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Housing Affordability in NYC
MEMORANDUM
TO: Mayor Bill de Blasio and Governor Andrew Cuomo
FROM: Jonatta Moore
SUBJECT: Soaring Housing Costs in NYC
DATE: 09/11/2015
Problem Memorandum
New York City is currently experiencing an unprecedented amount of homelessness. There are a myriad of issues that lead to individuals and families becoming homeless, however, there is direct correlation between the increasing housing costs and the increase in homelessness in the city. At present, there are almost 60,000 homeless people in NYC with seventy percent of those being families with children.[i]
Reports by Streeteasy[ii] and NYC Comptroller, Scott Stringer[iii] highlight a problem that is affecting ordinary New Yorkers. Housing prices are increasing at an unprecedented rate with New Yorkers spending over sixty percent of their income on rent.[iv] Average monthly rent cost in the city is $2700,[v] up from $1100 in 2011.[vi] In his report, “The Growing Gap: New York City’s Housing Affordability Challenge,” the City Comptroller writes, there was “a dramatic upward shift of the city’s rent distribution during the 12-year period, with a loss of approximately 400,000 apartment renting for $1000 or less (in 2012 dollars) and a corresponding gain in the number of apartments renting for more than $1000 per month.”[vii]
The drastic shift in housing prices is creating a gap between ordinary residents and the wealthy which is turning New York City into what journalist, Bill Moyers calls, “a playground for the 1%.”[viii]
The affordability issue is one that needs to be addressed and mitigated rather than overlooked. The decline in housing affordability can only lead to more highs in homelessness and push out the working people who help run this city.
Policy Recommendations:
Rent Freeze:
As City Comptroller Scott Stringer detailed in his report, “The Growing Gap: New York City’s Housing Affordability Challenge,” housing costs have soared while incomes have stalled or declined.[ix] Although Mr. Stringer stressed the impact of increasing rent on low-income households[x], the reality is that working class New Yorkers are also affected by rising housing costs. City dwellers find themselves living paycheck-to-pay check or working several jobs to afford their rents. To alleviate the burden on residents, it is palpable that a rent freeze needs to be implemented not solely on Rent Stabilized/Controlled apartments but also on market rate housing units that have received subsidies from the city.
While rent stabilized and rent controlled apartments account for about 47.5 percent of the city’s housing units,[xi] those units are on the decline as landlords are opting out of the tax incentive program that classify them as such. Within the last three decades, the city had a net loss of 231,000 rent controlled and stabilized housing. Consequently, market rate and unregulated housing continues to be on the rise.[xii]
Additionally, as rent stabilized apartments or buildings are nearly impossible to find (due to tenants rarely moving out of these units), most tenants turn to market rate housing and find their rent increase substantially each year. Therefore, implementing a multi-year rent freeze will greatly ease the financial burden numerous New Yorkers face with regards to affordable housing.
Mandatory Affordable Low Income Housing:
In the 1970s, New York City established the “421-a” Tax Property Incentive to give newly constructed developments a tax break.[xiii] In the 1980s, an “exclusion-zone” was designated between 14th and 96th streets for developers erecting affordable housing in the city.[xiv] At present, “421-a” is available to constructions within the 5 boroughs and gives developers a very generous tax relief for providing affordable housing in the city. Based on city parameters, developers must provide 20 percent or 5 percent affordable housing to qualify for the tax exemption program. However, providing affordable housing in these unit is voluntary and frequently unaffordable to low income households. In “Rethinking 421-A Real Property Tax Exemption,” New School researchers noted that roughly 14 percent of all 412-a tax exempt units are affordable to low income families.[xv] By instituting mandatory low income housing in newly developed 421-a exempt buildings and setting a realistic affordable income threshold that is on par with inflation, there is an opportunity for the mayor to seriously address housing affordability, homelessness, and low-income housing for those in need.
Rent Regulation:
According to the report by Comptroller Scott Stringer, market rate rents increased at a faster rate than rent stabilized rent from 2002 to 2011.[xvi] Although it differed based on borough, more units are being priced at market rate values as tenants vacate these premises or are forced out by landlords or new owners. Hence, stronger rent regulation laws are required to protect tenants against preferential rates and from losing their homes. Additionally, a provisional law that addresses how much a landlord can increase the rent in market rate unit will help curb the cost of fast rising rent costs and help stop the exploitation of renters who are overcharged in these developments. Since it is a largely unregulated market and people are desperate for housing, tenants may be living in sordid conditions that are not worth the rent they are being charged. As the mayor has stressed to Albany and as lawmakers debate the issue of housing affordability in NYC, it is important to understand that nearly 2.5 million may have nowhere to live if a reasonable compromise is not reached. Without lawmakers advocating on behalf of those who put them in office, there may be no relief in sight for renters.
Conclusion
There are numerous groups affected by increasing housing costs. Pensioners, young adults, children, the disabled, and low-income families are at the faces behind this policy issue. Young people (already burdened with student loan debt) cannot afford to save or buy a house as they spend a bulk of their income on housing while pensioners are shelling out a greater percent of their retirement income on rents. With homelessness already at an all-time high time since the 1930s, more families and children will continue to be displaced due to the growing housing costs. Thus, this is a pressing issue that must be mitigated as the socio-economic diversity that defines NYC is rapidly disappearing.
[i] “Shadow City.” Fault Lines. Al Jazeera America. 1 Apr. 2015.
<http://america.aljazeera.com/watch/shows/fault-lines/Episodes/2015/3/30/shadow-city-NYC-homeless.html/>
[ii] Lightfeldt, Alan. Bright Lights, Big Rent: Understanding New York City’s Rent Affordability Problem. 1 Mar. 2015. http://streeteasy.com/blog/new-york-city-rent-affordability/>
[iv] Keil, Gould Jennifer. “New Yorkers Spend Nearly 60% of Income on Rent: Study” New York Post 3 Mar. 2015.
[v] Ibid
[vi] New York. Office of the New York City Comptroller. The Growing Gap: New York City’s Housing Affordability Challenge. Apr. 2014. 1-28. p1.
[vii] Ibid
[viii] “The Long, Dark Shadows of Plutocracy.” Moyers & Company. PBS. Thirteen, New York. 28 Nov. 2014.
[ix] New York. Office of the New York City Comptroller. The Growing Gap: New York City’s Housing Affordability Challenge. Apr. 2014. 1-28. P9.
[x] Rent Guidelines Board. New York City’s Housing Affordability Challenge. Testimony, 8 Jun. 2015. <http://comptroller.nyc.gov/newsroom/testimony-of-new-york-city-comptroller-scott-m-stringer-before-the-new-york-city-rent-guidelines-board-2/>
[xi] New York. Office of the New York City Comptroller. The Growing Gap: New York City’s Housing Affordability Challenge. Apr. 2014. 1-28. P18.
[xii] New York University. Furman Center for Real Estate & Urban Policy. Rent Stabilization in New York. <http://furmancenter.org/files/publications/HVS_Rent_Stabilization_fact_sheet_FINAL_4.pdf/>
[xiii] New York. Pratt Center for Community Development. Understanding the NYC “421-a” Property Tax Exemption Program-How Can It Be Reformed to Create Affordable Housing? 1-6.
[xiv] Ibid
[xv] Ibid
[xvi] New York. Office of the New York City Comptroller. The Growing Gap: New York City’s Housing Affordability Challenge. Apr. 2014. 1-28. P23.