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.”

  • natan

    50-30-20″ model , this model there’s no way tp make money and i’m afraid this might be the and of nyc real estate market . thank you Mayor Bill de Blasio

  • natan

    @the end

    • goldsand

      what do you mean??

  • Stupid

    Has anybody ever heard of income mobility? Or are we back in caste system days and you die with the same income as you’re born with? Hey…why not…..40-25-32-11-4. Let’s try to micro-manage this city a little bit more. It’s like 7 minute abs being better than 6 minute abs!!!

    • Proper

      who works out for 6 minutes???!!

  • Basiceconomics

    I’d rather he take that $41 billion, pay off all of the rent stabilized and rent controlled tenants in this city….convert everything to free market…and finally put an end to this unfair, economically unsound, disaster of a housing policy. It would be wealth redistribution and grossly anti-American but at least it would finally take government out of housing. Let the private market fulfill demand just like it does with cell phones, refrigerators, and blue jeans. You don’t hear the city coming up with a “refrigerator policy” do you? And magically, miraculously people have refrigerators!! How is that possible without government managed refrigeration policy?!?!? Learn economics people!!!

  • benard

    50% & 50% —- is not going to work those economic advisors suckss!!

  • jordan

    Absolute insanity. Say goodbye to inclusionary housing, because no developer I know will build another rental building if it’s a requirement to build half of your units at little to no profit. The only upside is it might make developers who hate building condos consider moving in that direction again.

  • sonofliberty

    new York city gov’t is the biggest slumlord in nyc with 200,000 projects apartments and diblasio are gonna tell the pviate real estate marketplace how its should operate?? where are we getting the $41 billion dollars?? from more taxes are all new Yorkers. this will fail and cost at the end of the day triple!