October 15, 2014
The agencies that shape NYC's housing policy are doing a complete 180 to reach Mayor de Blasio's goal of 200,000 new affordable units in 10 years, according to panelists at Bisnow's NYC Affordable Housing Summit yesterday.
As much as 80% of those units will be preserved by meat-and-potatoes LIHTCs and refis, said NYC Department of Housing Preservation and Development deputy commissioner Eric Enderlin, whom we snapped with NYC Department of City Planning executive director Purnima Kapur. To create the other 80,000 units, his department is working with the NYC Department of City Planning on a new mandatory inclusionary housing policy, more federal involvement (say, HUD financing for projects in which 20% of the units go to homeless housing), and twice as much supportive housing (switching from subsidies to leveraged-bond financing).
Purnima says the mayor's plan will cost $41B ($8B in public money, including $6.7B from the City, which will find ways to motivate private capital to provide the rest). A revision of 2004's inclusionary housing, for example, means no more 33% bonus FAR for including 20% affordable housing. Now, in areas the City rezones to mid- or high- density, affordable housing will be required for any new development. (The 1,700-unit Astoria Cove, approved last week, will be the City's first under the new plan.) Subsidies will be saved for areas they're needed or to achieve greater affordability. She says the NYC Housing Development Corp is doing a financial feasibility study on the plan, ready for public review in the spring. Meanwhile, Purnima and Eric's departments and HDC will work together to make it a reality.
NYC Housing Development Corp's Ellen Duffy (flanked by Volunteers of America-Greater New York CEO Tere Pettitt and our moderator, Windels Marx's Michele Arbeeny) says her group will put out $1.2B of financing and $11B in tax-exempt bonds next year. The agency is also in an FHA risk-share pilot program, will work with the GSEs as they evolve, and will finish redoing its term sheets within the next month. An easier process would help, considering Tere's organization will open The Creston Avenue Residence near Fordham next month using seven layers of financing for just 66 units. (If something has seven layers, it better have frosting on top.)
Chase Community Development Banking's Susan Hyman (whom we snapped with The Community Preservation Corp's Dick Conley) says all those layers of financing add time and thus cost to an affordable project. That's money VOA would rather spend on residents than on transaction and development costs, Tere says. Dick worries about existing affordable properties: Bronx buildings are trading at 10 times the rent roll and acquisition costs can run $100k/unit, so maintenance could suffer as buyers try to make their investments work.
The Arker Cos' Dan Moritz (right, with The Hudson Cos' Aaron Koffman) likes the idea of using private capital. The current tool bag of incentives and subsidies is not enough to achieve the mayor's plan, he says. His company advocates the return of the 421(a) negotiable tax certificate program, which funneled capital to affordable housing via a marketplace for the purchase and sale of tax-exemption certificates and was killed in '07. The City's housing departments are already committed to collaboration, says Aaron; he'd like to see New York State Homes and Community Renewal reform, more public promotion of seniors affordable and supportive housing, and subsidies for ground-floor retail in struggling new neighborhoods.
HUD doesn't play as direct a role in NYC as it does in other markets, says Jonathan Rose Cos' Paul Freitag (with Dunn Development's Martin Dunn), and he'd like to activate more federal funds for the City's affordable housing efforts. Martin adds that land costs ultimately mean the City will have to pay for land if it wants new affordable units. He and Monadnock Construction's Kirk Goodrich both championed legalization of rooming units, and Martin also suggests legal alternatives to three-quarter houses.
Kirk (right, with our moderator, CohnReznick Northeast affordable housing director Bill Riley, and architecture firm Montroy Andersen DeMarco's Marvin Meltzer) also wants to revisit minimum unit size, as many affordable apartments are larger than market-rate housing. (True, but cell phones are getting too big for our pockets. We need somewhere to put them.)