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October 2006
Affordable Housing

New York City is losing affordable housing at an incredible rate.  Manhattan is fast becoming the borough of the rich as middle income and low income families are uprooted and leave.  The effect on the tone and character of the City is disastrous and felt everywhere. 

Mitchell Lama rental apartments are fast disappearing as landlords buy out the underlying mortgages.  Cooperative apartment buildings are opting to privatize.

The Department of Housing and Community Renewal continues to receive  numerous applications from landlords to demolish existing housing. The New York City Housing Authority (NYCHA) is keeping vacant apartments from the market.   There is increased gentrification of unregulated units in Harlem and in Queens.

Despite tax benefits to developers under 421A, new buildings are not affordable because they require incomes at 60% of the Average Median Income (AMI) rather than using 50% as a benchmark.  Private developers produce new buildings where 20% are reserved for low and  moderate income tenants in return for substantial tax breaks (the assessed value of the property before it was developed is maintained– for 10 to 25 years.)

Most of these lower-priced apartments were built off-site rather than as part of the original, more luxurious complexes. Mayor Bloomberg has endorsed changes recommended by his recently-appointed Task Force. These changes would limit the tax breaks available to developers who do not provide some affordable housing. They would also extend the exclusion zones and require market-rate developers in any exclusion zone to pay  full taxes unless they build affordable housing on site.

There are also things we can do! Unions can return to the housing market and construct affordable housing as they once did for their members. So, too, can non-profit organizations. Affordable Bond (Funds) can provide cash for low and middle income families to purchase homes/cooperative apartments.  An action plan to fight the termination of Section 8 vouchers could be designed and implemented.  Legal clinics can teach tenants how to exercise their rights.

Tenants Fight Back!

Tenant residents in Stuyvesant Town and Peter Cooper provide a good example!

The Metropolitan Life Insurance Company’s sale of Stuyvesant Town and Peter Cooper Village – its 23 acre middle income housing complex – represents the largest sale for a single American property in real estate history and the greatest threat to affordable housing – in theory and practice. Roughly 75% of the 11,200 apartments fall under the state’s rent regulation guidelines and rent for as little as one half the open market rate.  Mayor Bloomberg remained neutral throughout the sale, refusing to be involved in any way. 

Initially rejected as a bidder by Met Life, City Councilman Garodnick mobilized the tenants to bid to purchase the property, motivated by the desire to protect its historic use as a middle income enclave and to permanently protect affordable housing.  Civic, union and other non-profit organizations joined in the bid of $4.5 billion.

The tenant group recognized that its bid had to be credible while understanding that it would probably not be the highest.  It also recognized that Met Life had received every conceivable public subsidy when the development was constructed immediately after World War II  for returning veterans including a 25 year tax exemption. It hoped that a sense of civic duty would motivate Met Life to accept a competitive bid.

Ultimately losing to Tishman Speyer in the second round, the tenants remain as part of the dialogue, determined to protect their rights to affordable housing in a City which now hosts dwindling numbers of middle income residents.

The crisis generated by the lack of affordable housing extends far beyond New York City to embrace the entire metropolitan region. Only time will tell how the crisis is resolved - if at all!
 
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