The Blog

Affordable Housing Needs a Reset

Unless it is radically changed, the mayor's plan will squander public assets, enrich real estate developers, but do very little for the record number of people living in the shelter system or at risk of landing there.
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We've been hearing a lot lately from New York Mayor de Blasio on his affordable housing plan. He says he will "build or preserve" 200,000 housing units, but the plan would only build 8,000 units a year. Unless it is radically changed, the mayor's plan will squander public assets, enrich real estate developers, but do very little for the record number of people living in the shelter system or at risk of landing there.

Let's first talk about how the term "affordable housing" is defined and whether it jives with our concept of the kinds of places New Yorkers can actually afford to live in. The mayor's plan defines an apartment renting for $41,500 a year as affordable because a family of four with $138,435 in income can afford it ― even though that is more than twice the actual New York City median 4-person household income of $63,000. That is, most New Yorkers cannot afford an "affordable apartment" by the mayor's standards.

The mayor's plan tracks the pattern New York City has religiously followed for quite some time of trying to "incentivize" private development. The city effectively pays a fortune to private developers to build this kind of stuff. Here is a frightening statistic from the Association for Neighborhood and Housing Development: in 2013, New York City gave private developers a pass on $1.2 billion in taxes in order to stimulate the building of 153,000 units of housing ― just 12,000 of which met the messed-up definition of affordability. Hard to believe we couldn't have done a lot better by simply collecting those taxes.

Importantly, when you invite developers into a neighborhood, the general price-level of housing tends to rise. So the 141,000 units of "market-rate" housing actually made things less affordable for people in the affected neighborhoods. We can already see how this dynamic has played out in Brooklyn.

A great report by the Real Affordability For All coalition explains that the development of downtown Brooklyn caused 23 and 20 percent drops in the area's Black and Hispanic populations ... and it wasn't because they didn't like the new Brooklyn Nets. In other words, when New York communities see the city's main agent for all of this ― the department of Housing and Preservation Development ― coming to remedy their problems, they might start running the other way.

If you thought that all of this at least created some decent jobs, you'd be wrong there too. The labor conditions on these projects are horrible and terribly undermine the flagging union construction sector. It is estimated that the average construction worker on an affordable housing project is making about $16,000 a year, at least a third are paid off the books and another third are probably paid as "independent contractors," meaning they don't get unemployment insurance, social security, workers compensation and so on. In other words, the people who build the units will not be able to afford to live in them.

At the root of this madness is the fact that housing development has long ago stopped being about creating places to live for regular people. How could it be when, as the New York Times reports, only 10 percent of the apartments in a luxury building like the condominiums at the Plaza are occupied by a year-round residents; while New York's homeless population has soared to an all-time high of 59,000, including a 10 percent jump under de Blasio (according to the Daily News). What we are largely building is not housing, but investment vehicles, usually for the international rich. Against such a backdrop, much of what passes for conversation on housing policy needs to be re-characterized for what it is: strategy-talk about using public resources to create private wealth, painted pretty by the veneer of fake affordability.

We desperately need to press a reset button on all of this. Far from doing that, the mayor's plan just doubles-down on the same game of "leveraging of private capital with public dollars" to create the appearance of a huge initiative. There may have been a time in the 1970s when it made sense to respond to urban decay by offering substantially unconditional subsidies and tax abatements to stimulate economic activity. But in an environment of virtually unchecked gentrification and social stratification, such tools and their underlying philosophy are totally misplaced. They don't ameliorate the problem, they fuel it.

So let's start thinking seriously about what we could do with the public resources New York has to make this work. Not just the taxes it could collect if the City and State would stop distributing tax-breaks like peanuts, or the $8.2 billion the mayor plans to use to "leverage" private financing, but also the wealth that comes from hopefully still being a somewhat democratic society (not just a market-driven one) entitled to wield influence over the shape of its skyline and the structures of its lived-spaces.

What would a plan that actually helped the homeless, not just the developers look like? It would mean first and foremost re-defining affordability so that it syncs with reality. It would likewise mean ending tax abatements or at a minimum conditioning them on criteria that reflect real community concerns, such as good jobs and at least a stabilization of market rents .

It also means the government should take seriously the responsibility for creating the kind of housing that worked for New Yorkers in the past, like Amalgamated Houses near Van Cortlandt Park (a state facilitated co-op development that provide developers a tax abatement only in exchange for limiting their profit to 6 percent), Morningside Gardens in upper Manhattan (a co-op created through a collaboration of academic and ecclesiastical institutions) and Parkway Village in Kew Gardens Queens (sponsored by the UN to shield its staff and delegates from the pervasive housing discrimination otherwise then rampant in the NYC market). None of that came about from blindly "leveraging" private developers to put up the overwhelming share of the money when we know their ultimate aim will always be ― has to be ― to sell every inch of new space at the highest possible price. Which is to say ― to make it unaffordable. We need to take a step back, press reset and come up with a plan that accomplishes the housing goals we have, and can again, achieve in NYC.