CityViews:
Housing Plan Misses the Big Question of How We Got into this Mess in the First Place

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A rendering from "Housing New York," the mayor's affordable housing blueprint.

HPD

Who would argue with the fact that we are in an affordability crisis stimulated by stagnant wages and rising rents, and that the demand for housing in New York City has been on the rise? Additionally, while no one knows by how much our population will grow in the next 15 years, we may likely top 9 million residents by 2020, ahead of previous growth estimates. While none of this is false, there is much more to the story of how we got into this situation in the first place. In failing to confront deeper questions around race and place, value and wealth creation, Mayor de Blasio’s housing plan comes up short in both creativity and in addressing the concerns of those New Yorkers most at risk for displacement with any sense of urgency. This is why the plan has received so much criticism despite an ambitious community engagement process.

To be fair, expectations are higher now than in at least a generation. The de Blasio housing plan follows 12 years of a fiscally conservative billionaire Mayor, who followed eight years of no real affordable housing policy during the Giuliani years. Clearly the expectations for a “tale of two cities”-fighting progressive—the city’s first Democratic Mayor in 20 years—are exceptionally high. But this isn’t just about de Blasio: Given the growing number of those who are severely rent burdened or homeless, and on their way to being displaced from the city they love, the timing is right for such high expectations!

The underlying fear in the air today is that of displacement. This fear is especially high among working-class people of color who, when they talk about “gentrification,” are really talking about the most recent installment in a long line of practices and policies that have led to the displacement, wealth stripping and fragmentation of communities of color throughout our nation’s history. During the last 80 years, the New York region and the entire nation has been shaped by systemically racist practices of redlining, a process of linking up race and real estate values and denying mortgages to people of color, wealth creation almost exclusively for white families through heavily subsidized home ownership opportunities, and the mass displacement of mostly people of color through Urban Renewal. Meanwhile, the promise of public housing became highly racialized and designed for failure, and the segregated neighborhoods of color embodied the scourge of mass disinvestment from the public and private sectors.

While the movement for community reinvestment began with the people most impacted by disinvestment, and sought to build wealth through creative means like sweat equity and collective ownership in its early days, the dynamics of “reinvestment” have shifted over the last 30 years to focus (successfully) on rebuilding the housing stock and the actual geography, but have failed to invest in local residents in a way that builds wealth and shared ownership. Rising property values and rents, coupled with a lack of wealth creation, leads to severe housing insecurity. This is the setting for the perfect storm of speculative investment in “place” (land and housing stock) that promises to reinforce existing racial and power dynamics and lead to another mass displacement of people of color in order to further the return of whites whose blue collar parents and grandparents fled the city to suburbia.

The new housing plan fails to look at ways to substantially disrupt this dynamic and ask the difficult question of “Who is New York City for, really?” in a way that addresses past injustice. Likewise, it fails to acknowledge how this history impacts who sits in the seats of power deciding what questions to ask, and how best to answer them. Longtime neighborhood residents of color experience the impacts of this reality and understand that the new housing plan is mostly more of the same.

What they have been presented with, however, is a simple scenario of supply and demand economics that ignores concerns of historic and systemic racism, and where the corresponding metrics for success have already been established before asking for any level of community input. The box of “creating and preserving 200,000 units of affordable housing” limits the conversations and maintains existing power dynamics. Contributions from developers, financiers, and high-end consultants receive much higher value, while the interests of those most likely to be displaced are relegated to the fringes of the program. No wonder the core components benefit higher income bands, new arrivals, and industries like finance and real estate. Anti-displacement programs like representation in housing court and anti-harassment initiatives are add-ons that have to be won through hard-fought battles, and offer little promise for a vision of an equitable city where workers can afford to live.

As the elected mayor, de Blasio and his administration have every right to have done things the way they have, and the people of the City of New York have every right to have responded in the way they have. There is nothing wrong with conflict. Good programs have come out of tension and conflict between neighborhood residents and government officials in the past, and some good programs will also likely come through this process. Yet, we are at such a critical moment in our city’s and nation’s history because of extreme income inequality, the growing racial wealth gap, hyper-segregated schools, mass incarceration and climate change that good programs are simply not enough.

Confronting the “tale of two cities” head on and building an alternative future requires real collaboration that comes from shared ownership of this future vision and the acknowledgment of the structural inequalities that got us to this point in time. What I present here as certain policy alternatives are themselves insufficient as they have not gone through the type of genuine engagement process of which I write. They do, however, attempt to address in a substantial way the major concerns held by those most fearful that hallmark programs like Mandatory Inclusionary Housing and Zoning for Quality and Affordability will only increase the likelihood of their future displacement.

First and foremost, the center of the housing plan cannot be dependent on new development that will primarily benefit those at the middle- and upper-income levels of affordability and leaves the majority of those most threatened with displacement with no hope of even qualifying to play the lottery, let alone win it. We all know when it comes to playing the lottery, you’ve got to be in it to win it! If we limited sales of PowerBall tickets to those making over $60,000 per year, there might be an uprising, despite the fact that the odds of winning are infinitesimal; the absence of hope is despair.

Consider that those who could and should benefit most under a mayor who promised to take on income inequality are those working in low-wage, service-sector jobs with few benefits, and who pay the majority of their income on rent in either privately owned rent stabilized apartments or two-to-four family houses. While the mayor has appointed smart and tenant-friendly members to the Rent Guidelines Board, it is painfully obvious that rent stabilization is not an affordability program. A one percent increase followed by a rent freeze, while important, has not increased affordability on any meaningful level. Most low-wage renters, especially those who have moved in recent years, are already so rent-burdened that a rent freeze just keeps them living at the edge of homelessness. Even in the best-case scenario where a severely rent burdened tenant wins the housing lottery, the rent in the apartment they vacate will increase by at least 20 percent for the next tenant. How is this a net-gain for the broader vision of a New York affordable to the people who make it run?

Instead of focusing on new development and lotteries as the core of the plan, the city could focus on a program that benefits owners who have (or could be incentivized to have) a long term investment strategy and value the cash flow worth of their properties over the short term speculative resale value. Rent increases in these properties are necessary to maintain profitability as operating expenses continue to rise dramatically. Even tenant- and community-controlled properties have had to raise rents significantly to deal with soaring operating costs in recent years. Among these cost increases, none have matched the rise in water and sewer rates, which have tripled in the past 15 years as rate payers take on more and more of the capital costs associated with providing the City with clean water.

A recent report by University Neighborhood Housing Program (my former employer) demonstrates how buildings in lower-income areas use more water and thus have higher water bills than buildings in higher income areas. For instance, in 2013 the typical core Manhattan building paid less than 5 percent of its operating expenses towards water, while in the Bronx it was 11 percent and as high as 13 percent in a sample of buildings with regulatory agreements. With unfunded mandates from the federal government, debt service on bonds for huge infrastructure projects (that are subject to interest rate hikes), and unknown factors stemming from climate change, rates will continue to rise and put more upward pressure on rents. We are witnessing the horrific impact of water insecurity in places like Flint, Detroit, and much of the western U.S., and it would be foolish to think that New York is immune.

A substantial discounted rate for water in exchange for a regulatory agreement on rents could be appealing for many landlords of both rent-stabilized buildings and private homes. Any discount for a subset of buildings puts more burden on other customers, meaning the program will become more and more attractive over time while shifting more of the burden onto luxury and market-rate property owners and those more interested in short-term resale. And unlike related ideas revolving around property tax abatements, a program based on a water-rate discount does not require approval from the state, which in this climate is critical to its success.

While city officials have met with UNHP about its proposal and may be considering a pilot program, it is not central to the city’s strategy. Without developer fees, ribbon cuttings, tax credits, and press releases, a program based in fighting displacement through water discounts lacks sexiness or a clear lobbying group to please. And yet, the possibility of a more affordable rent would be real for many New Yorkers. The city could invest their expertise in working out the details of such a strategy to make it attractive to landlords, tenants and environmentalists by incorporating incentives to curb storm water runoff.

Such a strategy could also support the necessary and urgent work to city is taking to move the formerly rent-stabilized buildings that have been converted to shelters (at a cost of $3,500 per family per month) back into the fold, before they are lost to deregulation. All of this would certainly take creativity with funding streams and a lot of inter-agency communication and coordination, something only possible in a climate of collaboration.

The other concern that the city could begin to address connected to the housing plan is the opportunity for wealth-creation for those not benefitting from the rising real-estate prices that come with the influx of wealthier white families into historically black and Latino neighborhoods, such as Upper Manhattan and Central Brooklyn. This could look like ensuring long-time owner occupants who are selling get a fair price for their properties and also have the opportunity to invest part of those proceeds into a fund that benefits long-time neighborhood residents in new wealth creation endeavors, such as cooperatively owned small business startups who seek to capture the wealth of large local institutions. If done right, such a strategy creates the opportunity to transform one dynamic of “gentrification” into a wealth transfer from white newcomers to long-time residents of color.

These are just two ideas that might arise from a process that acknowledges the uncomfortable realities of how we got into this situation. I do not purport to have all of the answers to making this work, and that is precisely the point. The best visions and programs come out of a more deeply engaging process that values the contributions of everyone. By naming and addressing the underlying concerns and fears around displacement and economic insecurity we can create a truly collaborative environment where initiatives such as rezoning and income diversity in new development, designed with a level of intentionality that acknowledges the disparate impact of past housing plans, can be part of a broader vision for a city that works for all of us.

Gregory Jost is a partner at Designing the WE and a consultant with LotInfo. He is writing a book called Race, Real Estate and Redlining: A History of the Bronx and America.

  • DanM

    The premise here (albeit grossly oversimplified) seems to be that racist policies created the housing shortage, that buildings with poor minority tenants pay unaffordable water bills, and that such buildings and tenants would benefit from a subsidy paid by other water customers. Just looking at the water issue, it should be understood that water bills are based on consumption. Larger families and denser groupings of people in apartments use more water. Following the recommendation would mean that the elderly, couples and singles, and struggling young professionals in economically integrated buildings would be paying more. I doubt that is what’s intended, but it is what would happen.
    That said, city water bills and city property taxes have been the fastest growing apartment operating costs for decades. They make up about a third of basic operating and maintenance costs, which currently average a total of more than $800 a month (not counting debt service or profit) for a typical apartment. Addressing unaffordable water and tax bills is essential to moderating rents on either new or existing housing.

  • PrgNewYorkCity

    It is a Tale of two cities
    or a tale of the city’s goal. Climate change, resource

    depletion,
    and neo-classical economics do play a role in this discussion. Most

    of these
    issues started with economic philosophies or currently neo-classical

    economics.
    In neo-classical economics economies do not really pay attention to resource

    depletion
    and energy or the process that lead to a product, it mainly only looks at the
    end result of the process and takes an ethnocentric view of wealth by using
    supply and demand, models that do not take energy into consideration, and what
    people decide to do in the market. There is no progressive energy policy or
    energy planning to manage resources and this has an effect on

    climate
    change. Developers, contractors, labors and others are stuck in the

    Neo-Classical
    economic philosophies; some don’t understand that everything

    has a
    biosocial component. Since there is a greater divide in wealth there are

    less
    people making the wrong decisions for the larger whole. Some of them don’t

    understand
    the real process of economics, which is biophysical process.

    So, the
    root causes of these problems lie in economic philosophies and how people
    define wealth. We all need to face great challenges with natural resource
    depletion, and the reduction of formerly abundant fossil fuels, and climate
    change. We all need to work together and separation does not

    help with
    dealing with issues that affect everyone regardless of class. A new progressive
    energy conscious approach is needed, with resilient architecture that help
    everyone, an energy conscious planning component, a local grid or maximum power
    component, not just a few who are stuck in believing in a neo-classical
    economic ideas that where good when we had abundant resources, but not suitable
    for our current situation.

    The city
    needs to decide what path to take. Does it want to be a leader in thinking

    of ways
    to provide for all by using progressive and innovative ways to deal

    with
    climate change or to be thought as a dwindling city that does not want to

    adapt and
    that uses the same methods that haven’t been successful in the past

    and will
    not be not be successful today?

    We all
    decide.