Paterson could push Spitzer’s affordable housing plan ahead

Of all the vague notions that real estate players have about incoming Governor David Paterson, the idea that he will support new affordable housing could be the most solid.

Paterson has said little about his devotion to property tax reform or his zeal for making sure the city’s big projects that are already underway succeed, since Governor Eliot Spitzer’s abrupt resignation Wednesday over his ties to a prostitute.

However, experts say that Paterson, the lieutenant governor from Harlem who officially becomes governor on Monday, will probably work to craft new incentives and find new funding to create housing that low-income and moderate-income people can afford. The $400 million affordable housing fund that Spitzer proposed in his State of the State address, these people suggest, enjoys enough support in key legislative districts and from Paterson that it seems likely to proceed.
“Governor Paterson has a strong background working on affordable housing issues as a state senator,” said John Raskin, an organizer with a West Side advocacy group called Housing Conservation Corps. “He is in a good position to prioritize both new funding mechanisms and reforming rent laws.”

Real Estate Board of New York president Steven Spinola, citing an email sent today by state Housing and Community Renewal Commissioner Deborah Van Amerongen, said the fund “is still alive.”
“At the moment, the $400 million is on the Assembly side of the budget,” Spinola said, adding that the Senate has proposed a fund half that size.

So will the governor push for the higher number?
“Paterson’s biggest problem is how the hell do we figure out how to set a budget,” said Spinola, “but I can’t imagine he’s not going to be an advocate for affordable housing.”
An Albany insider, who asked for anonymity because he once worked for Paterson, confirms that the new governor — who worked on fair housing issues for the NAACP before becoming a state senator — could easily score points with legislators by embracing a cause he knows.

“It’s a priority for a lot of legislators,” this source said.

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Where that affordable housing gets built is another mystery. Nobody knows whether Spitzer’s controversial proposal to sell land north of the Javits Center, which would help fund the affordable housing program, will go forward. And upstate cities need affordable housing as sorely as the Big Apple does, portending more political deals.

A logical place for state-supported affordable housing in New York City lies on Hudson Yards, the state-owned rail yard that four development teams are bidding to take over in a master lease from the Metropolitan Transportation Authority. Both developers’ advisors and Anna Levin, a leader of the local community board, have noted that the required city zoning on the yards’ eastern side requires high densities that could mean enormous building costs. Tax credits for affordable housing on the yards’ western side could offset those big costs.

“Everyone involved would like to re-look at the zoning,” says an advisor to one of the bidders, who asked for anonymity to avoid revealing his client’s concerns. The western portion of the rail yards will undergo rezoning after the state selects a bidder, so Paterson could then try to work affordable-housing funds or incentives into the equation.  

But as with every issue before the state, handicapping what Paterson plans to do is a dangerous exercise. Nobody knows whether projects near Hudson Yards, like the transformation of Penn Station into Moynihan Station, will ultimately survive.

What’s more, Paterson may be wading into a morass he can’t easily correct, some say.

“The rail yards deal had become so muddled and so vulnerable in the shaky credit and real estate market that many of us around here think the whole deal is destined to fall apart, and that on-site affordable housing will have to wait until someday, down the line, when the rail yards will realistically be developed,” said one real estate veteran who asked for his name to be withheld.

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