Residential development in New York City stands to get another boost—or bailout, depending on one’s perspective—from Washington, as a bill Tuesday afternoon passed the U.S. House that would have the federal government back more loans to construct new apartment buildings.
The bill, sponsored by Brooklyn Congressman Anthony Weiner, came at the urging of many real estate industry groups, who have been loudly grousing about the lack of credit for well over a year, a drought that has put a halt to new construction.
“The banks are simply not doing what we want them to do,” Mr. Weiner said on the House floor Tuesday. “This is a way to make housing programs reflect what is truly going on in the marketplace.”
Under the legislation, the Federal Housing Administration would effectively act as the backer of substantially more debt for new multi-family buildings with elevators (which generally only appear in urban areas), raising the available debt guarantee from about $250,000 per unit to about $375,000 per unit. This is done by steering an additional $3 billion annually in these guarantees.
Urban policy wonks and elected officials from cities have long complained that federal policy on housing, transportation and other areas is geared toward suburbs and rural areas, ignoring problems in cities. Federal policy, so the argument goes, favors construction of single-family homes and doesn’t take into account some of the challenges cities face (such as higher costs of housing, construction and real estate), giving cities the short end of the stick.
New York, of course, stands to benefit most from any change that favors cities, and with this particular piece of legislation, according to Mr. Weiner’s office, the city is expected to see up to 2,088 new units of construction sparked, with an estimated 11,000 new units estimated nationwide.
The real estate industry, which urged the legislation, was pleased to get the help.
“It’s very important; we did support it,” said Steven Spinola, president of the Real Estate Board of New York. Mr. Spinola said he thought the bill had a good chance of passing the Senate.