Study: De Blasio Affordable Housing Mandate Proves Unsuccessful

Mandatory Inclusionary Housing has failed to keep pace with the city’s need for more housing

NEW YORK, NY — During his 2013 campaign, Mayor de Blasio focused intensely on his promise to increase New York’s supply of affordable housing. Over three years after the implementation of his signature affordable housing initiative, Mandatory Inclusionary Housing (MIH), a new Manhattan Institute study by adjunct fellow Eric Kober finds that the program has contributed little to meeting the mayor’s ambitious affordable housing goals. The vast majority of MIH units are in already low-income neighborhoods and supported by public subsidies, not developer contributions. At the same time, the program’s stringent affordability requirements have stymied potential new privately financed housing production in rezoned areas.

Under MIH, when neighborhoods are rezoned with increased density, developers have the opportunity to build—if they agree to make up to 30% of their units affordable. For this to make economic sense, market-rate units must have rents high enough effectively to subsidize the affordable units and qualify for tax exemptions. In reality, rezonings under MIH have been focused in weaker rental markets where public subsidies are necessary to make the program work. This means that, in comparison to former Mayor Bloomberg’s voluntary program (VIH), de Blasio’s MIH program has concentrated low-income housing in already low-income areas—rather than focus on mixed-income housing in neighborhoods where rents are rising the most.

According to Kober, a nearly 40-year veteran of the NYC Department of City Planning, the city’s current zoning rules do not allow enough housing to be built to alleviate its housing shortage, and MIH’s current design precludes the widespread rezoning necessary to mitigate this shortage. The report’s recommendations include:

• Rezone the residual manufacturing zones in Manhattan, Brooklyn, and Queens, where housing markets are strong, but no new housing is permitted. These include Soho, Noho, parts of Midtown South, Gowanus, East Williamsburg, and Long Island City.
• Take advantage of “middle market” potential in central and southern Brooklyn, where spare capacity on certain parts of the subway system provides substantial room to rezone for housing growth.
• Change MIH so that it will work for all types of housing, including conversions, small buildings, condominium buildings, and buildings that provide affordable housing off-site.
• The State Legislature should give the city flexibility to set tax exemptions in accordance with the needs of the MIH program.

Click here to read the full report.