With 2023 AMI up nearly 6%, allowable "affordable" rents rise (& middle-income targets more unrealistic). City adjustment--after error?--lowers studio rents.

The relentless rise of Area Median Income (AMI) for New York City continues, which means allowable "affordable" rents continue to skyrocket, even if AMI bears little relation to the incomes of the city's renters.

That means that, as described below, middle-income units at 130% of AMI--including those in Atlantic Yards/Pacific Park--are typically marketed below the astoundingly allow allowable rents, such as $3,443 for a 1-BR.

A nearly 6% increase

At 100% of AMI, which qualifies as moderate-income, the 2023 AMI for the New York City region is $127,100 for a three-person family and $141,200 for a four-person household 100% AMI, according to the city's Department of Housing Preservation and Development (HPD).

That's a 5.7%-5.8% increase over 2022, when the corresponding figures were $120,100 and $133,400. And those represented an 11.8% increase over the previous year, as I wrote in April 2022.

Note that HPD does not disclose its new calculations at the beginning of the calendar year.

Rather, the 2022 figures for affordable rents and AMI persisted until at least May 23 of this year, according to the Wayback Machine, and the 2023 figures were posted no later than June 5.

Permissions, and reality

So developers of such income-linked housing, offering middle-income units at 130% of AMI--as permitted with projects built thanks to the state's 421-a tax break--could theoretically set rents at $2,756 for a studio, $3,443 for a 1-BR, $4,130 for a 2-BR, and $4,772 for a 3-BR.

But that's unlikely, as past units, even in prime locations like the supertall Brooklyn Tower (9 DeKalb) or Atlantic Yards/Pacific Park's Brooklyn Crossing (18 Sixth Ave.), offer a discount to attract renters, as developers of such income-targeted, rent-stabilized housing recognize that they must set somewhat lower rents to compete.

So too does the two-tower 595 Dean complex in Atlantic Yards/Pacific Park, which has taken advantage of the new 2023 AMI calculations by raising not rents--$2,290 for a studio, $2,690 for a 1-BR, and $3,360 for a 2-BR--but the income ceiling for renters, thus expanding the pool.

Departure from reality

Of course this diverges from reality. According to New York City Housing and Vacancy Survey, the median household income as of 2021 was $50,000. (Not sure about household size there.)

As of then, about 650,000 renter households (30%) earned less than $25,000, about 415,000 (19%) earned $25,000 up to the median household income of $50,000, 566,000 (26%) earned between $50,000 and $99,999, and about 540,000 (25%) had incomes of $100,000 or more.

In other words, only that last cohort--those least rent-burdened--are eligible for the "affordable" housing the last four buildings (662 Pacific St., 18 Sixth Ave., and the two-tower 595 Dean St.) built as part of Atlantic Yards/Pacific Park.

AMI relies not only on wealthy suburbs, but also a NYC-only factor, the High Housing Cost Adjustment, which inflates AMI in areas where rental housing costs are unusually high compared to median income. That's why housing advocates call for a focus on not merely "affordable" units--at 30% of household income--but low-income ones.

Three people or four?

Note that the City Department of Housing Preservation and Development tends to use the 100% AMI figure for a three-person household, while, throughout the approval stages of the Atlantic Yards project, the figure for a four-person household was used.

For example, when in 2005 the (nonbinding) Affordable Housing Memorandum of Understanding was signed by original developer Forest City Ratner and housing advocacy group ACORN, 100% of AMI for a family of four was $62,800.

Today that would not be moderate-income but low-income, at 44.5% of AMI. And low-income units at that AMI are hardly guaranteed, since that category now goes up to 80% of AMI.

New adjustments: 130% of AMI studio

The city apparently adjusted rents that were distorted--erroneously?--in last year's calculations.

From 2021 to 2022, the guideline rent for a studio at 130% of AMI went from $2,263 to $3,035, an astounding 34.1% increase, well beyond the 11.8% increase in AMI. (In other words, it should've been $2,688.44, by my calculation.)

For 2023, the rent for a studio at 130% of AMI has been cut to $2,756, which represents only a 2.5% increase--not a 5.8% rise--over what I think should've been the 2022 rent.

I suggested that that related to a reconfiguration of the formula. In 2021, a single person at 130% of AMI could earn $108,680. At 30% of income, spread over 12 months, rent for a studio could be $2,717, but instead was $2,263.

In 2022, a single person at 130% of AMI could earn $121,420. At 30% of income, spread over 12 months, rent could be $3,035--exactly the figure stated for a studio.

In 2023, a single person at 130% of AMI could earn $128,570. At 30% of income, spread over 12 months, rent could be $3,214, well above the $2,756 for a studio. (It is well below the $3,443 for a one-bedroom.)

No adjustments: 130% of AMI 1-BR & 2-BR

From 2021 to 2022, the guideline rent for a 1-BR at 130% of AMI went from $2,838 to $3,253, a 14.6% increase. For 2023, it's $3,443, an accurate 5.8% increase.

From 2021 to 2022, the guideline rent for a 2-BR went from $3,397 to $3,903, a 14.9% increase. For 2023, it's $4,130, also a 5.8% increase.

New adjustments for studios

The city lowered rents for studios across the board, apparently making up for that 2022 math. As shown in the mash-up image below, the maximum rents for studios in 2023, outlined in blue below, actually decreased from 2022, outlined in red below.

Otherwise, rents went up, as did AMI.