The Real Deal New York

Real estate execs laud de Blasio’s affordable housing plan

But mayor’s methods, including mandatory inclusionary zoning, may rankle some
By Hiten Samtani | May 05, 2014 01:27PM

Mayor Bill de Blasio’s unveiling on Monday of a $41 billion plan to create 200,000 units of affordable housing over the next decade — an initiative that he described as “the largest and most ambitious program in the history of the United States” — was immediately hailed by a number of prominent voices from the real estate industry.

Steven Spinola, president of the Real Estate Board of New York said in a statement that the plan “identifies the problems and provides a realistic roadmap for solutions.”

Bill Rudin, CEO of Rudin Management and chairman of pro-business group the Association for a Better New York, said that “we agree that the time is right to take bold new steps to address our city’s housing crisis and we applaud Mayor de Blasio and his administration for issuing this important plan.”

The mayor’s scheme seeks to preserve 120,000 affordable units and build 80,000 new units across the five boroughs. The plan will create 194,000 construction jobs and more than 7,000 permanent jobs in the process, de Blasio added.

David Picket, president of the Gotham Organization, applauded the proposal. He noted that 250 Ashland Place, which Gotham is developing, would keep 282 of the 52-story tower’s 586 units permanently affordable for low-and-middle-income families.

Despite the initial response to the plan, some of the methods the administration will use to meet its aggressive target may not sit so well with the industry. The scheme, for example, calls for mandatory inclusionary zoning, which stipulates that, in all rezonings that substantially increase a development’s housing capacity, the developer will be required to build permanently affordable units “in order to ensure diverse and inclusive communities.”

Spinola and other industry voices have previously expressed their concerns about mandatory inclusionary zoning and have come out in favor of the existing voluntary inclusionary zoning program.

De Blasio’s new plan also puts an end to the 80-20 development model, which provided low-cost financing – in the form of 421-a abatements or other incentives — for developments in which at least 20 percent of units are affordable. The city will adopt a new “50-30-20” model, in which 50 percent of the units will be market-rate, 30 percent of the units will be for moderate-income families, and 20 percent of the units will be for low-income households. He did note, however, that the model wouldn’t work for all projects.

“Every site is different and every situation is different,” he said, “We’re going to drive a hard bargain.” He noted the example of the Domino Sugar Factory redevelopment project, where his administration pushed through an eleventh-hour deal to create more affordable units at the site.

Jaron Benjamin, executive director of the Met Council on Housing, the city’s oldest tenant union, told TRD that “ending the failed 80/20 development model is a step forward for new affordable housing, but the plan is dangerously silent on protecting renting families.” The mayor, he added, needed to call for the immediate repeal of vacancy deregulation, “for the sake of millions of families in rent-regulated housing, the vast majority of who are low-income.” De Blasio’s plan states that the city will “use every tool at its disposal” – from legal action to closer scrutiny of city contractors – to protect rent-regulated tenants.

Alicia Glen, the deputy mayor for housing and economic development, said the city would think about the best ways to use its rezoning powers, as well as its capital spending and tax-incentive programs, to meet the affordability goal. “We are linking our housing strategies with our work to spur economic development, deliver good jobs and revitalize neighborhoods.”