$1.9 Billion More For Affordable Housing, But Plan Lacks Specifics
As part of New York City’s Fiscal Year 2018 Executive Budget, Mayor de Blasio announced the addition of $1.9 billion in capital funding to increase affordability protections for up to 10,000 of the 200,000 planned units in his ten-year affordable housing plan. This would increase the projected share of units reserved for the lowest income New Yorkers from 20 percent to 25 percent.1
The City’s official budget documents, however, offer few details on which programs or projects will receive the new funding, or how it will be used to enhance different levels of affordability. The lack of productivity benchmarks in the Ten-Year Capital Strategy also makes it difficult to estimate how many units at which levels of affordability the additional $1.9 billion will finance and at what cost per unit.
At CBC’s request, the City’s Department of Housing Preservation and Development (HPD) provided a detailed accounting of the programs and changes that represent the $1.9 billion added to the City’s capital plan in the Executive Budget (See Table 1).2 The data offer insight into how the City commits capital funds to further its affordable housing goals.
Table 1 shows that slightly more than one-third of the new funding will go toward new construction programs, with the remaining two-thirds pledged to preservation programs. Half of the new construction funding is expected to be used as part of the Administration’s mixed-income development strategy, which encourages affordable housing developers to include moderate- and middle-income units to cross-subsidize units at deeper levels of affordability. In certain cases, the new commitments add funding to programs that HPD recently revised to require a larger share of units for very low- and extremely low-income households.3
Table 1: Planned Commitments for Major Loan Programs in HPD's Ten-Year Capital Strategy
(dollars in millions)
|Program Name||FY2017-27 Prelimary Ten-Year Strategy||FY2017-27 Executive Ten-Year Strategy|| Change
|Amount for Extremely and Very Low Income (ELI/VLI)|
|Mix & Match||$758||$1,056||$297||39%||$187|
|Extremely Low & Low-Income Affordability||$1,410||$1,596||$185||13%||$187|
|Low-Income Housing Tax Credit Year 15 Preservation Program||$495||$1,177||$682||138%||$648|
|Participation Loan Program||$674||$1,244||$570||85%||$565|
Source: City of New York Department of Housing Preservation and Development.
The allocation between new construction and preservation programs reflects the distribution of outcomes of the Mayor’s Housing Plan to date. Through the end of 2016, 33 percent of the 62,506 units financed have been in new construction projects, with preservation projects making up the remaining 67 percent. Even though a majority of new funding is marked for preservation projects, new construction programs still represent a majority of the $5.6 billion in total planned housing commitments in the Ten-Year Capital Strategy. In the absence of per unit cost estimates, however, it is difficult to estimate how many units the added $1.9 billion will finance over the course of the capital plan.
This difficulty reflects a broader concern about the financial transparency of the affordable housing plan. While the City regularly shares information about the number of units built or preserved to date, it infrequently updates the public on what the City has spent toward reaching its goal.
When Mayor de Blasio announced his Housing New York plan in 2014, City officials acknowledged that the goal of building or preserving 200,000 affordable units would come at a high price: $41 billion in public and private funds over 10 years, including $6.7 billion in City capital funding.4 (The majority of funding was to come from tax-exempt bonds and Low-Income Housing Tax Credits.)
Three years into the plan, the City has yet to provide an update on how much it has spent to date and how much it will need to spend to reach its goal by 2024. In January 2017, the City announced that it had financed more than 62,000 affordable units, which put it on track to meet its 200,000 unit goal by 2024.5 The release was accompanied by a progress report that highlighted noteworthy projects launched over the previous three years and a database that listed each project financed through the Housing New York plan. Notably, the database did not include information on which affordable housing programs each project used, or the value of City, State, and federal subsidies provided to each project.
Without this basic data, whether the Mayor’s Housing New York plan is deploying its capital in the most cost-effective way cannot be evaluated. Similarly, without productivity metrics in the capital plan, it is not possible to accurately estimate the number of units the City expects to finance through its new construction and preservation programs in the years to come.
- Households qualify for affordable housing based on their income as a percentage of the Area Median Income (AMI), which is established each year by the U.S. Department of Housing and Urban Development. For the New York City region, the current median income for a three-person household is $85,900. Affordable rents are capped at 30 percent of a household’s annual income. The additional $1.9 billion is intended to benefit households earning up to 50 percent of AMI. A three-person household at 50 percent of AMI could earn up to $42,950 annually and would pay $1,073 per month for a two-bedroom apartment, including the cost of utilities.
- The Ten-Year Capital Strategy shows a $1.6 billion increase, not the $1.9 billion increase the Mayor announced. HPD explained that significant funds were moved up to fiscal year 2017, while the strategy begins in 2018. As with most HPD capital funding, the $1.9 billion has not been formally committed to specific projects and could be moved into different years or programs based on changes in developer interest, market conditions, or state and federal housing policies.
- In May HPD revised the term sheets for Extremely Low- and Low-Income Affordability and Mix and Match programs to require developers to build a larger share of units at deeper levels of affordability. In exchange, the City will offer a sliding scale of subsidies based on the proposed level of affordability. The additional capital commitments to these programs are intended, in part, to offset the additional cost of the deeper subsidies outlined in the new term sheets. HUD considers families earning 30 percent of AMI to be extremely low-income, and those earning less than 50 percent to be very low-income.
- City of New York, “Housing New York: A Five-Borough, Ten-Year Plan” (May 2014), p. 100, www1.nyc.gov/assets/housing/downloads/pdf/housing_plan.pdf.
- City of New York, “Housing New York: Three Years of Progress” (January 2017), www1.nyc.gov/assets/hpd/downloads/pdf/about/hny-three-years-of-progress.pdf.