Mayor de Blasio wants to build and preserve 200,000 units of affordable housing in New York City over the next ten years, a feat that has not been accomplished by any of his predecessors. However, this monumental plan is off to a rough start with the proposed Astoria Cove project in Queens.
In what the Wall Street Journal is calling “the first major project he has shaped from its early stages,” the developers of the 1,700-unit waterfront complex are proposing to set aside only 17-20% of the total units to below-market rents, which is causing much uproar with the de Blasio Administration and affordable housing advocates who are calling on 50% of the units to be below-market.
A de Blasio aide was quoted saying the administration is still identifying all of its tools to properly execute the housing plan. It is evident that Mayor de Blasio still has no general plan for his affordable housing proposal and that each project, such as the Astoria Cove, will have to be negotiated individually in order to achieve a certain amount of affordable units in each development. Going forward, it will be interesting to see how these large developmental projects will be handled in order to achieve the Mayor’s goal.
The recent enactment of the lowest Rent Guideline increases in the 46-year history of the rent stabilization system has provoked an outpouring of media attention on an issue that is usually ignored but will likely remain in the public eye until next year’s guideline deliberations and expiration of the rent laws. Already, tenant groups are calling for rent freezes on both one-and two-year leases next year while the RSA has called on the Mayor to limit increases in real estate tax assessments and water and sewer rate increases to one percent, equal to the allowable increase for one-year leases.
The debate over allowable increases for rent stabilized apartments has spilled over into a broader debate about housing affordability, the Mayor’s affordable housing plan and who really deserves to get housing subsidies. Jim Epstein at Reason.com points out that “freeloaders of the past” are occupying more than their share of rent-controlled apartments including wealthy celebrities and their children, as well as New York elected officials. And while Mayor de Blasio’s goals of future and existing affordable housing is purportedly to assist lower-income tenants current “affordable” housing programs subsidize households earning up to $193,000 per year. But, as Bob Knakal points out in his Economics 101 primer in the Commercial Observer, part of the problem is that the rent stabilization system has no income eligibility criteria – getting a great deal is a matter of luck and perseverance.
Kyle Smith of the New York Post has a different opinion on the City’s existing and future affordable housing stock, saying that not everyone has the “God given right to live in NYC” and that the City rents are right where they should be. Smith also says that Mayor de Blasio’s song and dance regarding affordable housing in the City has been heard and seen before through former Mayors John Hylan, John Lindsay, Ed Koch, and most recently Michael Bloomberg. The one thing all of these former Mayors have had in common with their affordable housing plans, which were all intended to end the affordable housing crisis in New York City, is that the so-called crisis still has not been solved over the last 80 years. Hence, Smith questions the “largest and most ambitious affordable-housing program initiated by any city in this country in the history of the United States of America” by Mayor de Blasio. Yes, Mayor de Blasio could increase the affordable housing supply, but that does not make the most desirable neighborhoods throughout the City cheap to live in. One interesting statistic that Smith provides that shows that the rent is right around where it should be is that as of 2011, New Yorkers on average spent 32.5% of income on housing, below the nationwide average of 33.1%.
So with arguments on all sides of the affordable housing equation, the question arises of what actually defines affordable in a City filled with diverse neighborhoods. Moving forward in this Progressive era led by Mayor de Blasio, affordability will be defined every more broadly. Major housing developments are continuing to be built with the majority of the units in each building going for market rents for higher-income families and a varying percentage of units in each building being set aside for lower-income families (or middle-income families or upper middle-income families). As long as government plays an ever greater role in the City’s housing market, there will be an increasing clamor for subsidies for the poor, the middle class and the wealthy. And as government’s role becomes ever more pervasive in the housing market, the market’s distortions, misallocations and scarcity will also become more widespread.