Mayor's Housing Plan: A Failure?

A couple weeks ago, New York City comptroller and Democratic mayoral frontrunner Bill Thompson called the Bloomberg administration's housing policies "a failure." Yesterday, Mayor Bloomberg's Department of Housing Preservation and Development was trumpeting its success at meeting this year's affordable housing targets.

Could they both be right? Better yet, might they both be overselling it a bit?

In a video response to a voter's question on August 5, Thompson said: "I think that New York City has failed over the last eight years to create enough affordable housing units and, as we look at affordability, we have to talk about it and think about it as low, moderate and middle-income housing, and they just have failed to do that. We need to approach housing and look at it as a crisis."

At the end of his first year in City Hall, Bloomberg unveiled a plan to spend $5 billion over five years producing 65,000 units of affordable housing. Housing activists wanted more. In the 2005 mayoral campaign, Democrat Freddy Ferrer unveiled a plan to create 167,000 units over 10 years. Team Bloomberg pooh-poohed Ferrer's idea at first, but a few weeks later put out its own, bulked-up initiative: $7.5 billion to create or preserve 165,000 units over a decade.

While the claim that it is "the largest municipal housing program in the nation" is not strictly true (Mayor Koch's housing plan devoted more money, in today's terms, and appears to have built more units than Bloomberg set out to), the Bloomberg initiative has launched about three times as many affordable units per year as under the Giuliani administration. It also gets kudos for using creative financing to open housing to households that are too poor to afford a decent place to live but too rich to qualify for standard housing programs. Bloomberg, of course, touts the plan in his campaign literature.

Yesterday, HPD announced that "amid a nationwide economic downturn and an uncertain housing market, the city has financed more than 12,500 units of affordable housing for middle-class and low-income New Yorkers over the last fiscal year," meeting its target. "In the midst of this economic downturn and the precipitous drop in housing starts nationally, New York City continues to forge ahead to create quality, safe and affordable housing for all New Yorkers," the housing commissioner, Raphael Cestero, said in a statement. "While many people thought we would miss the ambitious target that we set for ourselves, but we were able to reach this milestone because we saw opportunities where others only saw roadblocks."

But in meeting that number, HPD may have reinforced concerns about the overall viability of the rest of the plan.

In the first place, the goal for the recent fiscal year was itself revised downward by 23 percent when the city earlier this year decided, in the face of budget constraints, to stretch its original decade-length plan to 11 years.

More importantly, the mayor's affordable housing plan calls for preserving 73,000 units of existing housing (through rehab funding or new financing) and building 92,000 units of new housing. Building new housing is the more expensive part. But the city has focused on the cheaper stuff first: It is 80 percent done with the preservation units, but has achieved only 38 percent of its new construction goal.

The numbers HPD touted yesterday reflect this skew. Of units financed last year, there were twice as many preservation units as new construction. The city missed its target for new construction in 2009 by 13 percent.

That mix matters because the cost of new construction, and the glut of that work that remains undone, has been identified as the biggest risk to the overall success of the mayor's plan.

A report by the Independent Budget Office in late 2007 found that while the city appeared to have the money to meet its preservation target, "Funding the remaining units to meet the plan's new construction goals, however, may pose more of a challenge." The report continued: "In contrast, IBO projects that HPD's capital budget is sufficient to fund slightly less than half—49 percent—of the units needed to meet new construction targets."

HPD disputed the numbers in that IBO report, saying that it exaggerated the budget crunch. The city did not push to add more money to the housing effort, despite rising construction costs around the city. The decision to stretch the plan out over another year suggests that cost pressures were fairly serious. The tightest constraints on the city's housing ambitions might come from Washington, where the federal government controls how many tax credits each state gets to build affordable housing.

Sure, the mayor's plan has critics who think it is too small, is offset by other policy decisions he has made or directs too much of its housing to moderate- and middle-income people rather than the poor.

But has it really been a "failure" as Thompson says?

It's unclear how Thompson defines failure, but it seems a harsh diagnosis. Rather than calling the completion of 65,000 units so far a "failure," it's much fairer to say that the plan could fail—meaning, fall far short of its goals—between now and the end date in 2014, leaving thousands of people without the housing that the mayor promised in his (first) re-election campaign.

In his August 5 remarks, Thompson said the city needed a "21st century Mitchell-Lama program" and to "work with labor" to get more housing built, but did not detail either approach.

Tonight, Thompson debates his primary opponent, Councilman Tony Avella, who has his own ideas on housing, including a plan to raise taxes on vacant lots and buildings in a bid to push them onto the housing market.

After the primary, there'll be two debates for Bloomberg and his Democratic opponent—plenty of time to learn if either has a plan to get from here to 165,000 units.