New York’s bold plan to create affordable housing: Make developers build it
The building industry, meanwhile, has been on a tear that seems entirely disconnected from these trends, constructing one luxury condo with white-gloved doormen after the next.
Affordable housing has become, says Carl Weisbrod, the director of New York's Department of City Planning, "the crisis of our time in the city."
Accordingly, officials plan in September to push dramatic changes to how new housing gets built, requiring many developers to incorporate into their projects a substantial number of affordable units. Planning a 60-story luxe apartment in East Harlem? Developers would have to put some affordable housing in there. A new mixed-use loft in Brooklyn? There too.
Under the proposal, which will be introduced in the city council next month, developers seeking to build in parts of the city that will be rezoned will have to set aside 25 percent of a building's housing units for households making below 60 percent of the median income in the area. Conversely, they can set aside 30 percent of units for families below 80 percent of the median.
Similar policies, called "inclusionary zoning," exist in other cities, including D.C. But New York's proposal goes further than any of them. It demands twice as much affordable housing as policies in Chicago, Boston or Los Angeles, where set-asides of 10 to 15 percent are the standard. New York is also requiring the housing to be permanently affordable — it can't convert to market-rate years down the road. And in the biggest change from an existing program in New York, the new policy would not be voluntary.
Every new development in broad stretches of the city expected to be rezoned would come under the requirement. And developers elsewhere who seek to rezone a single parcel of land — perhaps requesting to build taller than would normally be allowed — would be subject to these requirements, too. Tax breaks tied to the proposal would also incentivize developers to place this affordable housing directly inside their market-rate buildings, and not on other sites nearby.
"It’s the most ambitious in the country, by far," Weisbrod says of the policy.
City officials believe these numbers — 25 to 30 percent affordable units — are the most they can demand of developers without destroying the incentive to build in the first place. They're confident, in other words, that builders will still make money.
"When we start thinking about mandatory inclusionary zoning," Weisbrod says, "we have a profound responsibility to make sure that we are not squelching and preventing housing from being built all together, because if the requirements are too onerous and economically not sustainable, developers simply won’t build. And that doesn’t really serve the public or any of us very well."
Right now, New York has a voluntary inclusionary zoning program, where developers who request rights to build additional density from the city can put up some affordable housing in exchange. But that program has produced a lot fewer units than the city had hoped, with 3,205 affordable homes financed this past year. Undercutting the program, generous tax abatements in New York have long given developers big breaks in some parts of the city even when they've built no affordable housing at all.
Those incentives are a vestige of the time, well before New York became such a hot real estate market, when the city had to try hard to coax any new development. Now, though, the system has meant that $100 million condos have gotten tax breaks.
"We felt that was really an outrage that you could get a tax abatement from the public," Weisbrod says. "It wasn’t an outrage 30 years ago when the city was desperate to get any kind of housing – but in today’s market and in today’s very healthy New York, to be able to build market-rate housing and get a tax abatement is just unacceptable."
New York Mayor Bill de Blasio pushed for changes to that tax abatement in the state legislature this year (the final agreement is now pending a labor deal on wages for construction workers). Those reforms, combined with the new mandatory inclusionary program, could ultimately spur thousands of new affordable units, creating buildings across the city where working-class and wealthy New Yorkers live side-by-side.
This won't entirely solve New York's problem, and these units will make up only a portion of the mayor's plan to create or preserve in total 200,000 affordable homes by 2024. But, as New York magazine architecture critic Justin Davidson put it, "the city is drowning in its own money, and this is a lifejacket for those who can’t swim."
New York's aggressive proposal should also be a signal to other cities with affordable housing crises that have experimented much more cautiously with inclusionary zoning. If this precise math works in New York, it won't necessarily translate elsewhere. The market-rate housing needed to subsidize the affordable units can command much higher rents in New York than in Chicago (land there, though, is also more expensive).
But inclusionary zoning is one of the strongest policy weapons cities can wield in what often feels like an impossible fight to create housing for the kinds of workers — clerks, cooks, teachers, nurses — every city needs.
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