The next great battle pitting affordable housing advocates against market forces is coming soon to a neighborhood near you. That’s if it hasn’t already arrived.
Well-documented showdowns involving Brooklyn’s Starrett City and Manhattan’s Stuyvesant Town and Peter Cooper Village recently highlighted the deepening struggle between building owners looking to maximize profits and residents who want to preserve affordable units. Tenant groups contend that thousands of affordable apartments are in danger of becoming too expensive for many working families, but that this threat is getting lost in the debate.
Castleton Point on Staten Island and Sea Rise in Brooklyn are dwarfed in size by mega-developments, but they face the same plight. Compounded by the tightening residential housing stock, many buildings leaving the Mitchell-Lama affordable housing program, and new restrictions in the 421-a developer tax incentive provision, tenants’ advocates have plenty of reasons to warn that the situation has reached critical proportions.
The war is being waged neighborhood by neighborhood, block by block and even building by building as affordable housing supply fails to keep up with demand, said Dina Levy, executive director of organizing and policy for the Urban Homesteading Assistance Board, a group that helps residents restore neglected properties in low-income neighborhoods. In the past year alone, tenants in 4,000 units in 14 buildings scattered throughout the city have received buyout notices saying that their landlords plan to opt out of the Mitchell-Lama program, passed by the state in 1955 to spur the construction of middle-income housing, Levy stated.
“That’s just an incredible number of housing units that don’t get the play because of their size,” Levy said. “Right when Starrett City was becoming an issue, there were a number of buildings that were facing the same problem.”
It’s with good reason that affordable housing and tenant advocates are worried. Buying buildings containing affordable housing units in New York City is still a lucrative proposition, said Heidi Burkhart, director for Eastern Consolidated, a commercial building sales brokerage.
Although the market has cooled somewhat in the outer boroughs, particularly the Bronx, demand is still high in Manhattan, she said. Tightening access to credit is having little effect on investors flush with capital who are seizing opportunities to convert units to market rate.
“I think in major metropolitan areas, you will always have a demand,” Burkhart said. “As long as people have their equities, there will always be a market to invest.”
For tenants, the situation is becoming so dire that even brokers — who aren’t always seen as advocates of building affordable housing — are stepping in. Stan Ponte, chairman of Brokers Build, a group of the city’s top brokers who have joined with Habitat for Humanity to raise $1 million to construct 11 of 41 homes in a Brooklyn complex, called the issue “a crisis.”
If steps aren’t taken to stem the loss of affordable units, the city will be threatened with the erosion of its ethnic and economic diversity, Ponte contended. A May 2007 report conducted by Housing Here and Now, a coalition of affordable housing advocates, stated that between 2002 and 2005, nearly 205,000 housing units affordable to families at 80 percent or below the city’s median income level were lost. The results are dire, Ponte argued. Lower-income tenants are forced to pay more for housing and less for other essentials.
“The idea that people are spending as much as half of their income on rent is a crisis,” Ponte said.
No doubt the estimated 14,000 tenants at the 5,881-unit Starrett City complex, the largest publicly financed housing development in the nation, are nervously waiting for the next buyer.
State and federal agencies rejected a $1.3 billion bid in the spring from David Bistricer of Clipper Equities in part because they considered the price too high for the units to remain affordable. However, with the owners intent on selling the complex, tenants remain fearful of a future marked by rent hikes and evictions.
Rents have been rising at Stuyvesant Town and Peter Cooper Village since the $5.4 billion sale last year of the largely rent-stabilized complex. Alvin Doyle, president of the Stuyvesant Town-Peter Cooper Village Tenants Association, in May told The Real Deal that since Tishman Speyer took over, rents on market-rate, one-bedroom apartments are around $3,000 a month, while two-bedrooms are going for around $4,000 a month. Tenants renewing leases are seeing rent increases of between 15 and 30 percent, Doyle said.
But tens of thousand of tenants in nondescript buildings across the city are left to fight on their own without garnering the same attention and assistance. Some of the buildings where the skirmishes are developing are as small as 100 units, Levy noted.
Julie Miles, Housing Here and Now’s executive director, was reluctant to predict where the next major fight will take place. Individual tenants’ groups face the same dilemma on a daily basis. That’s largely due to a legal provision that permits owners of Mitchell-Lama buildings built after 1973 to leave the program for market-rate rents if they’ve paid their debt. While Miles hailed the efforts by New York Gov. Eliot Spitzer to close loopholes in the law for older buildings, the Housing Here and Now report estimated the loss of another 21,000 Mitchell-Lama apartments by 2016.
Even Mayor Michael Bloomberg’s groundbreaking 2004 initiative, called the New Housing Marketplace, which has added or preserved nearly 65,000 affordable units and promises to add another 100,000 units by 2013, falls well short, said Nicholas LaPorte, executive director of the Associated Builders and Owners of Greater New York. The economic boom of the 1990s, which drew hundreds of thousands of new residents to the city, created “the perfect storm,” LaPorte said. As more people flocked here, the demand for housing at all levels grew.
The city’s 421-a tax break program has failed to spur the building of enough affordable housing units to keep pace with demand, LaPorte maintained. The program has been revised, with changes signed into law by Gov. Spitzer last month.
“There need to be more flexible programs by the government,” LaPorte said, adding that “421-a, the way it was written, was wrong.”
To address the housing shortfall, the New Housing Marketplace committed $7.5 billion of public money, making it the largest municipal housing program in the nation, said Seth Donlin, press secretary for the city’s Department of Housing Preservation and Development.
“Clearly, more can always be done, but we’re talking about limited resources,” Donlin said. “The city, state and federal government can only build so much housing. The private market has to build much of that.”
A major obstacle in the struggle to save affordable units is that so many fronts have been opened. Small building tenants need protection, but a loss of Starrett City to market-rate housing would also be a devastating blow, tenants’ advocates conclude. “All we can do is hang in there,” said Starrett Tenants Association president Marie Purnell. “If we go down the tubes, a lot of the affordable housing will go down.”
Levy said tenants’ groups need to refocus their efforts sensibly. Until now, each complex has been left on its own. Stuyvesant Town and Starrett City apartment dwellers had a fighting chance simply because of their size. In the future, elected officials and housing advocates must develop a plan and draft accompanying legislation that deals with the issue globally, not on an individual basis, Levy said.
Levy concluded that the city and the state “have to figure out what their preservation strategy is going to be.”