“We are facing some real challenges in a way that we’ve never faced them before,” said Bernie Carr, the executive director of an industry group, the New York State Association for Affordable Housing. “This is the first time that the financial markets have really been creating an issue for affordable housing.”
Already, the Bloomberg administration has stretched out its 10-year plan an extra year, now slated to be completed by 2014. The city has exceeded its targets for the preservation component, and the new production component, which was always expected to expand in the second half of the plan, is now expected to lag in the economy. As of this fall, HPD reported it had started 31,640 of the 91,637 new units outlined in the plan.
Housing advocates stress that a new emphasis is needed on adding affordability provisions as part of a response to the mortgage crisis, particularly with multifamily apartment buildings. Tens of thousands of apartments were bought in recent years by highly leveraged landlords who had optimistic assumptions about rents.
With rents no longer going up and credit markets sealed tight, mass defaults are anticipated. An October study by the Association for Neighborhood and Housing Development estimates that as many as 54,000 city units are in buildings purchased with financing at risk of default.
“Obviously, the response to the foreclosure crisis is going to remain critical and important,” said Brad Lander, executive director of the Pratt Center for Community Development. “We’ve got all those predatory equity things that are going to be financially failing, so in all of those cases, [the city will need to be] trying to figure out the right mix of policy and finance.”
To help alleviate default pressures, along with a slew of other constraints faced by the affordable-housing industry, developers and advocates are looking to Washington, which in some cases will mean looking once again to Mr. Donovan.
The Bloomberg administration, often led by Mr. Donovan, has advocated for a number of federal legislative changes that would put help below-market-rate housing production and preservation in New York, including changes to the Federal Section 8 program and an expansion of the use of tax-free bonds. Whether those advance under an Obama administration has yet to be seen, although Mr. Donovan would clearly have a role in reviewing some of the desired legislation.
Affordable developers and advocates also are pushing for changes to the Federal Low Income Housing Tax Credit to extend its reach.
The economy has also humbled other goals outside of the mayor’s affordable-housing plan. Council Speaker Christine Quinn last year announced an initiative to create middle-income housing on a large scale. But the task force scaled back its ambitions amid the economic collapse, multiple committee members said, and some discussion has been devoted to trading financial incentives for affordability provisions in financially distressed properties and partially built apartment buildings.
Deputy Mayor Robert Lieber declined to comment on housing policy going forward, other than to reaffirm, through a spokesman, the Bloomberg administration’s commitment to its housing plan.
“With the slowdown in the economy, we’ve stretched out the time frame, but we are as committed to achieving the full plan today as ever,” said Andrew Brent, the spokesman. “We’ll do it through prudent fiscal policy and the creative use of private-market financing. And when the market improves, we plan to be well positioned to take advantage of it.”
ebrown@observer.com
