As supply constraints and rising development and construction costs drive market-rate rents higher at the same time incomes remain stagnant, municipal and industry concerns continue to grow over rental housing affordability. While many major metropolitan areas are struggling with the same issues, in New York, one of the most expensive cities in the world, rental affordability is in the spotlight.
To help address the city's growing need for more affordable housing units, Mayor Bill de Blasio put in place a progressive if not historic plan to add 200,000 affordable units to the city's stock over the next decade.
"This is the most ambitious housing plan in the nation," said Gary Rodney, president of the New York City Housing Development Corporation, during a presentation at the 2015 NMHC Spring Board of Directors Meeting.
Underscoring the need for a formal plan is the fact that the city continues to attract new residents. New York City's population is expected to continue to grow by 600,000 over the next decade plus, stressing the current stock. At the same time, 55 percent of New York City renter households are rent burdened, spending more than 30 percent of their income on rent. Of those households, 30 percent are extremely rent burdened, spending more than 50 percent of their income on rent.
While some question the achievability of the ambitious goal, the city is already reaching early milestones, said Rodney. In 2014, 17,376 affordable units were delivered. While a good portion were legacy units moving through the pipeline, Rodney said he estimated the new program was specifically responsible for closing 8,000 units since June 2014. By the end of 2015, Rodney said he expected that number to grow to 16,000 units.
Preservation will be a key strategy in reaching the program goals, said Rodney, indicating that the city estimated that 60 percent of the units are expected to come from the preservation and rehab of existing unit stock.
In addition, the city is making sustainability a key part of the rehab and preservation efforts and looking to provide housing that will reach a broader range of New Yorkers by increasing income diversity.
But as Rodney explained, “Writing a plan is one thing, but financing it is another. ... This is what keeps me up at night.”
To address financing issues, the city is working to refine its financing tools and expand funding sources. In particular, the city has been working on a new bifurcated financing approach, where low-income portions of a development are split out and financed with tax exempt bonds. Moreover, the city is advocating for changes to the low-income housing tax credit (LIHTC) program that would use average income qualifications to make the program more flexible.
Get more details on the program by viewing the presentation here.