There may be more to Governor Spitzer’s legacy than many would have anticipated just a few weeks ago. State legislators are considering his plan to commit hundreds of millions of dollars to fund affordable housing efforts throughout the state – and while the proposal still must clear the hoops of the state budgeting process, many involved say that lawmakers are on the verge of reaching a deal.
To the excitement of housing advocates, Spitzer announced in January his proposal to create the $400 million Housing Opportunity Fund to provide ongoing support for affordable housing in New York state. Since then, the Assembly and Senate both have crafted bills regarding the plan, and will soon start the process of hammering out a compromise.
Housing advocates and elected officials are expressing a level of optimism on this issue that contradicts the dismal news emerging from Albany these days. Aside from the leadership upheaval, the state anticipates a budget shortfall of more than $4 billion, and Gov. Paterson recently announced $800 million in budget cuts. “Despite the budget issues, we feel that this is a great time for this investment,” said Marc Greenberg, executive director of the Interfaith Assembly on Homelessness and Housing. “Housing relates directly to other areas of the economy and creates growth.” Members of the Empire State Housing Alliance, a statewide collection of about 50 organizations that formed almost two years ago to promote affordable housing, expect at least a $200-$250 million initial public investment in the Fund, if not the full $400 million that was originally proposed.
The original Housing Opportunity Fund was intended to finance a wide range of housing options, including the preservation and development of affordable, supportive and workforce housing through the expansion of existing programs and the creation of new ones. Some of the better-known programs targeted for further investment by the plan included Mitchell Lama housing, low-income housing tax credit projects and Homeless Housing Assistance. An advisory panel co-chaired by the Division of Housing and Community Renewal (DHCR) and the State of New York Mortgage Agency (SONYMA), with participation from several other state agencies, would make decisions about the distribution of money.
According to DHCR’s own statistics, the support cannot come soon enough: last year alone there was more than $317 million worth of unfunded applications for housing initiatives in New York. “There’s been a recognition across the state that the time is now to invest in affordable housing,” explained New York City Habitat for Humanity executive director Josh Lockwood. DHCR itself was shortchanged to the tune of $175 million in the previous fiscal year, forcing it to scale back or eliminate many affordable housing initiatives.
Financing for the fund in the original proposal was to come from the sale of land around the Javits Center on Manhattan’s west side, which was expected to provide $300 million for downstate housing programs. An additional $100 million was budgeted for upstate activities through excess reserves from the State’s Mortgage Insurance Fund, which derives revenue from the state mortgage recording tax surcharge, a fee that counties collect from all mortgages.
However, in response to widespread opposition to the Javits land sale—from the likes of Mayor Bloomberg, City Council Speaker Christine Quinn, state legislators and trade show and tourism executives—and the speculative nature of the deal, both the Assembly and Senate have developed alternative funding streams for their respective affordable housing plans.
The Assembly bill, passed just two weeks ago, supports the creation of the Fund, but in place of the Javits money proposes issuing $200 million in bonds to partially finance the program. The Assembly also advanced legislation to commit an additional $180 million to a foreclosure prevention fund, which would provide for both direct financial assistance to homeowners and counseling and legal services. “This is the most comprehensive advancement in affordable housing for the state in 25 years,” claims Assemblyman Vito Lopez , a Brooklyn Democrat who chairs the State Assembly Committee on Housing.
The Senate has not specifically agreed to the creation of the Fund, but its budget does commit $200 million for affordable housing initiatives, to be paid in part through excess reserves from the Mortgage Insurance Fund. For its part, the governor’s office says that Paterson remains committed to the Fund and will keep the plan in the Executive Budget.
In adopting the fund, New York would join 38 other states and the District of Columbia in creating similar housing trust funds, according to policy specialist Nina Dastur of the Center for Community Change, a national nonprofit that operates a Housing Trust Fund Project. Including counties and localities brings the total to almost 600 active funds across the country. With their flexibility and ability to produce tangible results, housing trust funds are an increasingly popular option for governments looking to promote affordable housing, Dastur said. The $400 million commitment from New York would be among the largest in the country. However, Dastur noted that New York’s model is not technically a trust fund, as it does not include a plan for dedicated resources over time.
Members of the Assembly and Senate will meet through the Conference Committee on the Housing Budget to work out the details of the Fund and produce a joint proposal for the governor’s consideration.