create about 400 affordable units.
So far, none have gone ahead. A deadline was originally set for December, but it was pushed back to April for lack of quality bids. Leicht said there are better offers coming in now, with more variety—not just small projects in the outer boroughs. The problem remains that few lenders, even with foreclosures in the offing, are willing to take the necessary discounts the program demands.
“It’s a great idea,” said Jerilyn Perine, executive director of the Citizens Housing and Planning Council, a local nonprofit research organization. “Ironically, because people are optimistic about our future here in New York, they aren’t willing to take a hit yet on their investment.”
As with most problems since the collapse, blame has fallen on the bankers. James Riso, a principal at affordable housing developer the Briarwood Organization, said he used to close two to three apartments a day in his projects but is now lucky to see that many a month. Meanwhile, most developers are holding on, so competition remains fierce for the few affordable ground-up projects out there, forcing Briarwood to do more construction management, which is actually where the developer has it’s roots. “We’ve come full-circle,” Riso said."You have to adapt to your circumstances."
Habitat for Humanity has, it has actually been prospering. It recently partnered with New York State to develop super low-interest mortgages for homeowners. With the proceeds, Habitat is now able to take out construction loans for the first time, expanding its building program. The group has also been negotiating short sales to keep buildings occupied and using its volunteers to clean up community centers and parks, making distressed neighborhoods less so. “Now’s the time to get creative,” Lockwood said.