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Tracy Munford
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Closing the Door on Housing: New York's Affordable Housing is Under Siege

CSS Reports:
Available Affordable Housing Continues to Decline for City Residents – Where Will Low Income New Yorker’s Live?

New York, NY, May 22, 2007 -- The Community Service Society of New York (CSS) today released the 2007 report on affordable housing, entitled, “Closing the Door 2007: The Shape of Subsidized Housing Loss in New York City.”

The reportchronicles the rapid loss of New York City’s supply of subsidized, privately owned, rental housing through 2006.  As of the end of 2006, more than a quarter (27 percent) of the city’s 119,785 apartments in the subsidy programs had been lost since 1990, and another 18 percent are now threatened with subsidy loss. 

Mitchell-Lama rentals have been hit hardest, losing 26,253 units, including 3,691 in 2006.  Mitchell-Lama rental losses since 2001 total 18,048 apartments – more than the combined number of apartments in three complexes that recently made headlines with billion dollar sales prices: Stuyvesant Town, Peter Cooper Village, and Starrett City. 

The report was released one day before a planned major march and rally on behalf of working families calling for the city, state and the federal governments to save and expand affordable housing in New York City.  The march and rally, which are scheduled for Wednesday, May 23, at Stuyvesant Town and Peter Cooper Village, are organized by a coalition of dozens of community organizations, labor unions, and other organizations, including CSS. 

David R.  Jones, president and CEO of CSS, said, “This tremendous loss of Mitchell-Lama and other subsidized housing is hitting neighborhoods from one end of the rent and income spectrum to the other.”  Jones added, “The affordable housing market in New York is quickly disappearing, and while the city is experiencing a boom in high-end real estate, it is losing its capacity to house low-wage workers.”

According to the CSS report, the city’s remaining subsidized affordable housing stock faces two main threats to its continued affordability. 

The first concern, market threat, according to CSS housing analyst Tom Waters, is the danger that owners will voluntarily remove residential buildings from their subsidy programs, seeking higher profits in the open market.  The CSS report reveals that there are more than 4,700 Mitchell-Lama rental units in the process of being bought out of the program.  If this pattern continues, most of the units will eventually be lost as a result of market threats. 

The second threat, termed distress threat, is the danger that negligent management will lead to poor building conditions, disqualifying the development from its subsidy programs.  More than 6,700 project-based Section 8 apartments are now subject to this threat, as are more than 4,600 Mitchell-Lama apartments with federal subsidies.

 “All levels of government must create cohesive and comprehensive policies that address this crisis in affordable housing, not just in New York, but in urban cities across the country,” David Jones said.  “There should be a fundamental human right to affordable and decent housing.  Yet as for the Mitchell-Lama crisis, which is primarily the responsibility of the city and state, neither level has come forward with an appropriate plan.”   Jones noted that the city has worked to preserve a few buildings in some instances, but the reality is that economic segregation in housing is growing at an alarming rate.

The CSS report calls for city and state government to adopt the goal to keep every Mitchell-Lama apartment in the subsidy program.  Since the preservation incentives that now exist are not adequate, even in low-market areas, the report advocated larger incentives and the enforcement of regulatory provisions to preserve affordability. 

CSS offers five recommendations to address affordable housing in New York City. 

Preserve Mitchell-Lama: New York City and New York State, rather than Washington, bear the primary responsibility for preventing further losses to the vulnerable Mitchell-Lama rental stock.  They should offer larger incentive subsidies to preserve Mitchell-Lama.  But to prevent the market from running away from government’s capacity to provide incentives, there should be a regulatory or tax “stick” in addition to the subsidy “carrot.”  This could take the form of a higher real property transfer tax for Mitchell-Lama reorganizations that fail to preserve affordable housing. 

Protect Mitchell-Lama tenants: Tenants in Mitchell-Lama buildings are vulnerable to displacement after the buildings leave their subsidy programs.  The New York State Legislature should place all Mitchell-Lama apartments under the rent stabilization program in the event they leave the Mitchell-Lama program, and should mandate that the initial rent-stabilized rent on each apartment be the last Mitchell-Lama rent, without any increase for “unique or peculiar” circumstances.  Two pending bills (A.795/S.4250 and A.352/S.5245) would accomplish this. 

Preserve Mark Up to Market: The Mark Up to Market program appears to be extremely effective in preserving subsidized housing, especially in high-market areas.  Congress should ensure that the annual HUD appropriation for project-based Section 8 continues to be sufficient to fund all needed Mark Up to Market activity.  Mark Up to Market should also be treated as a model for preserving other parts of the subsidized housing stock.  The other federal rent subsidies, Rent Supplement and Rental Assistance Program, should be converted to Section 8 and thus made eligible for Mark Up to Market.  

Provide tools to New York City and nonprofit organizations to preserve distressed subsidized housing: Themain threat to project-based Section 8 housing in New York City is physical distress, and some developments with other subsidies are also threatened.  Congress should pass legislation enabling the federal Department of Housing and Urban Development to transfer its enforcement powers to local governments and to transfer its assets (mortgages or buildings) at a reasonable price, taking rehabilitation needs into account.  Congress should mandate that HUD continue its practice of offering project-based Section 8 contracts to owners who are preserving housing after a foreclosure or other transfer, and that HUD escrow Section 8 payments while rehabilitation is under way.  Congress should also restore funding for rehabilitation work.  A pending bill (H.R. 44) would accomplish this.

Give tenants and their chosen development partners a right to purchase: In 2005, New York City passed legislation intended to facilitate tenant and nonprofit purchases of subsidized apartment buildings at-risk of being de-subsidized.  This legislation, Local Law 79 of 2005, has been struck down in New York State Supreme Court.  New York City should appeal this decision, and the New York State legislature should pass, and the Governor sign, similar legislation to facilitate tenant and nonprofit purchases statewide.  Both levels of government should appropriate funds to help tenants and community-based developers use a “right-to-purchase” effectively.

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