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The Micro-Affordable Micro-Units

August 1, 2013

Every single Micro-Unit is unaffordable for the typical single-person household. 

Last week, the new first AdaptNYC proposal came before the City Planning Commission as part of the ULURP Process, after being presented to both the Community Board and Borough President. This is a development of fifty-five 250-350 square foot studios on the East Side of Manhattan, known best as the pilot project for the Mayor's new "Microunit" idea. In order to do this development, the city is providing the land, and proposing seven different Mayoral Zoning overrides, changing regulations around unit size, light & air, and density, and doing a commercial overlay. There's been lots of talk about the design and amenities of these units. Little has been said about the affordability.

The Community Board, Borough President, and City Planning Commission all focused heavily on this oversight, and the lack of real affordability in the development. The Community Board voted to reject the proposal outright, and the Borough President voted to approve only with conditions, many of which centered on the affordability of the units. Fortunately, because these concerns were raised, both HPD and the developer, Monadnock, explicitly promised to revisit the levels and length of affordability in the development. The ULURP process worked well - the city made a substantial oversight, it was brought to its attention by the community, and it will be addressed.

So now that the focus is properly back on the "affordable" in "affordable housing," we should look at what that means for this development. We hear two oft-repeated things demonstrating the need for Microunits:  first that there are 1 million studio and 1-bedroom apartments, and 1.8 million 1- and 2-person households; and second, that the growth of single-person households is "an across the board" issue. Both of these talking points need deeper examination.

First, while it is highly questionable if it's appropriate for any 2-person household to be housed in a 250-350 square foot Microunit, we also need to take into account that not all 2-person households are adult couples. Many times these households are a single parent and child, two unrelated adults, or other non-traditional families. These households are not appropriate not just for a Microunit, but also for a studio or even one-bedroom apartment. A single mother and teenage son, for instance, need a two-bedroom apartment.

But more importantly, while it's commendable that this proposal is addressing the needs of the increasing number of single-person households in New York City, we need to look at who these single-person households are. It is not enough to simply dismiss deeper analysis by saying the growth of single-person households is "an across the board" issue.

Single-person households are the poorest in New York City with a median income of just 56% of AMI. In 2011, the latest year available, this was $32,474, meaning that a studio apartment renting for $812 a month would be affordable to the median single-person household in New York City. Every Microunit in this development is well over this price. 60% of the units aren't affordable at all. 20% of them come somewhat close, at $1,115 a month (80% of AMI level). And another 20% are deemed "affordable," but at $1,811 and $1,940 a unit (145% and 155% of AMI), are actually only slightly below market rents - market rents in one of the most expensive rental neighborhoods in the entire country. 145% and 155% of AMI are grossly out of the range of affordable housing, being affordable only for people making well over twice the median income for single-person households in New York City. In fact, 65% of all New York City households, not just single-person households, make under $75,000 - too little to afford an "affordable" Microunit at the 155% AMI level. Single renters are also twice as likely to be senior citizens, with individuals over 65 making up 28% of single renters, and individuals over 55 making up 45% of single renters, as compared to just 12% of the total population over 65, and 23% of the total population over 55.

And the apartments that are renting at 145% and 155% of AMI are not only not affordable compared to actual need, they are arguably not even below the market standards of the neighborhood. On a per-square-foot basis, the rents are higher than the average free-market rents for the neighborhood, which are $53/square foot, according to the latest Ellisman report. Even the largest unit, at 350 square feet, is still over $60 a square foot for the 145% and 155% AMI units. And the average rent for a studio in in the neighborhood is $2,247. An "affordable" MicroUnit is only about a 15 - 20% discount over a typical studio for the neighborhood, and is about 30% - 50% smaller than HPD affordable housing guidelines for studio apartments.

Building smaller units to address a growing population of single-person households is an interesting development idea, but in order for it to be an effective affordable housing policy the units must, at a bare minimum, be more affordable than the open market. With 80% of the units in this development commanding more per square foot than the current market rate, and with only a slight discount off the rental prices of a full-size studio apartment in one of the most expensive rental markets in the country, this is not the case.

However, the most serious consideration of this development is that these units are only affordable for the short-term, 30 years. Since 60% of the development is high-rent market-rate units, 20% is high-rent, effectively market-rate units, and there is even a newly-zoned commercial space commanding market rents, there is no reason why the affordable units should be for only 30 years. Considering the land provided by the city, as well as the zoning changes and Mayoral overrides needed to come to fruition, are permanent subsidies provided to the developer, the affordability should be permanent as well. This is the case with all other community benefits - when a new subway entrance is created as the result of a new development, the developer is charged with maintaining it in perpetuity - it isn't simply abandoned and backfilled after 30 years.

Adjusting our housing policy to fit the changing demographics of New York City is a smart, forward-thinking thing to do. One of the biggest demographic trends over the last two decades is the percentage of rent-burned New Yorkers, which has continually increased since 1991. One of the biggest of the future is going to be the average of 8,500 affordable housing units, starting in 2017, at-risk of losing their affordability every year because of short-term affordability. 

Appropriate affordability lengths and levels need to be the first priorities of a new program, not an afterthought.

Blogger -  Moses Gates

ANHD blog team:  Benjamin Dulchin, Moses Gates, Ericka Stallings, Jaime Weisberg, Barika Williams. Anne Troy, editor.

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