The Real Deal New York

To help make his revamped housing plan work, de Blasio wants to tax vacant land

Mayor targets 300,000 affordable units by 2026, plans "tiny homes" competition
By Kathryn Brenzel | November 15, 2017 11:03AM

Bill de Blasio and Alicia Glen

The latest version of Mayor Bill de Blasio’s affordable housing program takes aim at unused real estate, proposing a tax hike on vacant land and a competition to build “tiny homes” on small city-owned properties.

The Department of Housing Preservation and Development on Wednesday unveiled some details on the updated affordable housing program — dubbed “Housing New York 2.0” — which promises to add 100,000 affordable housing units to the 2014 plan, which pledged 200,000 units. The city released a report on the mayor’s plan following an announcement earlier this month that the original program was two years ahead of schedule. So far, the city claims it has preserved 52,309 units and created 25,342. The cost of the program is expected to reach $82.6 billion, with $16.9 billion coming from the city.

“While there are many threats and challenges on the course ahead, we also believe there are some very profound opportunities and our affordable housing engine is primed and ready to pick up the pace,” HPD Commissioner Maria Torres-Springer said during a press conference on Wednesday. “We really believe, now more than ever, we have to build on the momentum that we generated over the course of the last few years.”

Maria Torres-Springer

The report notes that many landlords sit on vacant land to keep their property taxes low — either until the market suits them to start building or to sell the land. The de Blasio administration suggests reclassifying residential-zoned vacant land to increase tax bills for such properties and to “incentivize owners to make their sites productive.”

To further boost the housing supply, officials will identify city-owned property that is “unsuitable for traditional affordable housing” and will launch a design competition for “tiny home” proposals. The report notes that homes as small as 400 square feet could add affordable housing where no other development is feasible. The competition for this will be held next year, Torres-Springer said. Small development and architecture firms, nonprofits and local academic institutions will likely be the parties most interested in the idea, she said.

The new plan also looks to micro apartments and modular construction as new (and cheaper) avenues for creating mixed-income housing. For the former, the city would need to tweak zoning restrictions on apartment sizes and update other design guidelines. For the latter, the city would expand a pilot program that used modular construction for single-family homes by issuing a request for proposals for multifamily housing.

Last month, the mayor announced that his administration would set aside $250 million to help keep Mitchell Lama complexes affordable. The money will be used to offer these properties a trade: Stay affordable for the next 20 years, and the city will help finance repairs and extend and deepen tax exemptions on the properties. Mitchell Lama, a program started in the 1950s, granted tax abatements and subsidized mortgages to developers for moderate- to middle-income rental and co-op properties. After 20 years, the properties can go market-rate.

The report notes the major threat posed by the House version of the federal tax reform bill, which includes a provision that would eliminate private activity tax-exempt bonds. In 2016, the Low-Income Housing Tax Credit and these bonds generated $2.7 billion in financing and equity to create or preserve 10,000 affordable units.

As the fate of federal tax reform remains unclear, the city is supporting legislation that will expand the LIHTC program and is pushing for certain changes to how the federal government handles these bonds. The city’s Housing Development Corporation is advocating for the creation of a national pool of unused private activity bond volume cap. This means that states that don’t use all of their allocated bonds — the government sets a cap for each state — could provide the financing to states that need additional resources. After Wednesday’s press conference, Eric Enderlin, president of the city’s Housing Development Corporation, noted that if these bonds are repealed, the city’s ability to create and preserve affordable housing will be greatly stunted. The city has estimated that the number of units will be cut roughly in half — or decreased by 10,000 units each year.

The mayor announced his new affordable housing goals two weeks before he was re-elected. The report touts that his administration has created more affordable housing in his first term than any comparable period since 1978.