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Commentary By Howard Husock

The Grim Price of De Blasio's 'Affordable Housing' Games

Cities, Cities Housing, New York City

Just a week after his re-election, Mayor Bill de Blasio has made clear he’ll continue to make “affordable” (i.e., subsidized) housing a signature issue. At a press conference in the Mount Eden section of the Bronx, the mayor announced the city was “preserving” the affordability of an apartment complex there — a step toward a promised increase from 200,000 to 300,000 units “created or preserved.”

About two-thirds will fall in the “preserved” category. But what appears to be a compassionate policy actually helps just a fortunate few at the expense of taxpayers generally and can contribute to neighborhood decline.

“It’s no wonder apartment turnover in New York is the lowest of the top 10 US cities and the typical tenant in public housing has been there more than 18 years. ”

The policy is less about “physical” preservation than keeping rents permanently low in buildings that have long been publicly subsidized but where the obligations of owners to offer low rents may expire.

To “preserve” the units, the city may provide direct subsidies or property tax abatements — or both. It’s an easy way for de Blasio to meet his housing goal, but it’s not a good use of city money.

Take the New Settlement apartments in the Bronx. The complex, run by the nonprofit United Neighborhood Houses, includes units in which the city has already had to invest fix-up funds, even though many of the apartments date only to 1990. In other words, nonprofit developers may not maintain their buildings any better than private owners. Consider this Yelp comment, for instance: “do not move into any new settlement apartment . . . ceiling has been leaking and the same area for 8 yrs !! . . . been waiting 5 hrs for hot water !!!”

Plus, the rents in privately owned buildings in the same neighborhood are actually at relatively comparable “affordable” levels even without subsidies. A May advertisement for a lottery for New Settlement units listed 15 two- and three-bedroom apartments ranging from $1,000 to $1,740 a month. But a check on the real estate website Trulia for the same Mount Eden neighborhood finds many market-rate two- and three-bedroom units available between $1,300 and $2,300. The most common two-bedroom rent advertised is $1,500.

This is what I’ve called NOAA — naturally occurring affordable housing. Amid the gentrification panic, we forget that New York has a lot of it. Nor can we assume that, absent intervention, every neighborhood will gentrify. There’s not an unlimited number of hipsters and investment bankers around. And city funds invested in a handful of buildings might be better used to keep the streets and parks safe and clean for the whole neighborhood.

Beyond that, there’s the effect on surrounding mom-and-pop landlords who have to compete with a landlord promising permanent affordability — and who also gets city funds to maintain the property and maybe a tax abatement. That creates an incentive for the sort of disinvestment that once plagued the Bronx: Landlords keep rents low by skimping on maintenance.

Then there’s what can be called the “frozen city” effect. If a major new employer wanted to open a manufacturing complex with high-paying jobs in Mount Eden, but needed to tear down the New Settlement complex (where de Blasio held his press conference), it would run into the city’s decades-long affordable housing “preservation” obligations. It’s the same problem posed by the city’s vast public housing system, with its 326 sites, including many on prime real estate.

““Affordable” housing may be a great backdrop for a press conference, but it distorts markets and inhibits change.”

Another problem with subsidized “preservation” occurs when households age in place with a guaranteed low rent. A household that starts off needing three bedrooms may later need only one — but still stay put thanks to the cheap rent. In contrast, suburban homeowners who face rising property taxes must make a hard choice about whether to downsize — and make way for younger newcomers.

In Gotham, tenants in literally millions of apartments (both rent-stabilized and public housing units) are buffered from such forces. It’s no wonder apartment turnover in New York is the lowest of the top 10 US cities and the typical tenant in public housing has been there more than 18 years.

“Affordable” housing may be a great backdrop for a press conference, but it distorts markets and inhibits change. De Blasio would do far better to make it easier and less expensive to build residences of all kinds and at all price levels. He may not believe it, but greater supply can really lead to lower prices. There was a time when that was true even in New York.

This piece originally appeared in the New York Post


Howard Husock is the Vice President of Research and Publications at the Manhattan Institute.

This piece originally appeared in New York Post