I recently came across a two-part question in Politico Magazine's What Works section, that asked “How would you improve affordable housing in your city?”
The first part was a hypothetical “magic wand” question: If we had the power to do any one thing what would it be? The second was the “back down to earth” question: Based on today’s political climate, what’s one realistic thing we could accomplish?
I’ve spent a lot of time (most of my adult life) thinking about how to make affordable housing better, not just in my city but cities across New York and the country. And I’ve been lucky enough to have had the opportunity throughout my career in the private and public sectors to have crafted and advanced housing policies and programs that have helped make a positive impact in communities.
That said, it’s always energizing to have an opportunity to think out of the box, to brainstorm and not have to worry about the constraints of politics, budgets, zoning, etc. I don’t know if Politico is going to publish my responses, but wanted to share them with you. Whether you agree with me or not, I hope it helps push the needle and provoke some creative thought - and maybe you’ll feel inspired to submit your own ideas to What Works.
Imagine you have the power to institute anything. If you could do one thing to improve affordable housing in your city (or state or country), what would it be?
We should provide rental assistance vouchers to all renters earning less than roughly 40-50% of the Area Median Income. Similar to Section 8, a household would be required to pay a percentage of their income towards rent, with the voucher paying for the difference, and there would be a limit on the total asking rent that a voucher could be used for.
Simple economics tell us that we can’t build our way out of the affordability crisis - especially at the lowest end of the income spectrum - because affordable rents won’t to cover the basic operating costs and capital needs of running a building. For example, providing affordable housing to a family with an income of $25,000 per year means setting rents at around $600 per month, which is typically less than the cost of maintaining and running that unit – not to mention the normal maintenance costs that periodically come due throughout a building’s lifecycle.
Quite simply, the private market won’t produce units that lose money. The best option is to provide low-income families with increased resources (vouchers) to pay for rental housing on the open market, which also allows landlords to cover their costs. While we should continue to build what we can, this increased capacity to pay rent will unlock new housing choices within the existing housing stock that aren’t available to low-income families today, without having to build a single new unit.
It is crucial to note that there is already capacity within the existing rental stock to house more low-income families, if we provided them with more resources to pay a higher rent. While the vacancy rate in NYC for apartments renting below $800 stands at 1.15% (meaning it is nearly impossible to find a vacant unit at such a low rent), that vacancy rate rises to 4.11% for units renting at $1,500 - $1,999, and to 7.42% for asking rents of $2,000-$2,500. This means there are currently a significant number of units sitting vacant, even in NYC, while so many families still struggle to pay the rent. We have the capacity to make a dent in solving the affordability crisis, but we need to make better use of the existing rental housing stock to accomplish that goal.
If we can’t create policies to increase income, providing vouchers that make up the difference between market rents and what people can afford, is the next best option.
Now considering cost, political will, public sentiment and other obstacles — what’s a realistic thing your city (or state or country) could do to improve affordable housing?
In our reality-based world one thing that I think we can all agree on is that it takes far too long to bring affordable housing online. From concept to occupancy, we can be looking at roughly five years at a minimum, even longer for projects on public land, and even longer for large-scale affordable projects.
This long and uncertain time-frame makes a project’s financial returns less attractive for investors and lenders, which makes it even harder than usual to access the low-cost financing needed to make affordable projects pencil-out. We need to take a comprehensive, common sense look at how we can streamline the various pieces of the process involved in the delivery of housing projects.
States and Cities can expedite building departments approvals, streamline the lottery and lease-up process, shorten pre-development approval times, and remove the numerous administrative burdens which developers must overcome through the development process. Together, these strategies can make the development time-frame more reasonable, and thus make more affordable housing deals financially feasible here in New York, and in cities across the country.