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| THOMPSON:
AFFORDABLE HOUSING CRISIS IS ACCELERATING
New York
City Comptroller William C. Thompson,
Jr. speaks at a news conference
on Thursday, May 25, 2006, regarding
the significant loss of affordable
Mitchell-Lama and Limited Dividend
housing units. Photo
credit: Marla Maritzer
View
Policy Report |
Significant
Loss of Mitchell-Lama and Limited Dividend
Housing Seen Since 2004
New
York City cannot keep pace with the
rapid, significant loss of affordable
Mitchell-Lama and Limited Dividend housing
units as increasing numbers of project
owners have opted out of the programs,
according to a report released today
by Comptroller William C. Thompson,
Jr.
“In just the
last two years, there has been a dramatic
increase in the number of affordable
units converting to market rate,”
Thompson said. “We’re seeing
a staggering loss of affordable housing
and along with it, fewer and fewer housing
options for New Yorkers.”
The report, Affordable
No More: An Update – New York
City’s Mitchell-Lama and Limited
Dividend Housing Crisis Is Accelerating,
found that between 2001 and 2003, about
4,700 units left the programs. Since
2004, however, the number of units that
have left the programs and filed to
leave the programs skyrocketed to more
than 25,000.
If all pending withdrawals
occur, New York will have lost more
than 49,000 units – nearly a third
of the 150,000 units created under the
programs.
Joined by elected
officials, housing advocates and tenants,
Thompson said: “The crisis isn’t
around the corner, it’s here today.”
According to Thompson’s
report, the substantial and accelerating
loss of Mitchell-Lama and Limited Dividend
housing has offset many of the City’s
affordable housing gains. Although the
City’s Department of Housing Preservation
and Development funded the creation
of 12,229 affordable housing units since
2002, the City lost 12,943 units of
Mitchell-Lama housing during that same
period.
“It’s
clear that, despite a very strong commitment
by the City to create and preserve affordable
housing, we are losing ground to the
market forces that are tempting building
owners to leave these programs,”
Thompson said.
As owners increasingly
opt out of these two programs, thousands
of New Yorkers are going to be faced
with rental rates that are far beyond
their reach, Thompson said, using the
experience of tenants of Independence
Plaza North in Lower Manhattan as an
example. Rents for a two-bedroom apartment
in the development ranged from $900
to $1,400 per month when the development
was part of the Mitchell-Lama program.
After withdrawing from the program,
two-bedroom rents soared to $3,200 per
month.
“Now is the
time to push for programs and changes
in State laws to ensure the long-term
affordability of these programs to protect
financially vulnerable families,”
Thompson said.
Thompson made the
following recommendations in his report:
- New York State should establish
a program to help refinance mortgages
and pay for needed repairs for the
remaining 52,090 units of Department
of Housing and Community Renewal-supervised
Mitchell-Lama housing that were financed
by the New York State Housing Finance
Agency, the Urban Development Corporation
or the State Loan Fund.
- The State should enact legislation,
already passed by the Assembly, to
place under rent-stabilization all
Mitchell-Lama developments built after
1974 that leave the program. In 2005,
the sponsors of this bill estimated
it would protect approximately 32,000
tenants.
- The State should enact legislation
to prohibit owners of Mitchell-Lama
developments from applying for rent
increases under the “unique
and peculiar circumstances”
clause of the Emergency Tenant Protection
Act.
- The City should investigate the
feasibility of new loan programs that
would provide Mitchell-Lama and Limited
Dividend developments that are not
eligible for the Housing Development
Corporation Refinancing and Rehabilitation
Assistance Loan program with access
to long term low-interest financing
if they continue to remain in their
respective programs.
- The City should clarify the new
Housing Development Corporation Mitchell-Lama
Co-Op Conversion Program. For example,
many Mitchell-Lama rental developments
need extensive repairs in order to
overcome years of deferred maintenance,
yet it is unclear how capital improvements
would be financed.
- The City should develop affordable
housing production goals on a neighborhood
basis, taking into account which neighborhoods
are most likely to lose Mitchell-Lama
and Limited Dividend housing in coming
years.
- The City should work with local
community organizations and elected
officials to develop programs to help
Mitchell-Lama and Limited Dividend
families find replacement housing,
in their current neighborhoods or
in other sections of the City.
- This report is an update to a 2004
study, Affordable No More: New York
City’s Looming Crisis in Mitchell-Lama
and Limited Dividend Housing.
A
full copy of both reports can be viewed
at the Comptroller’s web site:
www.comptroller.nyc.gov.
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| THOMPSON'S
TAX REBATE PLAN FOR SENIORS GAINS CITY
COUNCIL SUPPORT
New York City
Comptroller William C. Thompson,
Jr. joins City Council Members
Lew Fidler and Leroy Comrie at
a news conference at City Hall
on May 24, 2006, as Fidler and
Comrie announced their intent
to introduce legislation based
on Thompson’s proposal to
provide an additional $600 in
tax relief to senior homeowners.
Photo credit: Marla Maritzer
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View
charts
View
letter to Mayor
View
Council Member Lew Fidler’s release
Comptroller
William C. Thompson, Jr. joined City
Council members Lew Fidler (D-Brooklyn)
and Leroy Comrie (D-Queens) as Fidler
and Comrie announced their budget initiative
to provide a property tax rebate for
senior citizen homeowners. Their initiative
is based on Thompson’s proposal,
City Aid for Senior Homeowners, or CASH.
“As the costs
of home ownership continue to escalate,
senior homeowners are forced to make
difficult decisions about their living
expenses,” Thompson said. “My
proposal, City Aid for Senior Homeowners,
would broaden the City’s current
tax relief program and provide much-needed
additional tax relief to seniors living
on fixed incomes. Our seniors have helped
our City through some very difficult
times. It’s time for us to help
them as much as we can.”
The initiative would
expand the City’s current property
tax rebate program to provide additional
benefits to seniors enrolled in the
New York State Enhanced School Tax Relief
(STAR) program. Qualifying seniors would
receive a rebate of up to $600, depending
on tax liability, in addition to the
current $400 rebate, for a combined
benefit of up to $1,000. Currently,
approximately 81,000 seniors are enrolled
in Enhanced STAR.
“Seniors have
increasingly become house rich and cash
poor,” said Fidler. “We
would love to provide property tax relief
to all New Yorkers, but in this program
we will at least be reaching the ones
who have been hit the hardest in terms
of cash flow.”
Comrie added, “Our
senior community built the very City
that has become cost prohibitive for
them and is forcing many of them out.
The cost of increasing assessments and
fees requires that we in government
make every attempt to ease the financial
burdens of our seniors.”
The eight Council
members who signed on to the Fidler/Comrie
initiative for Thompson’s CASH
program are: Maria del Carmen Arroyo,
Tony Avella, Simcha Felder, James Gennaro,
Vincent Gentile, Eric Gioia, Robert
Jackson, and James Sanders, Jr.
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| THOMPSON:
PROPERTY TAX PROGRAM FAVORS MANHATTAN
LUXURY BUILDINGS
View
policy brief
View
letter to Mayor Bloomberg
Analysis
shows tax breaks for multi-family housing
may not reflect the City’s current
real estate market
A property
tax savings program created to spur
housing development three decades ago
may have outlived its usefulness, as
Manhattan luxury developers and apartment
purchasers have reaped the bulk of the
program’s benefits, according
to a report released today by Comptroller
William C. Thompson, Jr.
An analysis
of the distribution of property tax
savings granted under the City’s
Section 421-a tax incentive program
shows that most of the benefits have
subsidized some of the most expensive
housing in the City. The analysis was
delivered to Mayor Michael R. Bloomberg
today.
The 421-a
program offers developers tax exemptions
to encourage them to build new multi-family
housing, and requires that, in return,
recipients in the Manhattan “exclusion
zone” – generally between
96 th Street and West Houston/14 th
Streets – must help finance affordable
housing. The Comptroller’s analysis
documents that relatively little affordable
housing has been financed compared with
the value of the exemptions that have
been taken.
In Fiscal
Year 2005, more than $320 million in
Section 421-a subsidies was provided.
Since 1998, the annual value of 421-a
subsidies has increased by more than
$240 million.
Comptroller
Thompson commended Mayor Bloomberg for
recently appointing a Task Force to
evaluate the program, and said, “My
analysis should assist the Task Force
as it evaluates how to update the 421-a
program to reflect that the City’s
residential real estate market is stronger
than it was in the early 1970’s
when the program was enacted.”
The major
findings of the Comptroller’s
report, An Overview of Section 421-a
Housing Subsidy Distribution, are:
- In Fiscal
Year 2005, Manhattan developments
received 78% of all 421-a benefits
yet accounted for merely 48% of the
number of units that received 421-a
benefits. Elsewhere, this pattern
was reversed, with the percentage
of the number of units receiving 421-a
benefits exceeding the percent of
total value of the 421-a exemptions.
- Developments
with subsidies of more than $10,000
per unit in 2005 accounted for only
19% of units in the 421-a program
but received more than 50% of the
421-a benefits. These deeply subsidized
units are nearly all in Manhattan
and had a market value of $4.2 billion.
- Since there
is no cap on subsidy levels, in 2005
owners of some units in a few 421-a
buildings, such as 845 United Nations
Plaza and 176 Perry Street, received
subsidies of more than $100,000 per
unit.
- The 421-a
program also subsidizes non-residential
uses within a residential development
such as parking garages, commercial
office and retail spaces, day care
centers, medical offices, and even
wine cellars. Commercial condominiums
received $19 million in subsidies
through the 421-a program in 2005.
- Under the
421-a 80/20 program, developers receiving
20-year tax exemptions in the Manhattan
“exclusion zone” are required
to set aside at least 20 percent of
their apartments as affordable rentals
for lower-income households. Buildings
participating in this program received
$103 million in 2005 alone, or nearly
$50,000 per unit of affordable housing,
and during their remaining years in
the program will receive more than
$1 billion in taxpayer assistance,
non-discounted, or more than $520,000
per unit of affordable housing created.
- In Manhattan
south of the exclusion zone, subsidies
provided through 10-year exemptions
totaled more than $24 million in 2005,
yet there was no requirement for developers
or unit purchasers to contribute to
affordable housing.
- Developers in
the Manhattan “exclusion zone”
may also opt for a 10-year exemption
in return for purchasing negotiable
affordable housing certificates from
affordable housing developers. More
than 7,675 housing units received
subsidies through the 421-a negotiable
certificate program in 2005, helping
finance approximately 1,918 units
of affordable housing. The subsidy
for each affordable unit was estimated
to be between $42,000 and $52,000,
while the average tax expenditure
per affordable unit of housing in
2005 financed through this program
was more than $58,000. Developments
receiving 421-a benefits in the exclusion
zone received approximately $119 million
in tax exemptions.
Outside of Manhattan, most of the
projects receiving 421-a subsidies
are located in growing, gentrifying
neighborhoods.
The Comptroller’s
analysis raised several issues for further
research, including:
- The
feasibility of extending the exclusion
zone.
- Reevaluating
the affordable housing contribution
to be required in exclusion zones.
- The
possibility of revising the negotiable
certificates program.
- Devising
alternative methods of determining
which 421-a projects must contribute
to affordable housing.
- Determining
the impact of 421-a subsidies on land
costs.
To view a copy of the report or the
letter to Mayor Bloomberg, please visit
the Comptroller’s web site: www.comptroller.nyc.gov.
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