Monday, October 29, 2007

Are city housing projects really for sale? Nah, but it's time to "unlock value"

A New York Daily News “exclusive” last Wednesday raised the specter of a sell-off of city housing projects, spurring a furious round of commentary on Brownstoner and Curbed. However, the article, headlined Feds eye New York building sale at housing projects, overhyped a thread in a wide-ranging discussion, and didn't sufficiently stress that city officials have other tactics in mind.

The article began:
New York’s top federal housing official said on Tuesday the city's cash-strapped Housing Authority should consider selling buildings in expensive neighborhoods to create more apartments elsewhere. "It may displace some people, and that is a concern," Sean Moss, the regional administrator for the federal Housing and Urban Development Department, said at a forum on the Housing Authority's future.
"That is not necessarily a bad thing if you can create more housing with that," Moss said. "Instead of having 300 units [in a project], maybe there is a way to increase that if they are able to ... sell those assets so that you can create more housing." Moss' frank comments prompted shocked murmurs among the dozens of housing advocates at the forum, organized by the New School's Center for New York City Affairs.

The newspaper added that Gregory Floyd, who represents many unionized Housing Authority workers, expressed dismay about the idea, and pointed out—as discussed at the forum—that, while housing authorities in other cities have aggressively replaced buildings, “New York's projects have been well managed in the past and provided solid middle-class housing for decades.” (Well, maybe working-class housing.)

Another look

The discussion at the forum, A ROOF OVER OUR HEADS: How Will New York Save Its Public Housing?, which involved a variety of experts and opinions, was a lot more nuanced.

It began with moderator Errol Louis of the Daily News suggesting that, “if things worked perfectly, this would be a public hearing organized by government.” (Louis is out front among the city's press in covering public housing--here's a 7/29/07 column headlined A crisis hits home--in contrast with his frothing Atlantic Yards coverage.)

The structural gap in funding the city’s public housing is about $200 million, a little under ten percent of the operating budget, and has accumulated since the late 1990s, according to Douglas Apple, General Manager, New York City Housing Authority (NYCHA). The budget has suffered because of lowered federal funding levels and the strains to provide for units that are not part of the federal system. He acknowledged that “conditions are not as good as they were a decade ago.” (The agency just cut 73 management jobs, the Daily News reported.)

Public housing has changed significantly, pointed out Joseph Shuldiner, head of the City of Yonkers Municipal Housing Authority and former General Manager of NYCHA and a former federal Housing and Urban Development (HUD) official. It began simply as a nonprofit real estate venture to house the less well-off, then, in the 1960s and 1970s, grew to encompass a larger social mission.

Now the pendulum is swinging back, as Congress tightens HUD’s budget. “We’re going back to a real estate model,” HUD’s Moss said, in which the feds want local housing authorities to better control costs and emulate the private sector. (Here’s a good summary of that history.) Apple noted that this came in concert with discussions of welfare reform.

What to pay

Nicholas Dagen Bloom, a history professor and author of the forthcoming, Public Housing That Worked: New York in the Twentieth Century, noted that rental costs were once not connected to what tenants could afford to pay—and now that’s history. (Rent is at most 30% of the monthly adjusted gross income, while it was once 25 percent of net income. Income limits are 80% of the area median income, or $56,700 for a family of four.)

But public housing in New York has always housed working people, not just the dependent poor, thus bringing a base of public support and respect absent in some other communities. (Louis spent some of his early years in public housing, as did fellow panelist Rosie Mendez, a New York City Council Member and chair of the Council's Public Housing subcommittee; Louis said he’d recommended that NYCHA create “an alumni association.”)

In the 1980s, NYCHA wound up housing many of the neediest, including the homeless. Shuldiner said that the city emptied welfare hotels, moving people to public housing. At the same time, with rents going up, before the gentrification boom, those in public housing with rising incomes could get a better deal in the private market. (Times have changed.)

From 1989 to 2006, the rent structure was unchanged, NYCHA said last year, while there was a 53% increase in rents for rent-stabilized apartments. Beyond the 30% limit, there's also a "ceiling" or maximum rent, based on apartment size--before the rent increase last year, the 13% of households at the highest incomes paid, on average, only 15% or less of their incomes for rent.

Agnes Rivera, a resident of Wagner Houses in East Harlem and leader of Community Voices Heard, said that too many people think “we are thieves, drug dealers, and we keep our homes really nasty.” That’s not the case, she said, offering a Jacobsian observation: “I know everyone in my community—do you know yours?”

Losing public housing?

Floyd raised concerns about “an indirect plan to do away with public housing,” citing potential for development in prime neighborhoods, like the Amsterdam Houses near Lincoln Center, and suggesting that underfunding would start the process.

Mendez said that “we need to fund public housing to keep it affordable” and has proposed that the city stop charging NYCHA for certain services. Aixa Alemán-Díaz, Senior Legislative Assistant, Office of Congress Member Nydia M. Velázquez, noted that a bill would provide federal support for the 21,000 units (of 178,466 apartments) built by the city and state.

Louis wondered if HUD would make any exceptions for New York City, given the contrast between its system and those in other cities. Moss didn't seem to bend, saying that “these solutions are hard, in the short term, but if we don’t make changes now, it’ll be worse as we go down the road.” Around the country, he said, more housing may be created if you “create partnerships, syndicate or sell those assets.”

There were, indeed, murmurs from the crowd, and Louis observed, “You may have touched a third rail.”

Unlocking value?

Union leader Floyd was skeptical. “This is New York City. Once a developer gets his hand on a piece of property, agreements aren’t kept.”

Louis, playing provocateur, pointed out that other housing projects, like those in Fort Greene, are also near thriving development zones: “Isn’t there an absurdity,” he said, not to be “tapping the value”?

NYCHA's Apple jumped in. Citing his experience living in a mixed-income community, he said that keeping Amsterdam Houses, Fort Greene, and projects in the Lower East Side “is part of what makes New York great.”

That said, he agreed that “there are things we can do to unlock some of the value” in the land the city owns. Mixed-income housing—up to $120,000 a year--is built on three parking lots that are part of NYCHA land in Chelsea. “Those folks are going to find ways to look at their neighbors and interact.”

Julia Vitullo-Martin, Senior Fellow, Manhattan Institute, and Director, Center for Rethinking Development, said, “It’s really incumbent on NYCHA to face the future,” which is “not the recent past.” Even a new Democratic president would not offer substantial support for public housing, she said. (Louis, in a 6/28/07 column headlined Public housing's fiscal roof is caving in, argues for increased support from the city (which has a $4 billion surplus), the state, and the feds.)

“NYCHA has phenomenal properties and extraordinary untapped wealth,” she said. (Here’s a 2004 column in which she expanded on the ideas. And here's an article from the Manhattan Institute's City Journal that suggests tearing down public housing in prime beachfront land like Coney Island and relocating residents to new housing built elsewhere by developeres.)

“I’d like to see NYCHA look at projects that are not that good,” Vitullo-Martin said, and consider the example of the renovation of the (private) Parkchester development in the Bronx and the privatization of troubled properties in Atlanta. (Here’s a more critical view.) Those displaced who want to stay in public housing could be relocated, she said.

Cautions and partial measures

Bloom offered a caution. “Is it worth throwing out what has taken 75 years,” he asked, suggesting that the significant redevelopment costs of apartments and buildings be compared to the budget gap.

Selling land to fix the operating budget is “wrong,” said Shuldiner, because it doesn’t address structural problems. He said he agreed that value could be tapped, but selling Amsterdam Houses is not “a systematic fix.” He stressed that public housing in other cities, especially those buildings already demolished, was “much worse… because it was federal policy to make public housing the place of last resort.”

Mendez noted that, originally, much public housing was built on land that no one wanted—the waterfront or the Lower East Side. “It was community residents who stabilized the Lower East Side.”

It echoed arguments made regarding other development controversies; do people who helped anchor a community before property values went up have a stake beyond their formal property rights? What happens to institutions like churches and community groups when neighborhoods change?

Apple agreed that public housing in cities like Atlanta and Chicago was not part of the fabric of the community. Though he wouldn't criticize demolitions there, he said, “I would suggest that here, our challenge is different: save public housing and also unlock some of that value.”

Bloom suggested that the addition of retail facilities in public housing superblocks would not only “create a more attractive landscape” but bring new revenue and enhance safety. (Vitullo-Martin recently wrote about this issue. Historically the feds didn't support it, but everyone's a Jacobsian now.)

Apple mentioned how “ceiling rent’ was raised in the past two years. He also cited another example: the redevelopment of a rundown 12-acre site in Staten Island, Markham Gardens, which was quietly closed a few years ago, into a mixed-income project.

However, he said, NYCHA doesn’t have that much deteriorated property; it can sell some air rights to raise money, given that there's a hunger for market-rate development around the city. “Next to the Fort Greene houses, this developer, my God—“

The Oro,” Louis interjected, identifying the new luxury project.

“I couldn’t believe it,” Apple continued.

The city didn't sell air rights for that project, but Apple's point seemed to be that, if religious institutions and other nonprofits can make some money from value untapped until the housing boom, why not NYCHA? That's one variation of "the real estate model."

1 comment:

  1. Interesting discussion! Thanks for posting about this event. I didn't know about it.


    Here are some comments and thoughts.


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    Norman wrote:


    " Mendez noted that, originally, much public housing was built on land that no one wanted -— the waterfront or the Lower East Side. 'It was community residents who stabilized the Lower East Side.' "


    Benjamin writes:


    For what it's worth -- I'm not sure it really impacts the main issues of this controversy one way or another -- this statement by Rosie Mendez appears to be, historically speaking, way, way off-base!!!


    Many public housing sites -- probably, in fact, the vast majority of them, especially the early ones -- were actually built as “slum” clearance projects and, thus, involved eminent domain and the destruction of hundreds of businesses and the displacement of many, many thousands of residents. (There is a very interesting website connected with LaGuardia College that contains an on-line exhibition of archival New York City Housing Authority photographs that show what many of these neighborhoods looked like before they were wiped away for public housing.)


    Plus, a good case can be made for the argument (made most famously by Jane Jacobs) that most of the areas selected for the construction of public housing projects were in fact areas that 1) were stable, 2) areas that were “unslumming” (to use a Jane Jacobs expression) on their own, or 3) areas that were, in any case, good prospects for unslumming without wholesale clearance -- and that it was the woefully misguided (and ideologically based) wholesale destruction and reconstruction of these areas as publicly owned and operated “projects” that really destabilized these areas and/or held them back. (This is not to say that the low-income residents themselves were the problem, but rather that the concept of income-tagged, tower-in-the-park developments were.)


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    Norman wrote:


    It echoed arguments made regarding other development controversies; do people who helped anchor a community before property values went up have a stake beyond their formal property rights?


    Benjamin writes:


    This is indeed an argument that is made quite frequently -- but is it valid? Do people who live in areas that are “bad” and undesirable have a right to prevent such areas from becoming better places to live -- and thus more desirable and, possibly, more expensive places to live?


    And further along these lines, do residents of any area of a city have a right to prevent changes that aren’t in themselves “bad” -- but are nevertheless changes that they personally do not desire to see happen? For instance should people who lived around Longacre Square at the turn of the 19th-20th Century have had the right to prevent the transformation of these residential blocks into a theater/entertainment district now known as Times Square? Should the people who lived along W. 49th and W. 50th St. in the late 1920s have had the right to stop the transformation of this mostly residential area into the high density, mixed use commercial area now known as Rockefeller Center?; etc.?)


    (As I believe I've mentioned previously, I think the "true" Jane Jacobsian approach is to encourage the creation of MORE housing opportunities and MORE good neighorhoods -- rather than hindering or decrying otherwise positive changes. Keep housing costs low by increasing the supply.)


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    Norman wrote:


    However, he [Apple] said, NYCHA doesn’t have that much deteriorated property; IT CAN SELL SOME AIR RIGHTS TO RAISE MONEY [emphasis mine -- BH], given that there's a hunger for market-rate development around the city . . . . The city didn't sell air rights for that project [The Oro], but Apple's point seemed to be that, if religious institutions and other nonprofits can make some money from value untapped until the housing boom, why not NYCHA? That's one variation of "the real estate model."


    Benjamin writes:


    If I understand this comment correctly, it’s sad to see that people seem to be thinking in terms of selling the air rights of these projects rather than in terms of filling in the anti-urban empty spaces that these “tower-in-the-park” projects usually have. Filling in some of the empty spaces of tower-in-the park projects, if done right, would help make them more genuinely urban. On the other hand, selling their air-rights in order to enable developers to build higher than normal off-site structures around them (if this is indeed the plan being discussed) would seem to be a way of actually preserving their anti-urbanity -- and thus making a bad situation even worse, rather than better!

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