Opinion: Keep it simple and keep adding to NY’s housing stock
rsinclair.substack.com
One of the reasons the 421A tax abatement was allowed to expire on June 15th is because there was disagreement over how much authentic affordable housing the tax subsidy for new development was delivering to a housing-starved NY. Policy makers, tenants, and housing providers all want affordable housing. But beyond that broad position, it’s hard to find alignment across these groups. Some key questions to answer:
· What determines if a unit falls under affordable housing?
· How much affordable housing is needed?
· How can NY get closer to those goals?
Does a rental unit become “affordable” if its rent is beneath a certain threshold?
According to the way the tax abatements are written in NY, the answer seems to be yes. New multifamily developments will rent ‘affordable’ apartments with rents that correspond to what is affordable for families at various income thresholds, also known as Area Media Incomes (AMI). The hotly debated 915-unit multifamily development One45, was shot down because Kristin Richardson Jordan, the City Council member representing the area, claimed it wasn’t affordable enough – that AMI levels for the majority of the units were above the median income of the tenants in the neighborhood. The table below shows various affordable levels for the property, 125% AMI meaning higher income tenants and 30% AMI indicated very low-income levels.
Source: Kristin Richardson Jordan’s table depicting the prospective unit mix in One45, relative affordable and non-affordable units
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In her rejection of the 3rd proposal of the project, Jordan declared that 255 units (28% of the total units) were at 50% of AMI and that this was not affordable for residents in East Harlem, where the tower is being built.
Let’s say 50% AMI is not affordable. If that premise is accepted for a moment, that leaves 112 units out of 915, or approx. 12% of apartments that could be considered affordable, per Jordan’s language. Okay – but the tower got denied so it wasn’t affordable enough. How can we wrap our heads around this?
Reject the premise outright. 50% AMI is affordable. Jordan is wrong.
Fair point. But this doesn’t help get new projects built. We want to find out a solution that works for developers and policy makers and is less open to interpretation.
Figure out what % of a building needs to be affordable for the building to get approval.
This seems like a good approach to triangulate on how to define something as affordable. As-of-right tax abatement buildings have this include in their charters but special variances throw everything up to interpretation.
Admit that no one is happy, and things will be imperfect, but focus on pros of development versus pros of doing nothing.
I think this makes the most sense in this situation. Let’s look more closely at this.
Developers want greater profits and tenant advocates always want lower rents (and less profitability) – but, is the proposed project better objectively for developer and tenant than what existed in its place before? In this case One45 would have exclusively replaced some old retail, a non-profit office, and two gas stations. In other words, 915 apartments units would have been a net gain of apartments in NY since no apartments would have been knocked down to facilitate the new ones. Further, 112 would have been a net gain of “affordable units” if defined as 30% AMI. Further, much of the retail could be replaced in the two 363-foot towers- there were agreements in place to provide the non-profit space in the building.
Should the AMI levels and the required number of affordable apartments be clearly outlined for all new projects?
This is actually already the case today, per the 421A tax abatement guide book. That said, if you’ve been reading the news closely, this project was requesting a zoning variance since some of the parcels exist on commercially zoned land (C8-3). Right now, the way it works, for each variance and special zoning that is approved, the city council will have the opportunity to insert themselves in the conversation and apply uneven, non-standardized affordability requirements.
It may seem difficult to decide what level of AMI is defined as affordable and what % of a building needs to meet that AMI level, but maybe it’s a simpler question. Perhaps we boil it down to brass tacks. Some multifamily projects are negatively contributing to growth of apartments units in NYC, like the luxury tower on 75th street and 3rd avenue. The new project will see rise an 18-story apartment tower with 38 units taking the place of the 43 units that exist there today. One45, on the other hand, promised to only add to the housing stock. The project would have replaced a handful of stores and gas stations, while it could have given housing to thousands of tenants across income levels and lightly relieved the huge upward pressure that exists on the NYC rental market.
How about a new policy: does the project add to the total number of apartment units in NY? Approve it
Opinion: Keep it simple and keep adding to NY’s housing stock
Opinion: Keep it simple and keep adding to NY’s housing stock
Opinion: Keep it simple and keep adding to NY’s housing stock
One of the reasons the 421A tax abatement was allowed to expire on June 15th is because there was disagreement over how much authentic affordable housing the tax subsidy for new development was delivering to a housing-starved NY. Policy makers, tenants, and housing providers all want affordable housing. But beyond that broad position, it’s hard to find alignment across these groups. Some key questions to answer:
· What determines if a unit falls under affordable housing?
· How much affordable housing is needed?
· How can NY get closer to those goals?
Does a rental unit become “affordable” if its rent is beneath a certain threshold?
According to the way the tax abatements are written in NY, the answer seems to be yes. New multifamily developments will rent ‘affordable’ apartments with rents that correspond to what is affordable for families at various income thresholds, also known as Area Media Incomes (AMI). The hotly debated 915-unit multifamily development One45, was shot down because Kristin Richardson Jordan, the City Council member representing the area, claimed it wasn’t affordable enough – that AMI levels for the majority of the units were above the median income of the tenants in the neighborhood. The table below shows various affordable levels for the property, 125% AMI meaning higher income tenants and 30% AMI indicated very low-income levels.
Source: Kristin Richardson Jordan’s table depicting the prospective unit mix in One45, relative affordable and non-affordable units
Thanks for reading Romain’s Newsletter! Subscribe for free to receive new posts and support my work.
In her rejection of the 3rd proposal of the project, Jordan declared that 255 units (28% of the total units) were at 50% of AMI and that this was not affordable for residents in East Harlem, where the tower is being built.
Let’s say 50% AMI is not affordable. If that premise is accepted for a moment, that leaves 112 units out of 915, or approx. 12% of apartments that could be considered affordable, per Jordan’s language. Okay – but the tower got denied so it wasn’t affordable enough. How can we wrap our heads around this?
Reject the premise outright. 50% AMI is affordable. Jordan is wrong.
Fair point. But this doesn’t help get new projects built. We want to find out a solution that works for developers and policy makers and is less open to interpretation.
Figure out what % of a building needs to be affordable for the building to get approval.
This seems like a good approach to triangulate on how to define something as affordable. As-of-right tax abatement buildings have this include in their charters but special variances throw everything up to interpretation.
Admit that no one is happy, and things will be imperfect, but focus on pros of development versus pros of doing nothing.
I think this makes the most sense in this situation. Let’s look more closely at this.
Developers want greater profits and tenant advocates always want lower rents (and less profitability) – but, is the proposed project better objectively for developer and tenant than what existed in its place before? In this case One45 would have exclusively replaced some old retail, a non-profit office, and two gas stations. In other words, 915 apartments units would have been a net gain of apartments in NY since no apartments would have been knocked down to facilitate the new ones. Further, 112 would have been a net gain of “affordable units” if defined as 30% AMI. Further, much of the retail could be replaced in the two 363-foot towers- there were agreements in place to provide the non-profit space in the building.
Should the AMI levels and the required number of affordable apartments be clearly outlined for all new projects?
This is actually already the case today, per the 421A tax abatement guide book. That said, if you’ve been reading the news closely, this project was requesting a zoning variance since some of the parcels exist on commercially zoned land (C8-3). Right now, the way it works, for each variance and special zoning that is approved, the city council will have the opportunity to insert themselves in the conversation and apply uneven, non-standardized affordability requirements.
It may seem difficult to decide what level of AMI is defined as affordable and what % of a building needs to meet that AMI level, but maybe it’s a simpler question. Perhaps we boil it down to brass tacks. Some multifamily projects are negatively contributing to growth of apartments units in NYC, like the luxury tower on 75th street and 3rd avenue. The new project will see rise an 18-story apartment tower with 38 units taking the place of the 43 units that exist there today. One45, on the other hand, promised to only add to the housing stock. The project would have replaced a handful of stores and gas stations, while it could have given housing to thousands of tenants across income levels and lightly relieved the huge upward pressure that exists on the NYC rental market.
How about a new policy: does the project add to the total number of apartment units in NY? Approve it
Sources: The Real Deal, Curbed.com