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The Fight for Permanently Affordable Housing Heats Up
April 23, 2013
Should our taxes subsidize real estate developers who cash in on high market rents when temporary affordability expires?
The fight for affordable housing policy that maximizes the benefit to the community and the taxpayer is heating up. In two recent articles on February 13 and April 12, the New York Times questioned the affordability levels of city-subsidized housing, citing ANHD's Real Affordability report that argued that the City should build affordable housing that truly meets the needs of local neighborhoods. This past Monday, the Wall Street Journal aggressively attacked the supporters of ANHD's permanent affordability policy proposal that seeks to prevent the loss of vital affordable units to short-term expiration restrictions.
Since the Koch housing plan in the 1980s, New York City government has invested in the creation and preservation of affordable housing with the understanding that addressing the housing crisis is a vital public interest. ANHD and others have sounded the alarm that the public purpose of affordable housing is in danger of losing ground to big development interest. Non-mission-driven developers can take the much of the Koch and Bloomberg era subsided housing up to market rate after the 30-year affordability restrictions in order to reap a windfall from the initial public investment. In fact, the Wall Street Journal quoted for-profit housing developer Ron Moellis, a principal at L+M Development Partners, as saying, "the ability to convert an affordable development in Chelsea or Park Slope to higher rents is a key incentive for the private sector."
We don't think this should be the basis for public policy.
Public subsidy is a benefit that should not also entitle anyone to a windfall profit. But some for-profit developers are attracted to public subsidies that reduce their costs and provide a safe, decent profit for the first 30 years followed by large profit margins from market-rate rents. ANHD's work for "permanent affordability" argues that, in return for the public investment in affordable housing, the City should have a right to require that the housing stay affordable in order to maximize the value for the community and the taxpayer.
Unfortunately, many for-profit developers are accessing millions of dollars in city-subsided financing and collecting significant fees with the intention to build short-term affordable housing units that then become long-term high-rent units. New York City tax payer money going to affordable housing should create a long-term public good. Our city doesn't invest in a new public park or playground with the idea that in a few years some private owner will start charging admission. There would, of course, be an outcry.
ANHD has also raised the issue that City-subsided housing should "contextually affordable" and truly meet the needs of the local community. While all New Yorkers need affordable housing, ANHD's a recent ANHD report highlighted the need for better depth of affordability to make more units affordable to the average local resident. The report illustrated that only 8% of the City's affordable housing units built since 2003 are affordable for those in the bottom 1/3 of the city income scale.
ANHD Champ Director Moses Gates explains, "The city has a choice to make - either invest in stable, affordable housing that adds value to the community and provides affordable housing for the long-term, or subsidize real estate developers to build temporarily affordable housing, while cashing in on high market rents once the temporary affordability expires.
At ANHD's March 22 mayoral forum and at a forum hosted at New York University last week, Democratic and Independent candidates expressed the view that in the future the City needs to create affordable housing opportunities that are actually affordable to local residents and are long-term affordable. ANHD is pleased to see this conversation moving forward, and will work to promote smart affordable housing development policy where it can produce the most good for the community.