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Old Posted May 5, 2014, 4:20 PM
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NEW YORK : De Blasio Unveils Affordable Housing Initiative

http://observer.com/2014/05/de-blasi...-housing-plan/

De Blasio Unveils ‘Most Ambitious’ Affordable Housing Plan in Nation





By Jill Colvin and Kim Velsey
05/05/14


Quote:
Mayor Bill de Blasio today unveiled a $41.1 billion affordable housing plan that city officials touted as the most ambitious in the city and nation’s history, and which aims to build and preserve 200,000 units of affordable housing over the next 10 years.

The plan, which Mr. de Blasio presented at a press conference in front of an affordable housing development construction site in Fort Greene, Brooklyn, aims to preserve 120,00 affordable units and build 80,000 new units over the next decade, with a focus on those at the bottom rungs of the economic ladder. The plan aims to increase the number of units available for families making less than around $40,000 a year by 200 percent, and boost the number available for moderate-income families making between $67,121 and $100,680 a year by 50 percent from previous levels.

“This plan, over the next 10 years, will create opportunity for so many people who are currently being priced out of our city. It will create affordability in the midst of what has been the greatest affordability crisis this city has ever experienced,” said Mr. de Blasio, as jack hammers blared in the distance.

“This is literally the largest and most ambitious affordable housing program initiated by any city in this country in the history of the United States of America. It is the largest, fastest affordable housing plan ever attempted at a local level,” he added, promising to “change the face of this city forever.”

While many of the details of the plan were vague or left to be determined, City Hall intends to focus extensively on mandatory inclusive zoning, which forces developers to build affordable units in new developments—but officials said that the proportions would be determined on a zone-by-zone basis over the years to come.

As part of the plan to encourage affordable development, the city also plans to initiate at least 10 new rezonings in the coming years.

“We’re going to take a very hard look at neighborhoods where we can upzone,” said Deputy Mayor for Housing and Development Alicia Glen.


Advocated had hoped to see the de Blasio administration move from the 80 percent market rate and 20 percent affordability rate ratio that became the standard voluntary rate during the Bloomberg era, with some eager to see a 50-50 split. But officials insisted that they would take a case-by-case approach instead of setting city or even borough-wide standards.

The city’s planning chair, Carl Weisbrod, said that the commission planned to launch “well over a dozen studies” on specific neighborhoods “immediately, literally right away.” East New York was identified by the administration as one of the potential places to accommodate denser development.

Brooklyn Borough President Eric Adams made clear the goal when he declared, “Build baby, build. Build tall, build high.”


The total $41.1 billion cost would include an $8.2 billion city investment in the form of funding, tax incentives, and other investments, with the rest paid for with state, federal and private funding.

Real Estate Board of New York President Steve Spinola hailed the plan in a statement this morning, saying that “It identifies the problems and provides a realistic roadmap for solutions.”
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Old Posted May 5, 2014, 4:34 PM
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http://observer.com/2014/05/de-blasi...-housing-plan/



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Mayor Bill de Blasio today laid out a 10-year plan to build or preserve 200,000 affordable apartments across all five boroughs—enough housing to serve more than a half-million New Yorkers. The $41 billion Housing New York: A Five-Borough, Ten-Year Plan is the most expansive and ambitious affordable housing agenda of its kind in the nation’s history, and Mayor de Blasio pledged it would reach New Yorkers ranging from those with very low incomes at the bottom of the economic ladder, all the way to those in the middle class facing ever-rising rents in their neighborhoods.

“We have a crisis of affordability on our hands. It touches everyone from the bottom of the economic ladder, all the way up to the middle class. And so we are marshaling every corner of government and the private sector in an unprecedented response,” said Mayor Bill de Blasio. “This plan thinks big – because it has to. The changes we are setting in motion today will reach a half-million New Yorkers, in every community, and from every walk of life. They will make our families and our city stronger.”

Housing New York outlines the broad principles and the specific policies City agencies will implement to reach Mayor de Blasio’s ambitious goal. The plan emphasizes:

•Unprecedented Scale: The plan calls for 200,000 affordable units over 10 years—120,000 preserved and 80,000 newly built.

•Affordability for a Wide Range of Incomes: Affordability programs will serve households ranging from middle- to extremely low-income (under $25,150 for a family of four).

•Proactive and Strategic Preservation of Existing Affordability: Agencies will use every tool at their disposal to protect tenants in both subsidized affordable housing and rent-regulated housing from the tide of deregulation, and to combat neglect and disrepair that threatens many affordable buildings.

•New Opportunities for Growth and Density: The City will undertake ground-up neighborhood planning to identify corridors and communities with opportunities for more housing (both affordable and market), and coordinate greater density with necessary infrastructure.

•Quality Jobs: Approximately 194,000 construction jobs and nearly 7,100 permanent jobs will be generated by the housing plan, and the City will work with stakeholders to make sure they are quality jobs and integrated into the City’s workforce development ecosystem.

•Fewer Unnecessary Barriers and Delays: The City will streamline the development process and help to contain construction costs by overhauling outdated regulations and removing duplicative agency processes.



Quote:
Implementing Mandatory Inclusionary Zoning:

In all rezonings that substantially increase potential housing capacity, the City will require a portion of the new housing developed to be permanently affordable to low- or moderate-income households in order to ensure diverse and inclusive communities. The Department of City Planning, working with the Department of Housing Preservation and Development, will initiate and expedite the completion of a study to provide the foundation for incorporating a mandatory Inclusionary Housing Program into the Zoning Resolution.

Spurring Development of Small, Vacant Sites:

The City will launch two new programs to redevelop hundreds of vacant sites and build thousands of new units: the Neighborhood Construction Program and the New Infill Homeownership Opportunities Program. These programs will aggregate sites to develop affordable housing, including one- to four-family homeownership opportunities and up to 20-unit rental buildings. The programs will build capacity among smaller developers, local non-profits, and community development corporations to drive the projects.


READ more on the plan here...

http://www.nyc.gov/html/housing/pages/home/index.shtml
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Old Posted May 5, 2014, 4:38 PM
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This will be an epic war between the housing advocates and NIMBYs. I think it may actually tear apart the "progressive coalition" that brought DeBlasio to office.

But it's very, very good news for the city. The housing advocates have the public opinion, the mayor's office, the council president's office, and most top elected officials, and will win the battle.

And if you want 200,000 affordable units, you will need a even larger number of market rate units to help fund this.
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Old Posted May 5, 2014, 4:49 PM
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At first glance, the "build baby build" attitude seems right. Ultimately, to be successful this will need tons of "luxury" market rate stuff to subsidies the affordable component. It's going to create a donut in the new market, where many won't be able to afford either market rate or affordable housing. But, the new units will take some price pressure off the existing unit base, so everybody wins.

Longer term it would be nice to see the NYC subway extended to Northern NJ. Building up in places like Jersey City makes more sense than deep in eastern queens or Staten Island (although everywhere in the region needs to add more housing).
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Old Posted May 5, 2014, 6:06 PM
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I don't think the units are high enough. For a city such as this, with all of the demand, there should be more units ( In terms of those newly constructed). 80,000 seems a little on the low side for NYC. Especially over a 10 year period.
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Old Posted May 5, 2014, 6:20 PM
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DELETE political rant.
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Old Posted May 5, 2014, 7:20 PM
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This will make the new market rate units much more expensive, since they have to subsidize the affordable units.

Sounds like he's trying to make it a city of rich+subsidized, not a city for the middle.
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Old Posted May 5, 2014, 7:32 PM
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This will never work, good start I guess.
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Old Posted May 5, 2014, 8:01 PM
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Quote:
Originally Posted by mhays View Post
This will make the new market rate units much more expensive, since they have to subsidize the affordable units.

Sounds like he's trying to make it a city of rich+subsidized, not a city for the middle.
Maybe I'm being overly optimistic on this, but I think it is too early the draw that conclusion.

I think the devil is in the details on this one. It really depends on what the ratio of affordable housing is versus the added "upzoned" market rate housing. If the "net upzoning" is just for affordable housing, then yeah the plan is dead in the water. But, if the "affordable housing" is a political sweetener to allow a lot more market rate housing than is currently allowable, then I think that is a tradeoff worth making.

It is in some sense economically sub-optimal, but the NYC housing market is already driven more by zoning politics than free market economics. Yeah, the middle/upper middle class are the direct losers from affordable housing requirements, but if this allows a lot more market rate development than the status quo, they will ultimately benefit (even if it is mostly through less price pressure on older units).
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Old Posted May 5, 2014, 9:00 PM
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The details can grow/shrink the level of subsidy required, but they're still a subsidy paid for by the market-rate units.

Further, going tall typically means more construction cost per square foot, particularly with highrises. It can be worth it if rents are high enough. But rents need to be substantially higher with the burden of inclusionary zoning. The result is that supply won't happen until rent pressure is high enough. Market rents might need to reset higher to make this worthwhile, and that will apply to the entire market, not just the new units.

Inclusionary zoning has another big problem. The same dollars don't go as far as they would if, say, a housing non-profit got the same money. The onsite requirement suggests an emotional basis, not a desire to maximize housing.
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Old Posted May 5, 2014, 9:08 PM
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Quote:
Originally Posted by mhays View Post
Sounds like he's trying to make it a city of rich+subsidized, not a city for the middle.
Come on. It doesn't sound like he is literally "trying" to make New York a city of only the rich and the subsidized. Whether his announced plan will make that happen or not is certainly up for debate, but I think it is fair to assume he really is "trying" to make the city more affordable.

How would you make New York City more affordable for the middle class and working class?
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Old Posted May 5, 2014, 10:20 PM
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^^ Multifamily to replace aging single family homes in Bronx, Queens and outer Brooklyn; annex portions of Nassau county and redevelop all of the LIRR stops with 30 story towers.
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Old Posted May 5, 2014, 10:28 PM
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All good points, I share your concerns. But, hope/think they can be overcome if the plan is bullish enough on increasing market rate housing.

If we start with the proposition that loosening zoning, will increase supply and lower prices (relative to a hypothetical baseline) then in theory there is an "affordable housing" trade off to be made to allow the politics of this to work.


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Originally Posted by mhays View Post
The details can grow/shrink the level of subsidy required, but they're still a subsidy paid for by the market-rate units. .
Agreed, IZ is a cost that is passed on to either the developer or the buyers. In a way this is a stupid policy, "implicitly taxing" new housing construction to subsidize affordable housing. A better approach would be to use general taxes (or even a "historic district tax') to subsidize affordable housing. It's always a stupid policy to tax what you want more of "i.e. market rate housing". But unfortunately, I think the politics of this are too difficult. Therefore, I think a dumb tax (IZ mandates) is the least worse option. The affordable housing component makes the link to new more housing clearer to most people. But, yeah this needs lots of new market rate density to work.

Plus, developers in NYC are in some sense earning "monopoly rents" due to zoning rules limiting their competition and driving up aggregate land prices. They are selling units for well above their production + capital costs (i.e. economic profits are zero).
Need to dust off the old economics text books, but I believe one of the ideas behind removing supply constraints is that per unit producer profits will fall, but overall production will rise.
It’s more likely the most/all the cost of the IZ units is born by the developer rather than being passed along to the buyers. If this is eats into their “rents” then this won’t reduce construction overall.

Ultimately, this requires some careful calculus (which yeah, I’m not sure they have done. De Balsio is not always known for his pragmatism). You need something massively pro-market (a big increase in allowable development) to offset a minor anti-market policy (IZ). If the scales aren’t right (too little new development or too much IZ), the whole thing will collapse.


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Originally Posted by mhays View Post
Further, going tall typically means more construction cost per square foot, particularly with highrises. It can be worth it if rents are high enough. But rents need to be substantially higher with the burden of inclusionary zoning. The result is that supply won't happen until rent pressure is high enough. Market rents might need to reset higher to make this worthwhile, and that will apply to the entire market, not just the new units. .
This is something I’m curious about as well.
I know construction costs psf rises as height increases, but how much does it rise going from say 3-stories to 5-stories or 15-stories to 20-stories? 20-stories to 40-stories? A big part of NYC real estate prices is due to land prices (which fall per sf of development). It seems there could be a happy medium, where psf construction costs rise or stay the same, while land costs psf fall.

Quote:
Originally Posted by mhays View Post
Inclusionary zoning has another big problem. The same dollars don't go as far as they would if, say, a housing non-profit got the same money. The onsite requirement suggests an emotional basis, not a desire to maximize housing.
100% agree. Mandating affordable housing is super-lux buildings is the height of inefficiency. I believe SF has a trade off policy that allows developers to donate money in leu of new units on site. Hope that is included here.
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Old Posted May 5, 2014, 10:35 PM
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Originally Posted by jpdivola View Post
I believe SF has a trade off policy, that allows developers to donate money in leu of new units on site. Hope that is included here.
Yes, developers can (and almost always do) choose to do that here. I'm sure they would do so in NYC as well, if given the opportunity.
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Old Posted May 6, 2014, 12:13 AM
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Originally Posted by fflint View Post
Come on. It doesn't sound like he is literally "trying" to make New York a city of only the rich and the subsidized. Whether his announced plan will make that happen or not is certainly up for debate, but I think it is fair to assume he really is "trying" to make the city more affordable.

How would you make New York City more affordable for the middle class and working class?
That's just semantics.

I'd allow supply to be added much more easily, which would address the market-rate segment at all levels directly or indirectly. And I'd put the whole city to work supporting low-income housing, via a fair method like property taxes.

Here's the key: Don't disincentivize the very thing you need most.
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Old Posted May 6, 2014, 12:26 AM
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I'm not an expert in construction costs (though I sit next to several), but here are some themes. When you switch from woodframe to concrete the structural cost skyrockets. At 85' you're out of the reach of fire ladders so fire standards go higher. As a highrise gets taller egress standards rise. Also, with a taller building, you're generally devoting a larger percentage of each floorplate to structure and systems.

If you switch from short and squat to a skinnier and taller building, you're also adding a ton of exterior square footage and elevator/stair space per interior square foot. That may be fine if your goal is high rents.
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Old Posted May 6, 2014, 12:34 AM
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Excellent Excellent News!! The Plan is far from perfect, but it's an excellent start and it gets the discussion going. De Blasio is on the right track.

mhays, the subsidizing of the affordable units is only one component of the plan. Are you not excited about the other elements: reducing of regulatory burdens, relaxing minimum parking requirements around transit centers (which will reduce construction costs), the encouragement of development on vacant and underutilized city-owned and privately-owned lots.

The city is contributing funding, hiring more planners, and encouraging its housing finance agency to generate billions for housing in the terms of bond sales.
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Old Posted May 6, 2014, 1:25 AM
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Originally Posted by Capsule F View Post
This will never work, good start I guess.
It's already working, and most of the plan isn't being implemented yet. But let the critics sit back and watch. They will complain, "its too ambitious, its not big enough, the towers will be too big, the city is already overdeveloped, we don't need more condos, we don't need taller towers, blah-blah-blah."

Meanwhile, the city will go on building, and far more residents than otherwise would have (half a mil by estimates) will benefit from it.



http://www.nytimes.com/2014/05/06/up...hpw&rref=&_r=0

Bill de Blasio Shows Liberals Can Be Pro-Development



http://static01.nyt.com/images/2014/...superJumbo.jpg


MAY 5, 2014
Joseph Baro


Quote:
Last year, I predicted that Bill de Blasio would be “New York’s most pro-development mayor in decades.” The affordable housing plan Mr. de Blasio released Monday is a step in that direction.

Mr. de Blasio’s plan contains a lot of traditional left-wing approaches to housing affordability. He wants to require developers who benefit from upzonings — zoning changes that allow for denser development — to set aside a fraction of units for rent-restricted affordable housing; he wants to use a set of carrots and sticks to discourage building owners from taking their buildings out of existing rent-regulation programs.

But the plan also reflects a recognition that housing is a market good, and if you want the supply to increase, you need to make it cheaper and easier to build. As Deputy Mayor Alicia Glen put it in a speech last week, “To become a more affordable city, we must become a denser city.” To that end, Mr. de Blasio’s plan includes at least nine significant proposals, many involving deregulation, that aim to get developers to build more and build denser.

1. By pledging that “in all rezonings that substantially increase potential housing capacity, the City will require a portion of the new housing developed to be permanently affordable to low- or moderate-income households,” Mr. De Blasio signals that he intends to seek further rezonings that substantially increase potential housing capacity.

2. He gives us some idea how he might achieve those rezonings by calling for repeal of a state law that limits residential buildings to a “floor area ratio” of 12. That law means you can’t have more than 12 square feet of residential building area per square foot of land area. Mr. de Blasio would instead have the city set its own such limits through the zoning process. Currently, the city allows a ratio of up to 18 for office buildings in the densest parts of Manhattan. Mr. de Blasio hasn’t proposed a specific limit for residences, but if the city copied its practice for office buildings, it could allow up to 50 percent more residential development on high-density sites — which would give the city something very valuable to offer developers in exchange for building affordable housing.

3. He proposes to use tax policy to discourage property owners from keeping their land vacant or their buildings underoccupied.

4. He calls for a relaxation of minimum parking requirements for affordable housing development in certain areas of the city, noting: “Where parking is built for affordable housing, spaces often go unused. The construction of unnecessary parking spots increases construction costs and may deter development or reduce the number of affordable units that can be produced.”

5. He’d change setback requirements (rules about how far away from the street a building wall must be to reach a given height) in order to increase the effective amount of building area that is allowed on a given site. Over the last few decades, developers have shifted toward taller ceiling heights, which has meant that the existing setback rules effectively allow for less floor space than they used to.

6. He’d make it easier to build on vacant land within “Tower-in-the-Park” style developments, which consist of buildings set far back from the street and surrounded by open space, for example, Stuyvesant Town. Much of that space often consists of parking lots rather than parkland, yet in many cases current zoning rules require the space to remain unbuilt.

7. He wants to expand the use of transferable development rights, which allow owners of underbuilt land to sell their excess rights to other landowners.

8. He’d make it easier to convert obsolete nonresidential buildings to residential use, even where those buildings would not meet residential zoning requirements if built new.

9. He makes a variety of proposals aimed at reducing New York’s unusually high cost of construction.

The plan is still rough and requires approval by the City Council and in some cases the State Legislature. But if Mr. de Blasio gets his way on these proposals, his legacy may be a much larger boom in construction than was seen under Mayor Michael Bloomberg. His plan notes: “Although the City’s current housing stock of approximately 3.4 million units is the largest it has ever been, recent additions to the stock have not been sufficient to accommodate the growth in demand.”

Any policy agenda that effectively addresses that gap will require Mr. de Blasio to preside over a great boom in construction.
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Old Posted May 6, 2014, 1:40 AM
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Good to see NYC leading the way on this, yet again.
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Old Posted May 6, 2014, 1:40 AM
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A few graphics from the rollout...


























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