Affordable Housing Under Siege

The rapid loss of New York City's supply of affordable rental housing threatens the ability of low-wage families to live in the city. Yet no level of government has produced a coherent policy response to this looming crisis.

The Community Service Society of New York (CSS) has released its latest report on the state of affordable housing, "Closing the Door 2007: The Shape of Subsidized Housing Loss in New York City." The report chronicles the rapid loss of the city's supply of subsidized, privately owned, rental housing through 2006. Between 1990 and 2006, more than a quarter (27 percent) of the city's 119,785 apartments in the subsidy programs had been lost - more than 32,300 subsidized apartments. And another 18 percent are now threatened with subsidy loss.

Mitchell-Lama program

Mitchell-Lama rentals have been hit hardest, losing a total of 26,253 units, including 3,691 in 2006. The Mitchell-Lama program was established by the state in 1955 to encourage low- and moderate-income housing by offering developers low-interest mortgages and tax abatements. In return, the rents in their buildings are capped at affordable under-market levels. After 20 years, landlords can leave Mitchell-Lama, but they can also opt to stay in the program.

Since 2001, Mitchell-Lama rental losses 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 New Yorkers who live in Mitchell-Lama rentals are largely low-income tenants. Over 40 percent are Black; another 20 percent are Latino. Their median household income is $22,500. They cannot survive in New York City without some form of subsidized housing.

The city's remaining subsidized affordable housing stock faces two main threats to its continued affordability. The first, market threat, is the danger that owners will voluntarily remove residential buildings from their subsidy programs, seeking higher profits in the open market. 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.

The second, 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 federally financed project-based Section 8 apartments are now subject to this threat, as are more than 4,600 Mitchell-Lama apartments with federal subsidies.

Policy Recommendations

There are several policies that government can adopt to protect privately owned, subsidized housing.

Preserving 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 there should also be a regulatory or tax "stick" in addition to the subsidy "carrot." This could take the form of higher taxes for Mitchell-Lama reorganizations that fail to preserve affordable housing.

Protecting Mitchell-Lama tenants: Tenants in Mitchell-Lama buildings are vulnerable to displacement after the buildings leave their subsidy programs. The 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. Two pending bills in the Legislature (A.795/S.4250 and A.352/S.5245) would accomplish this.

Preserving the Mark Up to Market program: The Mark Up to Market program - where subsidies are increased to market value - appears to be extremely effective in preserving subsidized housing, especially in high-market areas. Congress should ensure that the annual appropriation for the Department of Housing and Urban Development (HUD) for project-based Section 8 continues to be sufficient to fund all needed Mark Up to Market activity. 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.

Providing tools to New York City and nonprofits to preserve distressed subsidized housing: The main threat to project-based Section 8 housing in New York City is physical distress. Congress should pass legislation enabling HUD 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 also 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 restore funding for rehabilitation work. A pending bill in the House of Representatives (H.R. 44) would accomplish this.

Removals from
subsidy programs

Giving 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 State legislature should pass 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.

Government must create cohesive and comprehensive policies that address this crisis in affordable housing, not just in New York City, but in urban areas across the country. Affordable and decent housing should be a fundamental human right.

From the New York Amsterdam News
June 14 - 20, 2007