The Real Deal New York

De Blasio: City used to let developers “write their own rules”

Calls for 160K new market-rate units, promises action against predatory landlords
By Claire Moses and Kerry Barger | February 03, 2015 01:25PM

Mayor Bill de Blasio announced six new neighborhoods where developers will be required to build affordable units and a plan to add 80,000 affordable apartments by 2024 during his second State of the City address on Tuesday.

He also proposed solving part of the housing crisis by creating an additional 160,000 market-rate units, and targeted predatory landlords and developers who received tax breaks in the past without having to provide affordable housing.

“Part of the problem is that the city has for decades let developers write their own rules when it came to building housing,” de Blasio said. “Sometimes projects included affordable housing … but far too often, they did not.”

The neighborhoods that will include mandatory affordable units in new developments are East New York, Long Island City, the Jerome Avenue Corridor in the Bronx, Flushing West and Staten Island’s Bay Street Corridor. The mayor also proposed free legal representation for tenants in rezoned neighborhoods.

The mayor singled out Sunnyside Yards — 200 acres of underdeveloped land in Queens — as prime for redevelopment. He proposed moving the rail yard underground in order to create 11,250 affordable units.

In the Southwest Bronx, the city will invest $200 million in new affordable housing to create up to 4,000 new units there, as well as infrastructure and job creation initiatives.

And in a nod to the city’s artistic community, the city will invest $30 million to create 1,500 affordable living and work spaces for artists by the end of this decade. Of those units, 500 below-market units will be in city-owned buildings.

Real Estate Board of New York President Steven Spinola said the mayor’s plan would “go a long way to keeping New York the greatest city in the world in which to live, work, and raise a family.”

“Without such bold initiatives,” he continued, “the city’s housing market will tighten further and become even more expensive,” Spinola continued, “our industry stands ready to work with the mayor and other stakeholders to put shovels in the ground and cranes in the sky to tackle this important goal.”

The New York State Association for Affordable Housing, a trade group representing affordable housing developers, applauded the mayor for “making affordable housing his number one priority.”

Kathryn Wylde, CEO of pro-business group Partnership for New York City said that public-private partnerships were key to hitting the city’s affordable housing goal, especially given the low inventory of land and skyrocketing construction costs.

“While it was not explicit in the Mayor’s speech, I trust his administration understands that forging partnerships with the development and financial industries is the only way to accomplish his housing goals,” Wylde said.

  • Lordyuyu

    doesn’t demanding affordable housing units in developments reduce the overall development going on because the profitability for each development goes down. so at the end of the day only luxury condo construction would pay off

    • Monica McLaughlin

      Any type of residential housing built n NYC is profitable. Luxury housing pays off the best and that will remain true no matter what. About 1/2 of luxury housing is bought as investments by people who do not actually live in the apartments, so building luxury housing does little to resolve the housing shortage unless there is a requirement that these luxury buildings contain affordable housing units.

      • Lee Presser

        From a financial perspective, if you demand developers to build adorable units as part of a development you decrease their profit margin because those units sell for well below what the market will bear, while still costing the developer approximately the same cost per sf developed. Of the neighborhoods the Mayor has highlighted for development, IMHO, only Long Island City might seem appealing to developers because of its proximity to Manhattan. However, even that is questionable because LIC has been the next Brooklyn Heights for the past two decades, and still has not seen anywhere near the development one might have expected to see. So how does requiring developers to build adorable housing in addition to their market rate units, when these developers already feel that building there is not a good investment, make it a good investment? It doesn’t. Let’s stop over regulating and allow free markets to work as they do.

        • Monica McLaughlin

          No matter what any developer builds any place in NYC, they will make a profit; however, developers have always chosen to make the largest profit possible — after all they are in the business of making money, not providing socialized housing for the benefit of society. The City will have developers build the 100% affordable housing in less desirable neighborhoods so has to leave their high profit margins intact in the nicer pricier hoods. There are 2 LICs. There is the waterfront and then there is the rest. I imagine the affordable housing will be located in the rest.

          The fact that NYREB is on board with the Mayor’s proposals is a clear indication that developers are going to make out like bandits with all of these plans not only with the buildings themselves but in years to come with all the tax rebates and freebies. NYREB put the Governor in office, and the Governor is surely going to take care of his cash cow.

          If one allows the free market to rule, the streets will be filled with homeless people to a much greater extent than it already is. What the free market will do is create more investment housing — vacant apartments. We have a housing crisis in NYC. The free market will worsen that, not make it better. The free market only helps those at the top and trickle down does not work.

          • Shas

            lol why do you think any developer building in NYC will make a profit? Developers have certain profit margins they NEED to hit. There are plenty of developers with projects that were not profitable causing them to go through rough financial times.

            Forced affordable housing will hurt development, not help. Also “affordable” housing isn’t always the answer. Especially in cheaper neighborhoods that they have targeted that already have relatively low costs.

          • Monica McLaughlin

            NYC developers are among the wealthy elite. NYC did not even get hurt during the recession. Land is at a premium and housing is scarce. We have had a housing shortage for decades.

          • Shas

            You just proved your knowledge of NYC real estate is lacking. Through the reccession multiple developers have gone out of business, multiple properties were foreclosed on, multiple construction projects were brought to a halt; etc. NYC is the HARDEST market to develop in.

          • Monica McLaughlin

            No, you just proved that YOUR knowledge of NYC real estate is lacking. It may be tough for any other that the super wealthy to develop in, but for those already in, it is not a challenge.

          • shas

            Monica, sorry but you are an idiot. Even the super wealthy are affected by the difficulties of NYC development. Maybe you don’t work in the industry, but I’ve seen people go from being “ultra high net worth” individuals to losing almost all of their money & businesses. Also the trickle down effect is real, especially in development. If they can’t make as much $ as they wanted, they will cut jobs. If you don’t believe that you can go talk to ANYONE in the industry from 08-11. Keeping your job, let alone get one, was a very big issue.

          • Monica McLaughlin

            Yada, yada, yada.

          • realposter

            Plenty of developers have gone out of business… You don’t know what you are talking about.

          • Econ101

            Monica – Why do you think we have any wealth at all here in America? You think it was a government program that lifted people out of poverty? You think the free market results in more poverty, not less? Look through history. Look at East and West Germany. Look at China before and after. Look at the USSR before and after. More government destroys wealth. Simple economics.

          • Crian Bashman

            Very myopic point of view. It is either laissez faire or socialism. The reality is it is somewhere in between and the either or can be disastrous.

          • Monica McLaughlin

            Yes, the free market results in extreme poverty and extreme wealth. The U.S. has never been a free market. China is not a free market, neither is W. German. There are aspects of capitalism there, true; however pure capitalism results in poverty. The U.S. is a perfect example of capitalism run wild. The gap between the rich and poor is at historical highs and the incomes of the rich have gone way, way up. If it were up to the super rich, 99.9 % of Americans would be living in hovels and working 18-hour days for that privilege. Laws to prevent abuse of the working classes and the poor were not passed in a vacuum.

          • Marc

            You’re a Liberal. You have no idea what a free market economy means. You want to control everything and everyone & flatten wealth. Really you are a communist. People like yourself proudly called themselves communists until Hitler(another Socialist) signed a non aggression pact with the USSR(Socialist). That embarrassed NYC Libs so instead they call themselves “democrats” or “progressives”. The world has had enough of your type. Your communism not only doesn’t work, it destroys wealth, people and creates nothing but poverty. Free markets are the best chance by far for wealth. Go to Cuba and get your equality if you’d like.

          • Monica McLaughlin

            Can’t come up with a logical argument? Let the name calling begin.

          • Marc

            I have lots of logical arguments. You cannot argue with a communist a/k/a someone who believes in forcing the will of a few onto the masses and taking peoples hard earned wealth and giving it to others. All you can answer with is “Can’t come up with a logical argument? Let the name calling begin.”
            I made no argument in this case. It’s pointless against a socialist. I merely stated my case and revealed you for what you are. I will not argue the merits of free markets and capitalism with you. Just go ask anyone: Russian, Chinese, Cuban………..ask them all if they’d like to return to that. The only ones who want communism are the ones who never had to live within it. Go to Cuba & try it sometime. The biggest butchers the past century by far are communists. Stalin, Mao, Pol Pot…………. Over 100 million and counting. Please go to those societies and enjoy yourself.

  • Char4Dew

    He is right, but they will get rid of him because he is not of the 1% mind set.

  • Whatajoke

    Governments don’t create affordable housing – the free market does. Unfortunately, we have a centrally planned city. And like all centrally planned societies, its inefficient, expensive, and corrupt. It’s laughable that he says developers have written their own rules. This city is so overly regulated it makes the old USSR look laissez faire.

    • harji

      glad to see educated, well aware, people still read this blog. Well said

  • David Brown

    Affordable housing is essentially subsidized housing – the tenant can’t pay the full cost. I know a few commentators will prattle on about the profits of developers but if building and renting affordable units was that profitable there would be a million units under construction and there isn’t. In Manhattan, where Wall Streeters pay $1-2-3K per square foot for condos it is viable to have them subsidize an affordable unit. Unfortunately the school teacher in East New York could barely pay market rate for their own unit, much less subsidize someone elses as well. Also Manhattan projects often have high value retail components but cash chequing stores in ENY aren’t as valuable as Italian handbag boutiques on Fifth Avenue. Just don’t see the math working in the outer boroughs. Sorry.