Tag Archives: de Blasio

Floodproofing Communities

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Gordon Tarpley

NYU’s Furman Center has released a Research Brief, Planning for Resilience: The Challenge of Floodproofing Multifamily Housing. The Brief opens,

As sea levels rise and storms become more frequent and severe due to climate change, many urban areas along the coasts and rivers of the United States are facing a flood-prone future. Especially in the older urban areas along the eastern seaboard, there is a significant stock of multifamily housing that will be increasingly at risk. Much of this housing is out of compliance with federal flood-resistant design and construction standards. Some of these buildings have housing units that are out of compliance because, regardless of their age, they were only recently mapped into the floodplain. And, even buildings that have been in the floodplain for longer may be out of compliance with the rules because their construction predated their jurisdiction’s adoption of the standards. (2)

And it concludes,

As the nation’s floodplains expand, the number and types of housing units at risk of flooding also grows. Multifamily housing makes up a larger share of the at-risk housing in the floodplain than was previously understood, and mitigating the risk to this housing and its residents presents unique challenges that local governments must be prepared to face. While there is no easy answer to how to fund the often costly and disruptive retrofit measures needed in these buildings, there are steps that local governments can take to make it easier for buildings to adapt, such as educating owners about risks, providing them with information about retrofit strategies, and helping them finance improvements. Including strategies like these in a long-term resilience plan will make communities stronger and will ensure that multifamily buildings and their residents are not left behind as flood-prone areas adapt. (10)

There is no doubt that this is right. New York City under both Mayors Bloomberg and De Blasio have taken this issue very seriously, but a lot of work remains to be done. And the odds are that the amount of work will only increase with time as sea levels rise higher and higher. Because many other local governments do not have the resources of NYC, they will get their wake up calls the hard way.

Given the broad effects of climate change, resiliency efforts would ideally be led by the federal government. But I don’t see that happening for a long time, probably after an avoidable tragedy on a large scale spurs Congress to action, notwithstanding its ideological commitments.

Primer on NYC Affordability Crisis

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"2014 July NYC's 432 Park Avenue" by The Hornet

Enterprise has released a report, 2015 New York City Housing Security Profile and Affordability Housing Gap Analysis. Its conclusions are not shocking, but they are sobering:

  • Of 2 million renter households in New York City, nearly 640,000 are low-income and severely cost-burdened.
  • There is not a single neighborhood in NYC that provides enough affordable housing to match the number of very low-income households in that community.
  • Both the regulated and unregulated rental housing markets of NYC are not meeting the affordable housing needs of low-income renters.
  • Even though the market added rent stabilized units between 2011 and 2014, the stock affordable to lower income families declined.
  • Competition exacerbates the gap between the number affordable units and the number of low-income renters, forcing many to pay beyond their means. (33)

As with many such studies, it offers a cogent analysis of the problem but offers very little by way of possible solutions. It hints at one such solution when it notes that

By any measure, the demand for affordable housing in New York City outstrips supply – even on the rent regulated market. Low-income households are squeezed even further by competition from higher income households for the cheapest units. The acute shortage forces the majority of lower income households in housing that costs beyond their means. (27)

Increasing the supply of housing will, if everything else is equal, reduce the cost of housing. The de Blasio Administration is certainly on board with an approach to increase density in NYC but many other elected officials are not — or at least resist it when it comes to their own backyards.  While more housing is not a sufficient solution to the affordability problem in NYC, it is certainly a necessary component of a solution.

The report also does not deal with the big elephant in the affordable housing policy room — the social demographics of NYC are undergoing a secular shift as the city gets hotter and hotter for global elites. It is unclear how much government can affect that trend, particularly at the local level.

Affordable Enough for NYC?

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Real Affordability for All has released a report, Real Affordable Communities: Mayor Bill De Blasio and the Future of New York City. The report opens,

Across the five boroughs, the affordability crisis is growing every day. Today, low- and moderate-income New Yorkers continue to be priced out of their neighborhoods. The incomes of countless New Yorkers are not increasing while rents keep rising. The growing gap between lower incomes and higher rents is making New York City increasingly unaffordable.

Indeed, a recent study released by StreetEasy, The High Burden of Low Wages: How Renting Affordably in NYC is Impossible on Minimum Wage, found that a New Yorker earning $15 an hour could afford just one neighborhood: Throgs Neck in the Bronx.

“The extent to which rent growth has outpaced income growth in New York City means low-wage workers face three options: find several roommates to lower their personal rent burden, take on more than one job, or move out of New York City,” the study finds.

According to a close analysis of the most recent Census data, Bloomberg’s housing efforts generated a shortage of more than 400,000 affordable units for low-income New Yorkers. Low-income here is defined as a household earning less than 50% of Area Median Income (AMI). For a household of four, that means an approximate annual income of less than $42,000. (In 2012 New York City area median income was $83,600 for a family of four; the 2015 New York City area median income for a family of four is $86,300).

Overall, utilizing the 2012 census data, more than 700,000 low-income New Yorkers were left behind by Bloomberg’s housing plan. To tackle the affordability crisis, Mayor de Blasio has proposed preserving or creating 200,000 units of affordable housing. He wants to achieve that goal through mandatory inclusionary zoning and dense new residential development in various neighborhoods.

To succeed, de Blasio will need to avoid repeating the mistakes of Bloomberg’s housing agenda, and ensure that real affordable housing is created for the huge number of low-income New Yorkers who were not served by the previous administration and still struggle to survive. (1-2)

The Real Affordability for All advocates that “Low-income neighborhoods like East New York and the South Bronx will be empowered to offer a ‘density bonus’ to developers in exchange for real affordable housing below 50 % of AMI and for career-oriented union construction jobs for local residents at new development sites.” (7)

The report provides an example pro forma for one building to demonstrate that this plan is do-able. The report does not, however, indicate where the De Blasio Administration would find the $15 million in additional subsidies it would take for this one building to be built according to the Real Affordability for All guidelines.

At this point, the plan is more of a wish list than a serious proposal, but it does make clear that there is a deep need for deep housing subsidies among low- and moderate-income households.

Airbnb in NYC

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Airbnb latte

New York Communities for Change/Real Affordability for All have issued a housing report, Airbnb in NYC. This is an advocacy piece that raises important questions about how Airbnb is changing the nature of housing markets in a hot destinations. The report states that

A new independent analysis of Airbnb’s website by www.InsideAirbnb.com shows that nearly 16,000 or just under 60% of Airbnb listings are entire homes or apartments for rent (in violation of state law and/or NYC zoning laws), and that they are available for rent an average of 247 days a year. To put that in perspective, those 16,000 Airbnb listings that are not available for everyday New Yorkers would be the equivalent of a loss of approximately one full year of Mayor de Blasio’s ten-year plan to build and preserve 200,000 affordable housing units, negating nearly all of the affordable apartments the administration has financed in the past year.

Despite Airbnb’s claims that the nearly 90 percent of their listings are from regular New Yorkers renting out spare rooms to make extra cash, the InsideAirbnb.com data show that nearly one-third of Airbnb listings come from hosts with multiple units, such as commercial landlords. (3)

While Airbnb has criticized the methodology of this report, it does appear to undercut Airbnb’s characterization of its hosts.

Opponents of the sharing economy will find a lot in this report that confirms their concerns. For instance, in the top 20 Airbnb zip codes in NYC, “housing units are rented on Airbnb for rates equivalent to more than 300% of the neighborhood’s average rent.” (5)

But supporters of the sharing economy will also find much to confirm their own views: “In 20 different zip codes in Manhattan, Brooklyn and Queens, entire/home/apartment Airbnb listings comprise at least 10% of total rentals.” (5) Supporters will say that the people have spoken with their pocketbooks — the sharing economy is here to stay, notwithstanding what the law says.

The sharing economy continues to shake up the old economy. The fact that so many Airbnb listings in NYC appear to violate the law means that the controversy over its appropriate role will probably come to a head sooner rather than later. The outcome of that controversy will then spill over and permeate the hottest residential neighborhoods in the hottest cities in the U.S.

The Dense State of NYC’s Housing

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NYU’s Furman Center released its State of New York City’s Housing and Neighborhoods in 2014. I found its discussion of urban density to be the most notable aspect of this nexcellent and data-rich annual report. The discussion on density concludes,

The renewed attractiveness of New York City since the 1970s means population will likely keep increasing, and so will population and housing density. In 2010, few other U.S. cities had any neighborhoods that matched the density experienced by the typical New Yorker. Yet, by recent historical standards, today’s density levels are not extreme. In recent years, the typical New Yorker lived in a lower-density neighborhood than the typical New Yorker in 1970, as population growth in the city since 1980 was focused in moderate-density neighborhoods. Further, while great disparities in education and crime across neighborhoods exist, these differences are not generally associated with density levels.

High density cities like New York are playing an increasingly important role in the economy as drivers of productivity and innovation. This means the accessibility of the city to new residents is important both for New Yorkers and the nation. We have demonstrated that significant numbers of new residents can be accommodated without elevating density to levels above what the city has historically experienced, and that high-density neighborhoods do not perform lower on key quality of life indicators. City officials will need to ensure that neighborhoods have sufficient infrastructure to accommodate their new residents. (20)

This last point is key: density is not a problem so long as the appropriate infrastructure is built to support it. And while current residents are concerned about the impact of local increases in density, the city as a whole benefits from the increased economic activity and cultural creativity that comes along with heightened density. The De Blasio Administration knows this. Other local elected officials should sign on to increased density along with thoughtful zoning and infrastructure policies.

As a final note, I would compare the transparent acknowledgement of the report’s financial sponsors in the front matter with the much less transparent acknowledgment found in Harvard’s Joint Center for Housing Studies State of the Nation’s Housing 2015 report that I blogged about yesterday.

NYC’s 421-Abyss

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New York City’s 421-a tax exemption has lapsed as of yesterday because of disagreements at the state level (NYS has a lot of control over NYC’s laws and policies, for those of you who don’t follow the topic closely). 421-a subsidizes a range of residential development from affordable to luxury. In the main, though, it subsidizes market-rate units.

This subsidy for residential development is heavily supported by the real estate industry. Many others think that the program provides an inefficient tax subsidy for residential development, particularly affordable housing development.

I fall into the latter camp. I would note, however, that NYC’s dysfunctional property tax system is highly inequitable because it taxes different types of housing units (single family, coop and condo, rental) so very differently.

With that in mind, let me turn to a policy brief from the Community Service Society, Why We Need to End New York City’s Most Expensive Housing Program. The reports key conclusions are,

At $1.07 billion a year, 421-a is the largest single housing expenditure that the city undertakes, larger than the city’s annual contribution of funds for Mayor de Blasio’s Housing New York plan.

The annual cost of 421-a to the city exploded during the recent housing boom as a result of market changes, not because of any intentional policy decision to increase the amount of tax incentives for housing construction.

Half of the total 421-a expenditure is devoted to Manhattan.

The 421-a tax exemption is a general investment subsidy that has been only superficially modified to contribute to affordability goals.

The 421-a tax exemption is extremely inefficient as an affordable housing program, costing the city well over a million dollars per affordable housing unit created.

The reforms made to 421-a in 2006 and 2007 have not resulted in a significant improvement of 421-a’s efficiency as an affordable housing program.

A large share of buildings that receive 421-a and include affordable housing also receive other subsidies, such as tax-exempt bond financing. Affordable units in these buildings cannot be credited entirely to the 421-a program.

The great majority of the tax revenue forgone through 421-a is subsidizing buildings that would have been developed without the tax exemption. (3-4)

The brief argues that 421-a should be allowed to expire and be replaced “with a targeted tax credit or other new incentive that is structured to provide benefits only in proportion with a building’s contribution to the affordable housing supply.” (4)

I don’t have any real disagreement with the thrust of this brief. I would just add that the fight over 421-should be expanded to include an overhaul of the City’s property tax regime. It is unclear, of course, whether Governor Cuomo and NYS legislators have the stomach for a battle so large.

Rapidly Rising Rents

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The Community Service Society has released its Fast Analysis of the 2014 New York City Housing and Vacancy Survey which “analyzed just-released U.S. Census Bureau data from the 2014 version of its New York City Housing and Vacancy Survey, a survey of 18,000 New Yorkers conducted every three years under contract with the New York City Department of Housing Preservation and Development.” The analysis

reveals that rents have risen rapidly, especially in the city’s inner-ring neighborhoods. Rents rose by 32 percent citywide since 2002, even after removing the effect of inflation. The sharpest increases occurred in neighborhoods surrounding the traditionally high-rent area of Manhattan below Harlem. Central Harlem led the way with a shocking 90 percent increase, with Bedford-Stuyvesant second at 63 percent.

The loss of rent-regulated housing to vacancy deregulation is combining with the loss of subsidized housing and with rising rents overall to dramatically shrink the city’s supply of housing affordable to low-income households. Between 2002 and 2014, the city lost nearly 440,000 units of housing affordable to households with incomes below twice the federal poverty threshold.

The study “focused on the rents being paid by tenants who have recently moved. This eliminates the tendency of lower rents paid by long-time tenants to smooth out market changes and mask the changes that affect tenants who are looking for a place to live.” (Slide 3)

This focus somewhat undercuts CSS’ claim that rents in general are rising rapidly because rents for vacancies typically rise much faster than those for existing tenancies. That being said, the study confirms the sense of many that outer-borough neighborhoods are rapidly gentrifying and becoming unaffordable to the households who had historically made their homes there. As CSS indicates, their analysis will certainly be relevant to the debates raging over how to regulate NYC’s housing stock.

It is also relevant to debates over zoning. New York City’s population has grown by almost a million and a half people since 1980. That increase puts a lot of pressure on the cost of housing. Unless, the City comes up with a plan to increase the supply of housing, market pressures will just keep pushing rents higher and higher. Mayor de Blasio is well aware of this, so it will be interesting to see whether the City Council will be on board with plans to increase density throughout the City. Greater density is a necessary component of any affordable housing strategy for NYC.