State of the City speech proposals on affordable housing


The excerpt below only includes proposals from the State of the City address on affordable housing.  
These proposals, detailed more in the speech itself, include:

1. Building 40,000 new middle income affordable apartments ("affordable" not defined) on top of the 4,000 new units of low-income housing being built under Mayor Bloomberg's New Housing Marketplace Plan. Money for this will come from unused funds for other government programs.

2. Permanent Affordability Act (state law), so some of the new units remain permanently affordable.
3. Pilot program: cap real estate taxes at fixed percent of rental income for landlords who keep rents affordable. [ This recycles a big real estate proposal that even the Bloomberg administration rejected.] 
4. Overhaul the City's Housing Maintenance Code with steeper penalties and requirements.
5.  Distressed Housing Trust Fund  to buy overleveraged buildings (with over-high mortgages) in bulk, then rehab and sell them to better private owners. 

MISSING from the proposals is any way to stem the hemorrhage of affordable housing - lost through vacancy destabilization.  

Aside from the first proposal, the City may end up with subsidies for wealthy landlords with getting much more affordable housing. 

[Note: the titles, bold face, colors, and large type below were added here]


. . . . And we must finally start to address the costs that make New York such an expensive place to live. Simply put, we face an affordability crisis in our city and it cuts right at the fabric of New York. We need to make sure that the people who want to stay in our great city can afford to stay here. We have no greater challenge or obligation to the families we represent than to tackle this problem head on and deliver results. The future of our city depends on it.
It comes as no surprise to any New Yorker that affordable housing is at the heart of this crisis. . . . .  
So today I’m going to outline a four-part plan to make housing in New York City more affordable.

1. BUILD HOUSING AFFORDABLE TO LOW-INCOME TENANTS.  First, and most importantly, I’m proposing the biggest commitment to middle class affordability that this city has seen in two generations. I have a plan to build 40,000 new middle income affordable apartments over the next ten years. That’s quadruple the current rate of middle class housing construction. And I want to thank Council Members Comrie and Dickens for working with us to develop this proposal. Our plan will be by far the single largest middle class housing program since Mitchell-Lama. And we’re going to layer it on top of the roughly 4,000 new units of low income housing being produced every year through Mayor Bloomberg’s New Housing Marketplace Plan. We’re not going to reduce that commitment to working class housing by a single red cent. My plan will build on it and strengthen it. Make no mistake - this will require increased financial commitment from the city. We will do this in three different ways.

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One - Government efficiencies.  The Council and the Bloomberg administration have undergone an effort to streamline the City’s back office operations. This has led to better management of our vehicle fleet that will save us over $40 million a year in the capital budget. Similarly, as we upgrade our information technology systems, we’ve begun to achieve concrete savings that will yield at least another $35 million a year. These savings will grow in future years as we better manage our real estate, consolidate office space, and reduce our energy bill.

Second, we need to use every tax payer dollar we allocate in the capital budget to grow New York City. We also need to start using our capital budget more efficiently. Believe it or not, for the last couple of years, the Parks Department has programmed $50 million a year for something called “miscellaneous capital projects” - money that it hasn't actually used. These kinds of idle funds exist in other agencies as well. If they’re not going to use them, then let’s put them to use where they will be used -- to build housing!

The third strategy is to borrow additional money. This is the right move at the right time. Interest rates and federal mortgage rates are both at an all-time low, so we can stretch our development dollars even further. This is a once in a lifetime opportunity to invest in our middle class – and we’re not going to let it pass us by. We are also going to make sure we avoid the affordability mistakes we made in the past. Mitchell-Lama was a great program. It helped build over 100,000 middle-income rental apartments and co-ops in the 60s and 70s, at a time when most other programs could only be used to build low-income housing. The problem is, their affordability requirements were built to sunset after 20 years. More than 30,000 Mitchell-Lama units have already been lost, and more are being converted to market rent every day. Just imagine. You worked hard to find an affordable apartment, and spent decades making that apartment into a home. You raised a family, sent your children off to college. Now you’re ready to retire. And because your building lost its affordable protections, you find yourself forced out of the place you’ve called home, and priced out of a neighborhood you helped to build. This doesn’t just impact the families being displaced. It robs entire neighborhoods of the diversity that keeps them strong and vibrant.

So as the second part of our plan, I’m happy to announce that at our request, Senator Martin Golden and Assembly Member Keith Wright, Chair of the Housing Committee, have agreed to introduce the Permanent Affordability Act. [That bill is not yet on line. There is a different bill on affordable housing - a type of NYS housing trust fund - that may be of interest: Housing New York Program Act for the Twenty-First Century.]And we’ll be working with Council Members Brewer and Mendez to make sure it gets passed.

The Permanent Affordability Act will allow us to give building owners a new tax exemption, by capping their property taxes at a certain percent of their rental income. In exchange, we’ll require that they keep their units affordable. This bill will, for the first time ever, create permanent affordability for thousands of the new units that we’ll build under my middle class housing construction plan. And it will also be applied to existing units – thereby preserving affordable housing that we might otherwise have lost. We’ll have the power to renew this deal every thirty years, keeping homes affordable for as long as the buildings remain standing.

Now even if we stop the hemorrhaging of affordable apartments, some communities have already become all but out of reach for the middle class. Well let me be clear: we’re not giving up on these neighborhoods. I refuse to accept the notion that large portions of our city are destined to become a luxury only available to the wealthiest among us. Because it won’t stop with Manhattan. If we don’t reverse that trend, Park Slope and Carroll Gardens will be next, then Astoria and Long Island City, Throgs Neck and Saint George, and maybe one day the whole city.

3. PILOT PROGRAM: CAP REAL ESTATE TAXES TO % OF RENT ROLL FOR OWNERS WHO KEEP UNITS AFFORDABLE.  So the third part of our plan is an innovative new tool that will turn existing market rate housing into affordable units. And I want to recognize Council Members Vacca and Chin for their work on this proposal.
We are working with Assembly Speaker Sheldon Silver and Senator Martin Golden to introduce legislation in Albany that will allow us to create a pilot program in a few targeted neighborhoods. We’ll make this offer to building owners. You convert a number of units to affordable middle income housing. In exchange, we’ll cap your property taxes at a fixed percent of your building’s rental income, lowering and stabilizing your overall costs. It’s a win for them, a win for middle class renters, and a win for the City. This is how we retain economic diversity in neighborhoods that have become harder to reach for the middle class. We will not allow middle class families to get priced out of the neighborhoods they helped build. We will keep New York City what it has always been – a place where opportunity is given, not just to those who can afford to buy it, but to those willing to work for it. Now building or adding more affordable homes won’t solve all of our problems.

So the fourth and final part of our plan takes a variety of steps to make sure that all our city’s housing is good enough for people to want to live and raise their families there. We hear horror stories all the time: apartments that cost a lot for someone to rent but have fallen into disrepair. Leaky roofs, inadequate heat, and repairs that landlords simply refuse to make. How do we tell that teacher or construction worker to stay here – or move here – if we can’t guarantee that the money they’re paying for housing is money well spent? Families who worked hard have a right to a home they can be proud of - just like my grandparents in that apartment on Isham Street. That’s why over the last seven years this City Council has done more to crack down on bad landlords than any Council in New York City history. We passed the Safe Housing Act, which has already provided roof to cellar renovations in more than 1,000 of the city’s worst buildings. Our Tenant Protection Act for the first time gives tenants the power to sue their landlords for a pattern of harassment. And just last month we passed legislation giving HPD unprecedented power to hold bad landlords accountable. But fully dealing with serious housing violations requires digging even deeper. That’s why I’m proud to announce that working with Housing and Buildings Chair Dilan, we’re going to undertake the first top to bottom overhaul of the city’s Housing Maintenance Code since its creation. For 50 years we’ve been working with a housing code that doesn’t give us the right tools to force landlords to keep apartments in livable condition. It’s so inadequate, it doesn’t even recognize leaking pipes as a potential problem. So when HPD inspectors find water damage, the best they can do is issue a general violation saying the landlord needs to quote "keep the premises in good repair”. A landlord might decide to hire a team of professionals to fix the pipe and repair the plaster. Or he might just buy a can of white paint and cover up the damage, only to see the leak come back in a week or a month. Either way, he’s brought the apartment up to code, and doesn’t have to worry about paying a fine. How are we ever going to solve this housing crisis if for every affordable unit we create, another one becomes uninhabitable? So when we update the housing code, we’re going to give building inspectors the power to tell landlords exactly what a problem is, and exactly how it needs to be corrected. And we’ll create new penalties for repeat violations - so if you keep trying to get away with a quick fix, you pay the price. We’ll open up more middle class housing, just by forcing landlords to do their jobs. Contrary to what you might think, this idea is supported by both tenant advocates and the real estate industry. Because it isn’t about unfairly targeting landlords. It’s about taking down the slumlords that give good owners a bad name.

Now for some middle and working class New Yorkers, the quality of their housing faces a different threat. At the height of the housing bubble, unscrupulous investors were snatching up properties all over the city hoping to turn them around for a quick profit. Their plan was to push out residents so they could turn the buildings into luxury apartments. And when the market crashed they walked away, leaving working class tenants to rot. Thousands of units from Washington Heights to Bed Stuy are currently in - or on the verge of foreclosure. When the bank puts these buildings up for auction, the future of tenants hangs in the balance. A new wave of predatory buyers is often waiting in the wings. While some may have been overwhelmed by this challenge, here in New York, tenants have banded together to fight back, and the City Council has been with them every step of the way. In partnership with Mayor Bloomberg, we created a Task Force on Financially Distressed Rental Housing, chaired by Council Members Dilan, Dickens, and Palma. And when ten buildings in the Bronx were in jeopardy, we helped pressure the lender to sell to a tenant-approved owner who will make needed repairs and keep units affordable. And we were able to save the homes of 500 families. Now we’ve actually convinced some banks to give the City a chance to purchase foreclosed buildings before they go up for auction. But because of insufficient resources and the complexity of the city’s budget process, we’re not always able to move quickly enough to make these deals. So I’m proposing that we create a Distressed Housing Preservation Fund. This money will be used by HPD to make bulk purchases of overleveraged housing. The city will make sure repairs get made while properties make their way through the foreclosure process. Then we’ll transfer them to an approved developer who will keep the buildings affordable and in good condition. Since we’re buying these properties at a bulk rate, we’ll be able to offer them to good developers at a price they can afford, while at least recouping our original investment. That way we can keep resources available to buy the next group of buildings in danger of foreclosure. The Distressed Housing Preservation fund will allow HPD to purchase as many as 400 units of housing in the first year alone. And I want to thank Council Members Vann and Rivera for their work on this initiative. None of this will be easy. It will take a renewed commitment by the City to make affordable housing a reality for tens of thousands of middle class New York families. It is a challenge, but it is one that we must and will meet.