Will Affordable Housing Plan Leave Middle Class New Yorkers Out in the Cold?

The Atlantic Terrace in Fort Greene has 80 mixed-income units, 59 of which were subsidized for low, moderate and middle-income New Yorkers. Photo courtesy of the Fifth Avenue Committee.

Sanjit De Silva, 35, won the lottery last year. Instead of a large payout, however, his prize was a new mortgage. He was one of more than 5,000 people who entered a Housing Development Corporation lottery to purchase one of 59 subsidized units in Atlantic Terrace, a mixed-income housing development in the Fort Greene section of Brooklyn. De Silva, an actor, said he couldn’t have been more surprised if he’d won the actual lottery.

“We just never thought we’d be able to buy a place in the city, in our favorite neighborhood,” he said. “When our number came up it was a miracle, actually.”

De Silva and his wife, who works for the nonprofit Teach for America, would be considered middle class anywhere else in the country. However, their salaries did not go far  in their Brooklyn neighborhood, where two bedrooms regularly sell for $700,000 or more. Through the lottery, they purchased a two-bedroom apartment well below the market rate. Units in the building go for $84,000 to $325,000, depending on the size of the apartment and the income of the buyer. While he has always loved Fort Greene, De Silva said becoming a homeowner changed his perspective.

“As soon as we bought this place we felt rooted. Before that we could just go,” De Silva said. “Now, this is home. This is where we will spend our time, our money and our effort.”

The housing that we’re losing is more affordable than the housing that we’re creating.

De Silva is one of 500,000 New Yorkers that the city estimated will benefit from Mayor Bloomberg’s New Housing Marketplace plan. The program started in 2003 and seeks to preserve or create 165,000 units of affordable housing in the city by 2014. The program, which is overseen by the Department of Housing Preservation and Development, is on track to meet this over-all target with 141,000 units started so far. However,  a recent report from the Independent Budget Office suggests that the number of units that have been created for moderate and middle income New Yorkers lags far behind the original goal.  Without a significant shift in focus in the next three years of the program, the report said, moderate and middle income New Yorkers may be left out in the cold.

Mayor Bloomberg first introduced the New Housing Marketplace plan in 2002. At the time, more than 40 percent of New Yorkers spent more than 35 percent of their incomes on housing, a position that the U.S. Department of Housing and Urban Development considers cost-burdened.

The original goal was to create or preserve 65,000 units of affordable housing by subsidizing or incentivizing new construction and rehabilitating existing affordable housing. In 2005, Bloomberg optimistically reset the goal, stating the city would create or preserve 165,000 affordable units by the end of 2014 with a $7.5 billion investment from the city.

One notable aspect of the mayor’s plan was its focus on creating more housing for moderate and middle income families, something few past programs have addressed. This category includes, but is not limited to, people living on $58,000 a year as individuals, or up to $145,000 a year for a family of four.

“We want to retain a large and varied workforce in the city,” said Ruth Anne Visnauskas, a deputy commissioner for the Department of Housing Preservation and Development (HPD). “Having affordable housing for the firefighters, the teachers, the nurses — people who might not be at the lowest income levels but are still priced out of the market — is important.”

The lobby at Atlantic Terrace in Fort Greene, Brooklyn. Photo courtesy of the Fifth Avenue Committee.

According to the NYC Movers Study, an internal report compiled by the mayor’s office in 2006, the lack of affordable housing was driving middle class people out of the city. The high cost of housing was the number one reason people were leaving the city: sixty-four percent of those surveyed gave it as their reason for moving.

Experts say that the problem has persisted. In the first quarter of 2012,  The Nationwide Housing Affordability Index ranked New York as the least affordable place for home buyers. Only 31.5 percent of homes in the New York metropolitan area were affordable for people making the median income, a number that would no doubt have been worse if only the city were studied. In other major metropolitan areas such as Los Angeles and Washington D.C., more than 50 percent of the housing stock was affordable to the average income earner.

“This is still a huge problem for New York,” said David Giles of the Center for an Urban Future. “Housing costs haven’t come down since then. I think it’s actually harder for middle class families now. “

A 2009 study by the Center for an Urban Future looked at the strain that housing costs were putting on middle class New Yorkers and argued that it was imperative for New York City to maintain a strong middle class.

“Middle class people are the ones who start small businesses, which employ many New Yorkers,” Giles said. “You need to make the city a place where people can build business and afford to stay here.”

The Bloomberg administration originally projected that 32 percent of the 165,000 units would be set aside for middle class New Yorkers. According to the IBO’s report, of the 124,400 that have been started so far, only 15 percent have been set aside for these groups. That amounts to about 18,600 units of affordable housing to date.

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Because of the economic downturn, new construction has been slower than expected. The HPD, which oversees the program, has shifted its focus from construction to the preservation of existing affordable units. Most of these units were created for and are currently occupied by low-income New Yorkers.

Deputy Commissioner Visnauskas acknowledged that the new construction, which is largely dependent on private investment, has slowed during the recession. She was unsure whether the goals for newly constructed and middle class affordable housing would be met by 2014, but highlighted the importance of preservation.

“There are a tremendous amount of Mitchell-Lama buildings and we’re eager to preserve those,” she said. “They come to us towards the end of their regulatory agreements and they are such a big source of affordable housing in these neighborhoods.”

While preserving this stock does help with overall affordability goals, it doesn’t create new options for moderate or middle class families. The HPD has since revised its goals and plans to devote 21 percent of the housing to moderate and middle income New Yorkers. The IBO predicts that there will need to be a serious shift for the HPD to meet even these numbers.

“Like goals for new construction, meeting this target will require a fairly significant change in the income mix of units started this fiscal year and in the next two years with a large uptick in the number moderate units,” the report said.

While creating or preserving almost 19,000 middle class  housing units is certainly an accomplishment, it has done little to balance the supply and demand. Neil Tilbury, a broker with Halstead Property, has worked on several affordable housing developments in both Harlem and Brooklyn. Tilbury said that there is a severe shortage of appropriate affordable housing for middle income New Yorkers. Over the years, the demand for the subsidized buildings has increased.

“People weren’t stampeding up Broadway to buy back then,” Tilbury said in reference to the first subsidized building he worked on in the late 90s. “We had 80 units and we didn’t sell them out through the lottery.”

Now it is a different story. For the Langston, the most recent building Tilbury worked on in Harlem, there were 9,000 applications for a lottery that would fill 120 units.

“There is intense competition with such limited availability,” he said.

A rendering of a residential building at Hunter's Point South, a development that will be affordable to middle income New Yorkers. Photo courtesy of the NYC Economic Development Corporation.

There are a few major developments in the works that could help the city meet the plan’s revised goals for middle class housing. Construction has already started on Phase I of Hunter’s Point South in Long Island City, Queens. The middle-income housing development is expected to produce 5,000 new units of housing with 60 percent of those affordable for middle-income earners. Phase I is scheduled to be completed in 2014. A long-delayed development project at Atlantic Yards also seems to finally be moving forward. The project is expected to create 2,250 units of affordable housing in the next few years.

Even if the New Housing Marketplace plan fulfills all of its goals, some housing advocates say that it will not be enough. Thanks to changes in zoning, rent regulations and gentrification pressures, the city is losing affordable housing at a much faster rate than it can create it, they say. Michelle de la Uz is the executive director of the Fifth Avenue Committee, a nonprofit that manages affordable housing developments in Brooklyn, including Atlantic Terrace. De la Uz appreciates the investment the city is making, but wants to see other changes.

“New York City has made the biggest investment in affordable housing of any city, which is commendable,” de la Uz said. “But the truth is that we’re still losing affordable housing and the housing that we’re losing is more affordable than the housing that we’re creating.”

De la Uz pointed to several instances in Park Slope where up zoning has caused a loss of affordable housing. She said that five-story buildings with affordable units have been torn down and replaced by 12-story buildings with only market-rate units. She would like to see New York City adopt a Mandatory Inclusionary Zoning, a policy that requires a percentage of any new residential construction to include permanently affordable housing. Currently, the city provides incentives to developers who offer affordable units, but it is not mandatory for developers to do so.

“It’s one thing that the city could do immediately that would result in more affordable units,” she said. “If we want New York to be a real city and not a museum piece, there have to be affordable places for people to live.”

For his part, Sanjit De Silva is happy that he and his family were some of the lucky ones who secured a much-coveted affordable apartment. However, he wishes such opportunities were more widely available.

“I know lots of teachers, artists, people who work for nonprofits,” he said. “They should have a chance to be home owners too. These are people who will help build their communities.”