Bloomberg Casually Tweaks Affordable-Housing Ambitions; Thompson Offers Little Pushback

The largest change in the current plan, which runs an extra year to 2014, is a shift toward preservation, away from the creation of new subsidized housing, which is more expensive (there were significant capital budget cuts made for housing) and significantly harder to undertake these days, with lending having dried up. The preservation of units typically takes the form of extending tax breaks or other benefits in exchange for a commitment by landlords to keep their rents at below-market rate levels for more time (often 10 or 15 years).

Under the 2005 plan, the Bloomberg administration sought to build 92,000 new units and preserve 73,000. Now the plan will be essentially flipped, as the new construction component has fallen well short of its goals. The initial plan seemed to assume that the market was going to stay hot for years, with the number of subsidized apartments being built in the second half of the plan exploding. Instead, the number has fallen: The city expects under 3,500 apartments to be built this year, down from 6,826 two years ago.

Instead, the city will turn again to what worked so well in the first half of the plan–extending tax credits on buildings like Mitchell Lama middle-income housing developments, so that their rents remain regulated for some time to come.

In addition, there is a significant new emphasis on distressed properties: the plan calls for $750 million to go toward the stabilization of apartment buildings that are at risk of deterioration amid a restructuring. Many landlords bought mostly rent-stabilized apartment buildings in overleveraged deals that could lead to default, with either the existing owners or a financial institution to cut back on maintenance.

The plan puts up money for these buildings so that they can be restructured and sold relatively quickly, and some money for the city to acquire properties.

Related is a pledge to step up code enforcement, forcing landlords to maintain their properties or face fines or the loss of their properties. The Bloomberg administration wants City Council approval to be able to foreclose on a property when it has code violations, a bill that is under discussion, according to the Bloomberg campaign.

Bloomberg Casually Tweaks Affordable-Housing Ambitions; Thompson Offers Little Pushback