Wednesday, May 07, 2014

Looking at de Blasio's housing plan: much potential progress, many unknowns; success would move the needle only so far

Beyond the awkward backdrop of Atlantic Yards regarding Mayor Bill de Blasio's affordable housing announcement, what more to consider?

The $41 billion Housing New York: A Five-Borough, Ten-Year Plan--80,000 new affordable units, 120,000 preserved--is the most expansive and ambitious affordable housing agenda of its kind in the nation’s history, according to a news release. (As noted below, it would require some $8 million from the city, $3 billion from the state and the feds, the rest from private developers.)

“We have a crisis of affordability on our hands. It touches everyone from the bottom of the economic ladder, all the way up to the middle class. And so we are marshaling every corner of government and the private sector in an unprecedented response,” said de Blasio. “This plan thinks big – because it has to. The changes we are setting in motion today will reach a half-million New Yorkers, in every community, and from every walk of life.”

Yet the solution remains dwarfed by the problem, given that there are nearly a million poor households vying for nearly 425,000 apartments today. Even if the plan proves successful, there likely will be numerous people living in illegal apartments or in the shelter system. As Steven Wishnia put it in Gothamist:
In short, the de Blasio plan would build about 16,000 apartments for this income group—more than twice as many as Bloomberg did, but not quite 3 percent of what it implies are needed.
And, as noted below, though the administration comes up with some worthy ideas and aims for a far more comprehensive approach than in the past, a lot of questions--where to rezone and add density? should towers be built on housing project parking lots?--remain pending.

The city also aims to add 100,000 new market rate units as well. "To meet this challenge, we must ensure that housing development is guided by meaningful community engagement and coordinated with public investments in infrastructure and services," the plan states.

A low-income focus



What's affordable?

Note that the definition of low-income goes up to 80% of Area Median Income (AMI), a formula that depends on wealthy suburban counties as well as New York City. 

(The 2013 AMI was $85,900 for a family of four, while the 2005 AMI--that used in the Atlantic Yards Housing Memorandum of Understanding--was $62,800. AMI has risen steadily, while the incomes of those near the bottom have not. Also note that the Atlantic Yards low-income housing, at least so far, would go up only to 50% of AMI, thus reaching more needy households.)


Features of the plan

According to the announcement, the plan emphasizes:
Unprecedented Scale: The plan calls for 200,000 affordable units over 10 years—120,000 preserved and 80,000 newly built.
Affordability for a Wide Range of Incomes: Affordability programs will serve households ranging from middle- to extremely low-income....
Proactive and Strategic Preservation of Existing Affordability: Agencies will use every tool at their disposal to protect tenants in both subsidized affordable housing and rent-regulated housing from the tide of deregulation, and to combat neglect and disrepair that threatens many affordable buildings.
New Opportunities for Growth and Density: The City will undertake ground-up neighborhood planning to identify corridors and communities with opportunities for more housing (both affordable and market), and coordinate greater density with necessary infrastructure.
Quality Jobs: Approximately 194,000 construction jobs and nearly 7,100 permanent jobs will be generated by the housing plan, and the City will work with stakeholders to make sure they are quality jobs and integrated into the City’s workforce development ecosystem.
Fewer Unnecessary Barriers and Delays: The City will streamline the development process and help to contain construction costs by overhauling outdated regulations and removing duplicative agency processes.
Charts illustrate the scale of the problem

As detailed below, the problem got worse during the administration of Mayor Mike Bloomberg: more rent-burdened households, more income needed to afford rent, a steady loss of rent-stabilized units (far more numerous/significant than rent-controlled units), supply vastly exceeding demand, and a falloff in construction (tied to the recession as well as the revision of generous subsidy programs like the 421-a tax break).













Reasons for praise, reasons for caution

The plan came with a requisite wide range of endorsers, from social service providers to the Real Estate Board of New York, but also left a lot of question marks, as noted by the Observer.

In Next City, Stephen J. Smith observed that de Blasio, like his predecessor Bloomberg, was already backing down from a previous promise, in 2013 calling for the construction of 105,000 new subsidized units, rather than 80,000, and preservation of at least 86,000 affordable units, not 120,000. And it was supposed to take eight years, not ten.

In Crain's, Greg David wrote:
In all, the de Blasio plan's 180,000 new apartments would increase the housing stock in the city by 5% over a decade or virtually the same pace as in the Bloomberg era... In the end, he promises some more affordable units, but not enough to change the dynamics of the market.
In Gothamist, Wishnia cited three major constraints:
First, although there are almost 250,000 people on the waiting list for the city's public housing, public housing construction is "essentially frozen" due to a lack of funds, de Blasio said.
Second, while the plan calls for preserving 120,000 currently affordable apartments, state law lets landlords deregulate vacant rent-regulated apartments if the rent can be raised to $2,500 or more, and the market is inexorably pushing rents toward that threshold all around the city. More than 250,000 apartments have been decontrolled since the first version of that law was enacted in 1993.
...Third, while the plan calls for repealing the state law that prohibits the city from strengthening its rent laws, it does not urge the repeal of vacancy decontrol. "We will work with the state as rent regulation comes up for renewal in 2015 to prevent abuses of the vacancy and luxury decontrol provisions," the report says. That wording enrages veteran tenant activist Michael McKee, who calls it a carefully phrased "cop-out," reneging on de Blasio's campaign promise to support repeal.
Daily News columnist Harry Siegel noted that,  while "Bloomberg favored Olympian master planning that rewarded wired developers, de Blasio is committing to 'start at the grassroots,'" but East Brooklyn Congregations, whose Spring Creek project in East New York, is cited in the report as a “case study,” has not been able to get a meeting with the mayor.

A Daily News editorial observed that "City Hall disingenuously says that it wants to only move to build affordable housing where communities are demanding it."

The New York Times opined:
The questions the 116-page plan raises would fill another book. What would the city look and feel like if builders built extrahigh and extradense? What strains would this place on schools and subways? (Those dreaded words, decaying infrastructure, are a real impediment to major rebuilding.) What if builders reacted to mandatory inclusionary zoning by not building at all?
What would public-housing campuses be like if their open spaces were filled in? The city’s Housing Authority has a lot of “underused” land, but any development must preserve quality spaces and tenants’ dignity.
Justin Davidson of New York Magazine called it "good, if wishful, thinking," citing challenges including:
  • Speed versus Consensus.
  • Density versus Gentrification.
  • Idealism versus Realism.
  • Neighborhood Stability versus Desegregation. 
  • The Needy versus the Needier. 
  • Quantity versus Quality.
New initiatives

The plan touts mandatory inclusionary zoning--as opposed to the voluntary program for now--in all rezonings that substantially increase potential housing capacity, which was of course not done with the Downtown Brooklyn rezoning. This requires a study.

The city will "provide housing opportunity to 16,000 of very low-income households over the 10 years of this plan—more than four times the number served over the previous 12 years," but surely still a drop in the bucket.

"As part of creating and preserving more than 20,000 homes for middle-income New Yorkers, the City will launch a new mixed-income program that is 100 percent affordable," with half those units for middle-income households, and the rest for low- and moderate-income households. So this is a new 50/30/20 program, while previously the 50 referred to market rate units.

The Mayor’s 2015 budget aims to more than double the Department of Housing Preservation and Development’s annual capital budget in the 5-year plan, to more than $2.5 billion, and will try to get more from the state and the federal governments.

The City will launch two new programs to redevelop hundreds of vacant sites and build thousands of new units, including houses and apartments built by smaller developers, local non-profits, and community development corporations.

"The City will work with the state as rent regulation comes up for renewal in 2015 to prevent abuses of the vacancy and luxury decontrol provisions and capital improvement rules," the statement said. (Meanwhile, the mayorally controlled Rent Guidelines Board may be gearing up for no increase.)

"The City will leverage Project-Based Section 8 vouchers to make housing affordable" for seniors, as well as other programs for seniors.

The City will launch a new program to targeting mid-size and small buildings "to encourage energy and water-use retrofits in exchange for affordability commitments from building owners."

"The City will reallocate a portion of its homeless shelter funding to finance lower-cost permanent housing for homeless individuals and families," and also expand supportive housing.

Construction far more costly

Note how new construction will cost three times as much as preservation but yield far fewer units.


A new emphasis on studios and larger units 

The plan notes that there are 1.9 million one- and two-person households in the City (more than 60 percent of all the City’s households), but only 1.25 million studios and one-bed- room apartments. That means people who might want to live alone are forced by high rents to live with roommates or family. 

So that means a new mix of units--including more studios and three-bedroom units. There might be more of the micro-apartments that Bloomberg piloted.

"Current HPD policy requires new construction projects to contain either 50 percent two-bedroom units, or 30 percent two-bedroom and 10 percent three-bedroom units," the plan states, but the latter option is more suitable for smaller households.

The 421-a program requires that the unit size distribution of market rate units mirror that of the affordable units or 50 percent two-bedroom units, so a "developer who wants to build studio and one-bedroom market rate units is forced to build larger units than the market may dictate in order to mirror the requirements that subsidy programs impose for two- and three-bedroom afford- able units." 

For Atlantic Yards, this could mean larger units in the affordable part, smaller in the market-rate section.





Job estimates

The construction of 6430 Atlantic Yards apartments and an arena was supposed to create 15,000 direct construction jobs, in job-years. Let's say an arena's the size of 1500 apartments. That means nearly two jobs per new apartment.

The analysis for the new plan is more conservative, perhaps because not all jobs would be union jobs. The construction and preservation of 200,000 units--including 80,000 new ones--would create 194,000 construction jobs and 7,100 permanent jobs, including over 132,100 direct jobs and an additional 69,000 indirect jobs.

More details: parking, planning

The plan notes:
Some regulations have become outdated or have created impediments to new housing. We will re-examine parking requirements, zoning envelope constraints, and restrictions on the transferability of development rights, among other regulations.
That's happening, for example, with Atlantic Yards, as the state aims to cut parking, But Streetsblog's Ben Fried thought the pledge inadequate:
The housing plan released by the de Blasio administration Tuesday could have announced one simple but major step to align parking policy with the city’s affordability goals: the end of parking minimums. Instead, the plan is strangely passive about parking reform, even though it plainly states that parking mandates contribute to the high cost of housing in the city.
..,What makes the housing plan such a letdown in terms of parking reform is that it sticks with the basic assumption that planners should guess how much parking people will use, then dictate how much developers should be required to build. Hence, even for affordable housing and senior housing, it calls for parking requirements to be reduced but not eliminated. And nowhere does the document explicitly say that parking requirements should be cut across the board for market-rate housing, even though parking mandates raise costs for all types of construction.
A real affordable housing “moon shot,” as the Times put it, would have recognized that parking mandates are a drag on all housing
The city plans a “ground up” planning process, coordinated with the Office of Management and Budget, to "mesh necessary neighborhood investments with community growth"--absent from the Atlantic Yards process. As noted, that may be a stretch.

New mixed-income program

The City plans M2, a refinement of HDC’s current mixed-income program, with 20% of a project’s units for low-income households (at the more deeply affordable 40% and 50% AMI level rents, as with Atlantic Yards), and 30 percent of units for moderate-income households (80% and 100% AMI rents).

However, the remaining 50% of units will be reserved for middle-income households (130% of AMI rents) as opposed to market-rate rents. (With Atlantic Yards, after the 20% low-income, there'd be 30% moderate- and middle income, 60% AMI to 160% AMI, then market.)

"In some areas the middle income rents may already be at or close to market rate rent," the plan noted, " however, by restricting them through program regulatory agreements and enrolling them in rent stabilization, we will ensure that they remain affordable to middle-income households even if neighborhood rents rise."

Streamlining the process
"CEQR is the process by which the City conducts environmental quality reviews of discretionary actions, including land use and other approvals," the plan states, but it's complex and slow.

"The City will review the CEQR process to make it more efficient and make Environmental Impact Statements more comprehensible to the general public and affected communities," according to the plan. "It will examine how environmental reviews are undertaken in other jurisdictions in order to incorporate best practices into the New York City process."

Note that the state equivalent of CEQR, State Environmental Review Quality Act (SEQRA) was used for Atlantic Yards.

Cutting construction-related costs

The plan states:
The City will work collaboratively with real estate developers, construction and building trades to help reduce the costs of construction without sacrificing the quality of our buildings or the livelihoods of those who build our City. While improvements were made to the Department of Building’s Permitting Approval Process in recent years, more needs to be done to remove additional inefficiencies and encourage the use of new construction technology. The City will also study its building and fire codes to assess what changes could reduce costs without jeopardizing safety.
(Emphases added)
What this means is they're not committed to union labor and/or hoping for cooperation from unions in lowering costs.

As for "new construction technology," that certainly could mean modular construction, which the administration supports but cannot cheerlead too much for now, given the delays in Forest City Ratner's first Atlantic Yards tower.

Subsidy reforms

The document states:
The State of New York implemented the 421-a tax exemption program in 1971 to stimulate the development of the tens of thousands of undeveloped lots that existed at the time because of disinvestment in many New York City neighborhoods. The initial legislation authorized a single as-of-right exemption from real property taxes for ten years for all new residential construction. In subsequent years, the program was amended to provide longer-term benefits for governmentally assisted affordable projects, as well as for projects outside Manhattan. Restrictions added in 1984 established a Geographic Exclusion Area (GEA) that required projects in the strongest Manhattan markets to provide affordable units either on-site or in an off-site location in exchange for the 421-a tax benefit. Between 2006 and 2008, the GEA was expanded by local and state legislation to include all of Manhattan and portions of the other four boroughs. In addition, the “certificate program,” which allowed off-site affordable units to generate 421-a benefits for market-rate GEA units, was eliminated. At present, only buildings receiving substantial governmental assistance pursuant to an affordable housing program, those that set aside at least 20 percent of their units as affordable, and projects that purchase negotiable certificates from agreements executed prior to December 28, 2007, are eligible for 421-a benefits in the GEA.
Now reforms to 421-a will be proposed. Also, 421-a benefits are often combined with other programs, so the same affordable units qualify for multiple forms of subsidy, leading to "over-subsidization:" (does that include Atlantic Yards?):
Going forward, in cases where multiple subsidies are used by developers building in strong markets, the City will seek to increase the percentage of affordable units required and/or require the developer to provide deeper affordability (depending on the exact combination of subsidy programs). 
A task force "will consider pursuing legislative authority to expand the 421-a Geographic Exclusion Areas to match the areas designated for Inclusionary Housing, and in strong markets, "the City will require more affordable units and/or deeper affordability."

More analysis, reactions

In City Limits, Jarrett Murphy observed that de Blasio's vision "was as much a process as a plan," in that it suggested "that despite funding 165,000 units of affordable housing [the Bloomberg administration] responded feebly to the housing crisis, and that in rezoning some 40 percent of the city it failed to pursue a comprehensive vision of what the city needed to get out of its land."

Speed trumps permanent affordability. As Murphy notes, "Little new was said about the notion, raised and dropped by Bloomberg, of developing housing within public housing complexes"--a hugely contentious issue.

The Real Deal reported:
Jaron Benjamin, executive director of the Met Council on Housing, the city’s oldest tenant union, told TRD that “ending the failed 80/20 development model is a step forward for new affordable housing, but the plan is dangerously silent on protecting renting families.” The mayor, he added, needed to call for the immediate repeal of vacancy deregulation, “for the sake of millions of families in rent-regulated housing, the vast majority of who are low-income.”
Click to enlarge
Crain's noted:
Under the administration of Michael Bloomberg, the City Planning Commission undertook 119 rezonings encompassing 11,000 blocks since 2002, or almost 50% of the city. But Mr. de Blasio said he was confident that more could be done using the city's zoning powers. Mr. Weisbrod said that even some neighborhoods that had been rezoned under the previous administration would be studied to assess additional rezoning opportunities.
Crain's also reported praise from the real estate community:
Fixes to outdated regulations like mandatory parking requirements, eliminating a state-imposed density cap for residential buildings and streamlining the requirements to get subsidy from different levels of government are just some of the red-tape cutting efforts that appealed to land-use experts.
Brooklyn Council Member Jumaane Williams "noted he wanted the de Blasio administration to make one proposal in the plan the top priority: asking the state to give up its jurisdiction over rent regulation in the city."

The Times reported, an article that made the front page of the New York edition:

Despite Mr. de Blasio’s pledge to “drive a hard bargain” with developers, his plan contained few ideas that would rattle the real-estate industry. That was both a concession to the city’s dependence on developers to increase its housing stock for a growing population of mixed incomes, and a reflection of the more pragmatic, less fiery approach Mr. de Blasio has adopted since taking office in January.
Capital New York, in De Blasio’s stab at affordable-housing history, noted that the administration "would not disclose where that capital funding would come from," given the upcoming release of the mayor’s capital budget. There were only a few details:
The written plan calls for bringing more housing to Atlantic Avenue, which it said “offers the greatest opportunity for higher-density, mixed-use development with several large opportunity sites,” and said that “the transit corridors of Pitkin Avenue and Fulton Street,” are also prime for new investment, as are Hunter’s Point South, Stapleton and Coney Island, assuming they get some infrastructure upgrades.
During an early morning briefing with administration officials replete with phrases like “neighborhood-building," “community-based process,” and “economic diversity,” a de Blasio aide also mentioned increasing housing density in East New York.
...The plan also calls for reducing parking requirements for affordable housing, allowing new construction on “underused land” adjacent to “tower-in-the-park”-style Mitchell Lama buildings, modifying existing tax incentive programs to wrest more affordable units from developers, and possibly expanding Bloomberg’s mini-apartment program.
City Limits cited some caution from the Association of Neighborhood Housing Developers:
"Affordable housing that will best meet the needs of local communities and build stronger neighborhoods means building housing that is truly affordable to local residents, building housing that will be affordable for generations to come, not just 30 years, and preserving affordable housing and diverse, mixed-income communities in places where rents are skyrocketing and long-term residents are being rapidly pushed out," read their statement.
The Community Service Society (City Limits' parent organization) praise the plan but called for deeper income targeting:

Under the de Blasio plan only 20 percent of the units would be accessible to New York families with the lowest incomes, up to $38,000 for a family of three, but families at that income level make up 73 percent of those paying more than 30 percent of their income for rent. They bear the highest rent burdens and, once rent is paid, have little left over to meet other basic needs."
Where (and how) to build

Interestingly, eminent domain has been ruled out--though de Blasio of course supported it in the case of Atlantic Yards.

The plan will look at city properties like parking lots and other vacant and underdeveloped public land. It will examine "towers-in-the-park" built under Mitchell Lama and other programs, which have open areas that may provide opportunities for new housing.

And it will request the removal of a cap in the State Multiple Dwelling Law that restricts the amount of housing that can be provided in any building to a floor area ratio (FAR) of 12. (Office towers can be at a higher FAR.)

The three houses at right and the industrial building
at left would be demolished for 27-story B15
In a Times article today about East New York, Deputy Mayor Alicia Glen said, "“We’re not talking 30- or 40-story buildings in the middle of a neighborhood where everything else is two or three stories."

Now there certainly are large buildings across Atlantic Avenue from the Atlantic Yards site. But a 27-story tower on Dean Street would, in fact, be next to and across from four-story buildings.

In New York Magazine, Chris Smith suggested "De Blasio’s New Plan to Create or Save 200,000 Cheap Apartments Is Going to Make a Lot of People Angry," given challenges from the City Council on zoning, the difficulty in finding money, and the willingness to tailor mandatory inclusionary zoning to specific neighborhoods.


"One element of the formula — increased 'density' — will stoke controversy if the mayor intends to construct taller towers in gentrified neighborhoods," Smith wrote. I agree, but... in hindsight, had it been proposed as a citywide policy during the Bloomberg administration, it would have gone down much easier.

Last week, Capital published In New York’s hidden places, finding room to build, quoting de Blasio and Glen on the importance of density but pointing out they hadn't targeted any neighborhoods:
“You could do it entirely in major corridors," said John Shapiro, the chair of Pratt Institute's Center for Planning and the Environment, naming by way of example, Fourth Avenue, Northern Boulevard, Coney Island Avenue, Queens Boulevard, and Atlantic Avenue, the latter a corridor one knowledgeable source told me the de Blasio administration has also discussed.
Also, the Pratt Center says there's unused density: "57 million square feet of unused, high-density residential zoning floor area in the Bronx, 24 million in Brooklyn, 56 million in Manhattan, and 8 million in Queens."

Urban planner and former City Planning Commissioner Alexander Garvin pointed, as he has in the past, to the opportunities posed by decking railyards and highways--though that can be costly.

There's a tradeoff regarding industrial property, which can support towers but also can be home to middle-class jobs.

“We have to ensure that industrial businesses are able to locate and create good middle class jobs," real estate executive (and former NYC EDC head) Seth Pinsky told Capital, "and that we’re not displacing those businesses with affordable housing."

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