The fact is that MIH is just bad policy. In New York City’s housing market, it mostly enriches developers and real estate speculators while inflicting real harm to the neighborhoods it’s supposed to help.

975 Liberty Ave

Adi Talwar

975 Liberty Ave, Brooklyn, one building shaped by the MIH program.

It is time to end Mayor Bill de Blasio’s policy of trying to build “affordable” housing via his signature Mandatory Inclusionary Housing (MIH) program. The next administration and current mayoral candidates should develop alternatives. 

The fact is that MIH is just bad policy. In New York City’s housing market, it mostly enriches developers and real estate speculators while inflicting real harm to the neighborhoods it’s supposed to help. Here’s how it works: the city upzones someone’s property (or sometimes an entire neighborhood) in order to “incentivize” the demolition of what is already there and replace it with one or more out-of-scale tower(s). Up to 30 percent of the new apartments will be arguably “affordable”—occasionally to households earning 130 percent of the Area Median Income (AMI), about $133,000 a year for a family of three)—and the other 70 percent will be rented or sold to the world’s gentry as “market rate” units

Fans of this approach say the rich will move into the new market-rate units, causing a price drop on their old apartments. They call that “filtering” which is pretty much a fairytale in New York City given how globalized real estate investment is. Proponents also argue that flooding the city with luxury housing will eventually lower the rent at the bottom of the market. That’s called the “trickle-down effect” which also doesn’t work in New York City’s market conditions. Advocates of this theory, such as OpenNY—even Deputy Mayor Vicki Been—also seek to use MIH and zoning to undercut New York’s historic districts and find illogical excuses to build over historic areas with towers, as they are now proposing for three sites in SoHo and NoHo (see the city’s Where We Live report, page 194), a move designed to benefit Edison Properties and Trinity Real Estate, not the citizens of New York.

So what could go wrong with MIH in New York City? Pretty much everything. Here’s a partial list:

  • The MIH policy doesn’t work. As of December 2019, only 2,000 “affordable” units of the promised 80,000 have actually been built under the policy. Surely that is a sign of failure. 
  • What MIH does do is flood upzoned neighborhoods with luxury housing, mostly in the form of towers, creating a kind of gentrification on steroids that displaces existing residents and the small businesses that served them.
  • The policy was never wanted by the citizenry. It was rejected by more than 90 percent of community boards but railroaded through city government anyway. So what’s the point of our already embarrassing model of democracy-as-focus-group that community boards are supposed to be?
  • The policy was sold to the public with two lies. The first is that the city needed to build as fast as possible to accommodate a crisis of “a million new New Yorkers.” Supposedly, our population was going to explode and we all had to suck in our stomachs and squeeze more bodies into the schools and subway cars. That turned out not to be true. We’ve had a net loss of people all along, even before COVID. The real idea was to compete with other Eastern Seaboard cities to attract hundreds of thousands of yuppie tax-paying college grads from across the country by building speculative luxury condos for them on the waterfront. Really! This lie has massively harmed the credibility of the technocrats running our city. The second lie was that the only way to get affordable housing was to juice the returns of private sector developers to supply a tiny bit of it. That’s just a right-wing, trickle-down, “Chicago School” version of economics getting passed off as a “progressive” housing policy.
  • Because this policy is based on big-time private sector developers as the main players, the definition of “affordable” gets fuzzier and fuzzier until it means nothing. Supposedly “affordable” is linked to a percentage of the “area median income” (AMI), a metric that is so flawed it prices out most New Yorkers. If you want to see what goes wrong, try to find an “affordable” unit in one of the towers of the Atlantic Yards project. My conclusion is that we need to get out of the game of fighting over AMI on each and every project and thinking that a trivial AMI concession or even just fixing the AMI standard will render a towerized project palatable. We need a different game and one not anchored in real concessions to developers and fantasy theory about MIH.
  • The proliferation of grossly out-of-scale new buildings drives up rents for all and renders neighborhoods that are victims of it unrecognizable. There’s data to support that. It also literally darkens the local streets and parks and stresses our already overburdened infrastructure of schools, parks, libraries, and subways. These non-market costs are incalculable, and not accounted for with any seriousness by the de Blasio administration in the depressingly pointless environmental review process.
  • There is also the immense problem that there is no place to build in the historic core of the city without demolishing something. That’s because we are the densest city in the country and already overbuilt as of 1955 (according to Robert Moses no less). “Who cares?” say the developers and this administration. A cynic like myself can’t help but think developers will say anything to squeeze even more luxury housing in the core, simply because the rates of return there are so high compared to building in the Bronx or Staten Island. They’ll use any justification, from affordable housing to incoherent racial integration theories to suburban notions about “transit-oriented development.” But the willful demolition of the historic core is literally killing off the very great urban neighborhoods that made people want to live in New York in the first place. Talk about short-term and blinkered thinking!

Are there less destructive alternatives? Of course there are, and especially if the city slows down and stops trying to do a “shock and awe” build-anything-now approach. Here are just six of the many ideas that have been floated, all of which would be an improvement and far less destructive to the city than reliance on floor area ratio (FAR) giveaways for MIH. Some of them have even been considered by the administration in a small-scale, hamfisted, or hesitant way, and always secondary to upzoning and MIH. 

Idea 1: Create incentives for owners of single-family homes and rowhouses to create what is called an “auxiliary unit” or a “granny flat.” Done properly, this could create about 200,000 new housing units at the low end of the market, dispersed around the city. That is 100 times the number of units the MIH program has produced! Moreover, it benefits the middle class who own the houses, not the world’s real estate speculators. (Note we are not talking about the legalization issue of existing conversions which is also a fine, but limited idea).

Idea 2: Use the current downturn to buy up at cheap prices lots of existing apartment buildings that could go into a community housing trust. Vulture capital is already circling. Why shouldn’t the city win out on this one instead of Blackstone? Money might be interest free for this purpose.

Idea 3: Build six-story apartment buildings on three-quarters of Floyd Bennett Field. If you don’t know where that is, Google it. Hey, that’s more than 800 acres to work with. Yes, we’d have to get the land back from the feds, but is it any crazier than the speculative, incredibly costly projects proposed for Sunnyside Yards or Governors Island? 

Idea 4: Build low (and mid-rise) in-fill housing on the excess open land and parking lots throughout the city’s publicly owned tower-in-the-park complexes. Do it very slowly, incrementally, as public money comes available. Don’t try to do this as a “shock and awe” strategy. Make it all 100 percent permanently affordable with just public money. Don’t go into debt for it. Don’t build over playgrounds, and don’t make it high rise. Don’t go over six stories so it is cheap to build. Design it so it reconnects these complexes to the urban street. Don’t do this via the RAD privatization process and don’t try to make these new units also subsidize NYCHA rehab. There are ways to get money for this, just not all at once. Incrementalism needs to win out here. Note that zoning guru Michael Kwarlter proposed low-rise infill in these spaces years ago. 

Idea 5: Incentivize the return of single room occupancy (SRO) and protect the category from gentrification. The attack on the SRO for 20 years reached a pinnacle during the Koch administration, causing the loss of 200,000 beds in his administration alone. We lost everything from middle class “hotels for women secretaries” to flophouses on the Bowery. That’s a big mistake that needs to be rectified, but slowly and incrementally. 

Idea 6: Make construction of six-story buildings as-of-right on all the commercial corridors of the outer half of the city while also banning the production of any more single-family homes anywhere. Disallow the conversion of any property to a single-family home. That would mean forbidding future moguls from imitating Michael Bloomberg, who combined two townhouses into one mega-mansion.

See? There are lots of alternatives to the deeply-flawed version of MIH-with-upzoning that the mayor has pushed. Candidates looking for new ideas on housing should read Human-Scale NYC’s Affordable Housing white paper here. To be sure, technocrats and permanent government types will resist a new path, as they often don’t like change or admitting they are wrong. Some are also dependent on developers for revolving-door jobs, research funds, or campaign finance money. Change is hard, but it is time for our policy elite to take Churchill to heart when he said, “All men make mistakes, but only wise men learn from their mistakes.”  

Lynn Ellsworth is the co-founder of the Alliance for a Human-scale City.

21 thoughts on “Opinion: It’s Time to End Mandatory Inclusionary Housing. Here Are Some Alternatives

  1. Very thoughtful and well-researched piece. We must take back the term “affordable housing”, which is being used as a Trojan horse by private developers and the De Blasio Administration to force through socially unjust and unsustainable rezonings, like the massive and misguided Gowanus Rezoning pushed by Councilmember Brad Lander over the objections of his own constituents! Common sense should dictate that bringing 20,000+ new residents into a FEMA Flood Zone A to live next to an unremediated EPA Superfund toxic site and an open sewer is terrible public policy. Find out more at: https://www.voiceofgowanus.org

  2. These alternatives to the “build, baby, build” need to be explored.
    I am curious how much vacant, (even temporarily vacant), space there is in the city now.
    Environmentally speaking, the greenest building is the one that exists already. Climate change anyone?
    The current trajectory of this city is the destruction and displacement of all that makes New York City a special place.

  3. Good topic to cover, a lot of magical thinking about it out there, mostly by real estate adjacent people under various monikers. Fact is, REBNY, the real estate interest group, came out in favor of it when deblasio announced it a few years ago, that should tell you all you need to know about the real purpose and outcomes of the policy.

  4. Excellent piece. Current city policy is a demonstrable failure: homelessness is soaring, pre- and post-pandemic.Not only should we ditch the failed MIH Policy, but we should expand and tighten manufacturing zoning restrictions, and push for universal rent control on the state level. Sky high rents are dangerous to the health of human beings (families crowding into unaffordable apartments in Corona and Elmhurst helped fuel the terrible cost of Covid in those neighborhoods), and it is killing the diversity and very soul of NYC.

  5. Context and experience is everything. I used to think there are places in NYC where MIH would be a useful policy, and there probably still are. But the places and ways the deBlasio admin has used MIH over the last 5 or 6 years has so discredited the policy that I’m afraid we have to throw this baby out with the bathwater and try alternatives, such as those the author suggests. For several other recommendations “Toward Just Land Use and Housing Policies” see last week’s CityLimits op-ed on that topic: https://citylimits.org/2020/12/16/opinion-moving-toward-just-land-use-and-housing-policies-in-nyc/

  6. Excellent piece ! Thank you for shedding light on the lie of “affordable housing.” We all want it, of course, but MIH is not working for all the reasons you mentioned and there are MANY viable, BETTER alternatives we can start implementing now!

  7. ‘Idea 1: Create incentives for owners of single-family homes and rowhouses to create what is called an “auxiliary unit” or a “granny flat.” Done properly, this could create about 200,000 new housing units at the low end of the market, dispersed around the city. ‘
    -I own a 1-family house. Adding a legal 2nd apartment (which means adding a 2nd floor) costs +$100k. Used to be quite common on SI but not worth it anymore. NYC’s aging infrastructure couldn’t handle 200,000 more units in the outer boroughs. School seats, water mains, sewer mains, etc.

    ‘Idea 3: Build six-story apartment buildings on three-quarters of Floyd Bennett Field. If you don’t know where that is, Google it.’
    -How will these new residents get to their jobs in Manhattan?

    ‘Idea 6: …while also banning the production of any more single-family homes anywhere. Disallow the conversion of any property to a single-family home.’
    -Very few 1-family homes are being built anywhere in NYC. Except in Riverdale, parts of Staten Island like Todt Hill and parts of eastern Queens. All neighborhoods with limited water/sewer infrastructure. I doubt it’s legal to prevent the owner of a 2-family home from converting it to a 1-family home, a rare conversion to begin with.

    • Hi, Just to comment on a couple of your objections: (Idea 1) Incentives to build rental flats in 1-family homes could work, if the incentives are good enough. Perhaps your own home isn’t appropriate, but others are. The idea is to spread it out, so the aging infrastructure is not overwhelmed. Current suggestions for concentrating housing into tall towers is much more of a stress point. For example, the SoHo/NoHo rezoning plan would add 50% more population into the area…an area that has zero schools and zero parks and zero grocery stores plus an ancient sewer system and has a large section (planned for the greatest development…that is in the flood plain.)
      (Idea 6) We do see conversions of multifamily homes into 1-family homes in Manhattan. These often require City approvals.

      • Actually my ranch-style home is quite easy to convert to a legal 2-family house by adding that 2nd floor. But it’s the cost that’s the issue. I can’t think of any city incentive that would convince 1-family home owners to add a 2nd unit. I even see fewer 2nd floor additions here on SI because it’s gotten so expensive to do, and only a few contractors can do it right. If anything it’s $150k to do it right not $100k.

    • “how will these new residents get to their jobs in Manhattan?”

      I think the assumptions being made here are false and they were false prior to the pandemic. Many people who live in the outer boroughs work in the outer boroughs. With the pandemic many office jobs in Manhattan are now remote and many low-paid service jobs are gone. Check out the research of James Parrott, an economist with The New School.

  8. Outstanding piece.

    Putting an exclamation on it…it should come as no surprise that then Deputy Mayor Alicia Glen having worked at Wall Street’s Goldman Sachs with drooling private equity stakes investors created a template-i.e. the MIH/ZQA scam together for a mindless Mayor -deferential to developers who were busy funding his campaign and personal self interests. In Feb 2016 deBlasio offered a goldmine raise to the City Council…a third over their current salaries…from $112,500 to $148,500 and then the next month- in March 2016…the MIH/ZQA passed:
    https://www.nytimes.com/2016/02/06/nyregion/elected-new-york-city-officials-vote-to-raise-their-own-pay.htm
    A paltry few Council members voted against it:
    https://www.dnainfo.com/new-york/20160322/civic-center/city-council-passes-mayors-citywide-rezoning-changes/

    Indeed-not only as Lynn describes-are the ‘AFFORDABLE’ carve-outs so unaffordable that they turn market rate :
    https://www.dnainfo.com/new-york/brooklyn/

    but… the remaining market rate units in those same projects are NOT reflective of the often racially target communities and blocks in which they’re injected. Unconscionable ULURP seizures then follow -community protests ignored…a kind of NYC localized version of eminent domain. -The rationale of ‘affordable housing’ has done much displacement damage to the outer boroughs -four years of REBNY’s MIH ownership of our communities- and if we’re honest-their henchmen… most of our City Council which blessed these bait and switch ‘public purpose’ initiatives to the detriment of their constituents.

    Lynn’s alternatives show that there are any number of better fixes…and we need to ask the next round of 36 Council candidates running to fill termed-out 2021 seats where it is that they stand on this.

  9. I agree on almost everything that is said in the article. The truth is DeBlasio and his developer and lobbyists friends have used the term “affordable housing” as a smoke screen for giving developers mor opportunities to destroy neighborhoods and existing housing and small businesses so that they, the developers can make more money.

    This push for “affordable housing” was always a cynical scam by the mayor and his Administration and Lynn lays it out so well.

  10. The approach to affordable housing proposed here is clearly the one to follow. It is very similar to what Patrick Lamson-Hall and I proposed in 2014 in a working paper titled The Rise and Fall of Manhattan’s Densities, 1800-2010 (https://marroninstitute.nyu.edu/uploads/content/Manhattan_Densities_High_Res,_1_January_2015.pdf).
    In the conclusion to this paper, “we outline a densification program that could accommodate a larger population without recourse to heavy-handed land assembly for large and heavily subsidized housing projects. Our strategy is based on our conviction that we can achieve a more efficient, more equitable, and more sustainable densification in New York City with small actions on the part of the many than with big actions on the part of the few.”

  11. Brilliant piece by Lynn Ellsworth, in which a much more effective, doable and palatable approach to creating affordable housing is presented than the failed MIH program pushed by the Mayor and loved by the developers.

  12. Excellent, finally someone calling out MIH for the scam that it is. NYC never wanted MIH from the very beginning evidenced by the majority of the CBs shooting it down. I hope 2021 candidates are listening.

  13. This argument doesn’t really hold up, even though I agree with the principle that MIH should be improved. The NIMBY argument of preserving historic areas conflicts with the need for greater affordability. You can’t have exclusionary zoning (historic districts) and then call for greater affordability construction other places.
    Most of the alternatives unfortunately don’t make sense or aren’t politically feasible. Hopefully infill housing in NYCHA will one day be realized, but the city has been trying to do that at a large scale since Bloomberg who failed miserably. 
    Developing vacant lots is something the city is and has been doing for years with many 100% affordable projects in the pipeline.
    Developing Floyd Bennett Field is insane. There’s no transit there, it’s so far from jobs, and it’s on the National Register!
    The last point I 100% agree with and should be #1: Idea 6: Make construction of six-story buildings as-of-right on all the commercial corridors of the outer half of the city while also banning the production of any more single-family homes anywhere. Disallow the conversion of any property to a single-family home. That would mean forbidding future moguls from imitating Michael Bloomberg, who combined two townhouses into one mega-mansion.

  14. ‘…Disallow the conversion of any property to a single-family home. That would mean forbidding future moguls from imitating Michael Bloomberg, who combined two townhouses into one mega-mansion…’

    Such conversions are rare and I don’t see how it can be legally prevented. My neighbor owns a 2-family home and following the birth of their 3rd child is thinking of converting it to a 1-family home. His property his money.

    The Bloomberg-type combination is extremely rare but so what. His property, his money.

  15. This is an excellent analysis of the failed MIH program. Although academics say that “displacement” or “gentrification” is hard to quantify and measure, it is absolutely real and it needs to stop in NYC. No more rezonings.

  16. Thank you to Lynn for opening up a discussion on the failures of MIH developments, for m the perspective of community inhabitants. On the other hand, these rental-developers see nothing but success with MIH, with record profits in NYC rental properties being reported for 2020. The problem is that the elected city representatives find it easier to side with those developers rather than they constituents who’s perspective they are to represent.

    There needs to be more real discussion on these matters, and the possible alternatives, can we expect, during this coming election year that this topic will be addressed by those looking to represent our NYC communities? It’s the new year setting in and we want to be optimistic, but without a constant push to open this discussion in the political primary races, we are going to hear little more that repackaged words supporting MID.

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