Testimony: Pathways to Social Housing

Thank you to the New York City Council’s Committee on Housing and Buildings for holding this hearing on social housing. Our names are Samuel Stein and Oksana Mironova and we are senior policy analysts at the Community Service Society of New York (CSS), a leading nonprofit that promotes economic opportunity for all New Yorkers. CSS uses research, advocacy, and direct services to champion a more equitable city and state. We are also a member of the New York City Community Land Initiative and the Right to a Roof coalition.

What is social housing?

We define social housing models as those that strive to achieve permanent affordability, social equality, and democratic resident control. These goals are reflected, to varying degrees, in existing U.S. affordable housing programs, including public housing, nonprofit-managed rentals, and privately-run, limited-equity cooperatives on land stewarded by community land trusts. But these existing programs don’t all live up to the three main social housing goals equally. Just how “social” each model is depends less on ownership structures than on how well it shields the housing from market pressures, promotes racial and economic integration, and allows for robust resident governance.

The first key goal of social housing policy is to create “housing in the public interest,” or, to redefine housing as a public good, like mass transit, libraries, or schools. Functionally, this means that the public and/or nonprofit sector assume stewardship responsibilities over the housing in perpetuity. While guaranteeing a level of affordability is central to social housing, it also insulates housing from market pressures. Through a commitment to permanent affordability, owners do not face either the financial incentive to raise rents and sale prices or the financial need to do so, to borrow money for repairs. This also reduces the financial risk of property ownership and the potential for property speculation, which is driven by investors using projections of quickly increasing rent rolls and/or underlying property values to take on risky debt.

The second goal is social equality through the reduction of segregation by race and income, and the diminished impact of policies that bestow privileges on different members of the public based on tenure (ranking homeowners above renters and the unhoused). According to the Homes Guarantee platform, “social housing is based on the fundamental principle that everyone—no matter their income, background, or their conformity to social or legal norms—has the right to a home.” In Nordic countries social housing models often employ a “universalist” approach, providing housing for people across income levels, not just those poorly served by the private market. Accessibility, including Americans with Disabilities Act (ADA) modifications and wraparound supportive services, are a key component of ensuring social housing is truly available to everyone.

The third and perhaps most ambitious goal of social housing is democratic resident control. Real control means that residents can and do meaningfully participate in building governance. This is only possible if residents have very strong rights and the resources to organize, formulate their policy preferences, and use their rights effectively. 

New York’s existing social housing stock

New York City and New York State already support a plethora of social housing models, including rentals (public housing, Mutual Housing Associations, Mitchell Lama rentals), limited- equity cooperatives (HDFC coops, Mitchell-Lama coops, Resident Owned Communities) and alternative forms of land tenure (Community Land Trusts). There are concrete differences between for-profit and social housing building operations. A private landlord seeking quick and lucrative profits will generally maximize debt leverage, minimize expenses, and attempt to increase rental income at every opportunity. A social housing operator aims to only take on debt when necessary, reinvest revenues back into the building to ensure good housing quality, and keep rents within the bounds of affordability agreements. Whereas our status quo model of housing has produced deep racial inequality, persistent homelessness and widespread precarity, social housing models aim to achieve exactly the opposite: racial equity, abundant affordability and self- determination.

Despite these distinctions, existing social housing models are far from perfect; there have been significant challenges in keeping this housing permanently affordable and in operating the properties in line with the ideals laid out above. Any serious social housing strategy must acknowledge those failures on their own terms, while recognizing the effect of the past several decades of fiscal austerity. As in so many other arenas, local, state, and federal austerity set social housing up for failure, leading to both its physical degradation and a hollowing of the expertise and democratic institutions required to successfully create and operate it.

Austerity also winnowed the public’s faith in the government as a reliably positive actor in the provision of housing. And while public funding for social housing has been slashed over the preceding decades, public subsidies and support for countless models of for-profit housing have proliferated, from state tax breaks for luxury construction (like 421-a and 485-a) to federal subsidies for single-family home mortgages (like the home mortgage interest deduction, or Freddie Mac and Fannie Mae backed financing). For most of the 20th century, our city, state and federal governments supported suburban homeowners and urban landlords, while claiming poverty when it came to funding public and social housing alternatives.

Meanwhile, the federal government – along with banks, conservative think tanks, and other aligned organizations periodically presented private homeownership (and sometimes landlording) to low-income people of color living in cities as the primary pathway to economic growth and stability. These positive outcomes, however, were never guaranteed. In fact, programs that promised entry into private homeownership for low-income people – and for African American first-time homeowners in particular – often relied on households taking on unsustainable debts or accessing poor quality homes, subjecting them first to dangerous conditions and then to foreclosure. Historian Keeanga-Yamahtta Taylor calls this process “predatory inclusion” for the ways it weaponized homeownership into yet another tool of racial discrimination.

The challenge for social housing advocates, then, is to buck these historical trends of austerity and predation and offer instead models of housing that not only promise but deliver on the ideals of decommodification, deep affordability, and democracy. This is a tall order, and one that will be achieved through a host of policies, actions and approaches. Thus, we present here a set of pathways rather than a single silver bullet.

Pathways to social housing

This past fall, the Community Service Society released a major new report, authored by Oksana Mironova, Samuel Stein, Celeste Hornbach and Jacob Udell, entitled Pathways to Social Housing in New York: 20 Policies to Shift from Private Profit to Public Good. In the report, we attempt to chart out a landscape of policies that would help promote social housing in our city and state, and, for each policy, offer clear information about what branch and level of government could be responsible, what kind of budget it would require, how it connects to the other policies, and how we might think about its impacts. We are very happy to see that the bills under consideration today are each named as major pathways to social housing in our report. The following are excerpts from the Pathways to Social Housing report that shed light on the merits of the types of bills under consideration.

Community Opportunity to Purchase Act/Tenant Opportunity to Purchase Act

One way to stop the predatory cycle of real estate speculation that plagues neighborhoods and buildings is to give tenants, public agencies and nonprofits a chance to intervene in building sales and offer them incentives to create social housing. New York State and City are currently considering legislation that would create a state Tenant Opportunity to Purchase Act (TOPA) program and a municipal Community Opportunity to Purchase Act (COPA) program. As currently written, COPA would give pre-approved nonprofit organizations and community land trusts a first shot at buying any rental building in New York City. TOPA would give tenants the right to make the first offer and the right of first refusal, or to assign their rights to a pre-approved nonprofit organization or public housing authority, if their landlord decides to sell their building. COPA would be a stronger and more effective law if it too were designed as a full right of first refusal for tenant- and non-profit purchasers.

Where such laws exist, they were usually implemented in response to rapidly changing market dynamics. For example, Washington DC’s law gave tenants more control over their housing during a period of rampant disinvestment in the 1980s, while Berlin’s law extended tenant protections during a period of aggressive and speculative investment in the 2010s. Just a couple of years ago, San Francisco implemented COPA as an anti-gentrification measure. DC’s law supported the conversion of 4,400 rental units in 99 buildings in gentrifying neighborhoods into limited equity cooperatives, stabilizing buildings primarily occupied by low- income tenants of color. Berlin uses its right of first refusal (Vorkaufsrecht) law in neighborhoods with high displacement pressure to purchase properties directly, protecting over 9,500 units between 2017 and 2021. Today, Boston, Somerville, Minneapolis, Berkeley, and Oakland are pursuing various versions of right of first refusal laws.

Right of first refusal laws are built on several pillars:

• Neighborhood Stabilization: gives tenants the ability to safely stay in their homes instead of being subject to displacement or neglect when a building is sold.
   
• Permanent Affordability: enshrines the legal rights of tenants and mission-driven nonprofits to acquire buildings that are for sale in order to convert them into permanently affordable social housing.
   
• Community Wealth: gives residents the ability to collectively exercise agency over the future ownership model of their housing and the opportunity to own the building in common or empower a community-based actor (like a CLT or trusted nonprofit) to take ownership.
   
• Resident Control: gives tenants more control where they live, regardless of a sale or foreclosure. TOPA laws strengthen the impact of housing court lawsuits, rent strikes, and other tools organized tenants use to enforce their rights. By complicating landlords’ ability to “walk away from the table” (i.e., sell the building), TOPA laws enhance tenants’ ability to collectively bargain with their landlords around repairs and rent increases.

Introducing this new right in New York State will alter the real estate industry’s calculations and disincentivize business strategies based on buying a building, working to quickly raise the income through cutting services or raising rents, then immediately flipping the building for a profit. COPA and TOPA could also insert reasonable price setting into the equation: by giving tenants the right to an appraisal, they will have a new organizing tool to challenge some of the most predatory transactions.

Public Land for the Public Good

The most direct way for municipalities to convert buildings into social housing is to use public property, particularly the vacant, abandoned, tax-delinquent, or otherwise distressed lots and buildings over which local governments have jurisdiction. Employing this distressed stock towards the creation of social housing, however, requires a major shift away from long-standing practices on two fronts. First, municipalities and public agencies must stop passing publicly- owned property to private actors. Second, they must return to the bold use of tools like municipal foreclosure, and even eminent domain, to acquire and transfer private housing under poor stewardship to social housing entities

Today, the predominant policy goal in public property disposition is to return them to the tax rolls, providing the economic justification for transferring properties to private actors at extremely discounted prices. An analysis by the Association for Neighborhood Housing and Development, for instance, found that between 2014 and 2018, 75 percent of New York City’s vacant public land dispositions went to for-profit entities — sometimes for just $1 per parcel.

Passing the Public Land in Public Hands bill would go a long way toward ensuring that we have solid ground on which to build new social housing across the city.

Abolish the Tax Lien Sale

In cases of publicly-owned, occupied residential buildings, there is a similarly long pattern of transfers to private actors. In the 1970s and 1980s, following the devastation of landlord abandonment and mass municipal foreclosures, tenants and nonprofit groups used persistent organizing and sweat equity to get the city to transfer buildings into their control, creating a major wave of social housing conversions. The New York City Housing Authority also frequently took ownership of distressed land and housing, temporarily transferring the ownership to private entities for redevelopment, then regaining title after construction and ultimately operating the buildings as public housing. At the same time, however, city agencies transferred thousands of similar properties to for-profit private actors, which was later understood to lead to far inferior outcomes for tenants, as compared to social housing transfers.

During the Giuliani mayoralty, New York City took a step backward, moving away from municipal foreclosure and toward a system of selling municipal liens to a trust operated by a private and unaccountable third-party entity. This system squandered any leverage New York City had to convert residential properties into forms of social housing, leaving behind tenants in physically distressed and tax delinquent rental housing, while putting undue pressure on low-income homeowners of color. While this particular kind of bulk tax lien sales do not exist outside of New York City, upstate municipalities also commonly sell off publicly- owned housing to private investors, usually through opaque and undemocratic land banks.

In place of the prevailing attitude, we need public agencies to resume using municipal foreclosure to intervene in distressed housing, while also learning from the mistakes of the past. This would both hold predatory and negligent landlords accountable, and allow for more properties to be transferred to responsible owners via a social housing entity. Specifically, we must abolish the tax lien sale in New York City — the epitome of bad policy that prioritizes private investors over homeowners and tenants — and move away from selling tax foreclosed housing to private investors throughout New York State. In place of these approaches, we should establish a new process for public tax collection, in rem foreclosure, and disposition to Community Land Trusts (CLT) and other forms of collective, cooperative, and/or public ownership.

The goals of such a program would be to: 1) re- municipalize public debt collection; 2) prevent displacement, either of owner-occupiers or tenants; and 3) promote long-term affordability through community ownership and social housing.9 The vehicles to reach these goals would be different for struggling owner-occupiers than for delinquent absentee landlords. For owner-occupied homes where the owner has fallen behind on taxes, municipalities should first pursue a repayment program. If the homeowner is unable to repay their debts, a CLT would work to assume ownership of the land, while preserving the dweller’s ownership of the home with equity restrictions at resale. For rental housing, cities should pursue in rem foreclosure, transferring the building to a preservation-minded owner (such as the building’s residents, a local nonprofit developer, a CLT, or a land bank), and either maintaining public ownership of the land or transferring it to a CLT.

Importantly, this new approach should include the careful use of eminent domain, when other tools are inadequate. Historically, eminent domain has been used both as a tool for public and cooperative housing construction, and for racist land grabs and harmful infrastructure siting.10 Today it is mostly used to create large-scale private facilities like sports stadiums, private university expansions, and pharmaceutical facilities. Eminent domain can be reconceived as a means for social housing conversions in buildings where owners have put their tenants’ wellbeing at risk in pursuit of profit. In such cases, the owners would be compensated for the value of their property, and the state would take ownership of occupied housing and transfer its operations to a social housing provider.

Land Bank

Land banks are a tool designed to take over and rehabilitate tax-delinquent, abandoned, and other distressed properties. They were first developed in St. Louis as part of the Civil Rights movement in response to the devastating effects of redlining. Most land banks in New York State are located in relatively low-cost urban and rural markets such as Syracuse, Buffalo, Oswego county, and the Finger Lakes region. In New York City, Neighborhood Restore, a nonprofit that works closely with the City’s housing agency and was created to help the City avoid taking direct title of distressed properties and vacant land, essentially plays the role of a land bank.

New York State’s existing land banks are structurally restrained from playing a role in the creation of social housing: they are dramatically underfunded, not always granted automatic rights to assume title, and founded on a set of principles that do not prioritize the disposition of land or properties to tenants, public housing authorities, or not-for- profit actors.

Across the State of New York, each land bank transfer to a private investor represents a lost opportunity to create social housing. To give one example: in a municipality in the Capital District, a resident was prepared to purchase her home where she had lived as a tenant for over a decade, and which had gone through foreclosure and was temporarily owned by the land bank. The prospective homeowner had an operating subsidy, was in the process of securing financing for the purchase price, and had support from a local community group and land trust. Despite these factors, the land bank was uninterested in waiting just a few months in order to sell to the tenant and instead disposed of the home to a for- profit purchaser.

This system does not have to work this way. Single family homes controlled by land banks could be placed on a CLT, which would provide new homeowners with support with finding low-cost financing and making necessary repairs. The CLT would act as a long-term steward, providing residents with ongoing support and ensuring affordability in perpetuity. This structure could also work for multifamily buildings, where residents are well-organized and prepared to take collective ownership or choose a responsible nonprofit steward for their building.

Social Housing Development Authority

New social housing entities must also be created, funded, and supported. These entities, including new organizations, coalitions, and public agencies, are needed to create the infrastructure that makes social housing possible. These entities organize and intervene in distressed housing, create democratic and accountable ownership structures, and work with governments and land banks to take title to housing.

A growing social housing ecosystem can both expand existing social housing entities (like housing nonprofits) and pursue larger goals, like rebuilding housing capacity and expertise lost over the last 50 years of austerity. Social housing infrastructure includes:

• New or Reformed Public Agencies:
  • Public Housing Authorities (PHAs) have been underfunded for almost half a century, and, as a result, have seen the physical decline of their portfolios and/or been fully or partially privatized. In municipalities outside of New York City, particularly in rural and suburban areas, PHAs are often the only organizations with expertise in developing and managing affordable housing. Federal, state and local funding must be put toward capital and operating budget gaps in public housing, to rehabilitate existing buildings and rebuild popular trust in public models, so that PHAs can grow by developing new public housing.
     
• Financing and Acquisition entities, which, in the longer-term, will issue bonds, disburse funds, and act as intermediate owners. One such idea is for a federal Social Housing Development Authority. Drawing on this federal model, a New York State Social Housing Development Authority could operate similarly to a statewide land bank, but with the express purpose of supporting and expanding social housing. It would acquire vacant land and, with long-term ground leases, contract for the development of new social housing, including supportive housing for formerly homeless people. Alternatively, a Social Housing Development Authority could intervene in the market to purchase tenant-occupied housing, finance renovations, then transfer the ownership or management of the building to either the tenants or an approved public or nonprofit provider.
   
• Community Development Corporations (CDCs) are currently the primary holders of the technical expertise needed to develop and expand social housing. In New York City, many CDCs created during prior housing crises developed the lion-share of New York City’s affordable housing. Today, CDCs are often shut out of larger development deals, and need added capacity to take the lead on large projects and new housing models. They can also partner with and advise on the development of new social housing entities.
   
• Community Development Financial Institutions (CDFIs) can play an intermediary role between private capital and social housing, taking on some of the lending risk, helping social housing entities develop a financing strategy, and, where appropriate, providing individual loans to purchase homes in limited-equity projects. Many of these functions could also be filled by municipal public banks.
   
• Community Land Trusts (CLTs) can provide long-term stewardship and accommodate various types of social housing structures, including mutual housing associations, limited-equity co-ops, regulated rentals, and more. Further, if properly funded, long- term governance structures of CLTs have the potential to solve for issues that have arisen in prior iterations of social housing in the US, by allowing for more democratic decision-making and by providing more long-term housing management and operations support.
   
• Local advocacy organizations and coalitions can push for funding and laws on the local and state levels that are crucial for the social housing entities they represent.

Housing Access Voucher Program

Long term social housing stewardship requires ongoing operating subsidies to pay for regular maintenance, labor costs, services for residents, and — in some cases — taxes and debt service. This is particularly true in developments where rents are set low enough to make the housing affordable to extremely low-income households and the collective rental income does not cover the cost of operations.

Operating subsidies can come in many different forms, including project-based vouchers (where the money is attached to a particular building or unit, as in Project-Based Section 8) and tenant- based vouchers (where the money is attached to a particular resident, as in federal Housing Choice Vouchers, New York City’s CityFHEPS voucher, or the proposed New York State Housing Access Voucher Program). They can also be effectively combined with capital subsidies, like direct grants or low-interest loans for socially-beneficial building improvements (such as green energy retrofits); tax breaks (including full exemptions and partial abatements); or mortgage write-downs (in which the government pays part of the upfront costs) to minimize future debt obligations.

Operating subsidies are agnostic: they are simply ways the government pays to maintain housing. They can be used to subsidize luxury developers and boost landlord profits (and today they frequently are), but they can also be used to make not-for-profit housing more deeply affordable and sustainable, while covering the real costs of housing operations. Social housing operating subsidies should be:

• Generous enough to cover the real costs of building operations and upkeep, including both physical maintenance and, in the case of supportive housing, social services;
   
• Structured to ensure housing access for people experiencing homelessnes, and people whose incomes otherwise make housing precarious;
   
• As easy as possible to use and access, with minimal administrative burdens, exclusions or barriers to entry.

Good Cause

Nearly half of New York State’s tenants do not have the fundamental right to a lease renewal. This includes almost 784,000 tenants in New York City.

Providing tenants across the state with the universal right to a renewal lease, the monthly rent of which would be capped at a reasonable maximum increase, would go a long way toward expanding the opportunity for social housing conversions. This right — which is generally referred to as Good Cause Eviction Protection, or the Right to Remain — fundamentally shifts the balance of power between tenant and landlord. Without it, landlords can, in essence, evict a tenant at the end of their lease term, simply by denying them a new lease, or by offering one at an unaffordable rent level. This power imbalance makes organizing in any rental housing without good cause eviction protection nearly impossible, because of the looming threat of landlord retribution.

A statewide Good Cause law would work with existing tenant protections to create the conditions for tenants to organize in their buildings, to limit speculation in rental buildings not covered by HSTPA, making it easier for tenant unions, localities, and nonprofits to pursue social housing conversions. Despite significant grassroots support, New York State legislators failed to pass statewide Good Cause Eviction Protection in 2022.

Conclusion

The bills under consideration today could all act as pathways to social housing in New York City – by preserving public land for the public good, by offering communities the opportunity to purchase and steward multi-family housing, by creating a public entity to hold land and property and facilitate social housing conversions, by strengthening tenants’ rights, and by expanding funding sources for low-income housing. There is much more work to be done to grow New York’s social housing sector, but the bills under consideration today are strong steps down that pathway.

Issues Covered

Affordable Housing