City’s Basement Apartment Program Buried by COVID-19 Budget Cuts

The de Blasio administration’s basement pilot program is headed to hiatus after taking a hit in the city’s proposed budget, where funding is being reallocated towards more urgent budget matters related to the COVID-19 epidemic. 

The program aimed to test ways to legalize basement apartments as a way to create new, sanctioned affordable housing units for tenants and help the moderate-income homeowners who might rent some of the spaces out. It was a key community demand during the negotiations over the East New York rezoning, the first of the mayor’s neighborhood redevelopment plans.

In the mayor’s executive budget, the basement pilot program is expected to see funds cut by $1.09 million in the coming year — leaving the program with only $91,580 for operations. Initially, the basement pilot program, which was launched last year, was slated to receive $12 million dollars for operational costs during a three-year period. 

Dozens of nonprofits signed onto a letter last week asking the city to continue its financial support of the program. While acknowledging the stark budget reality facing the city, the signers insisted: “this is not the time to draw back support from programs that are critical to the most COVID-impacted populations in our city.” 

“The virus is exposing the desperate need for safe spaces for vulnerable populations who need to socially distance,” the letter read. “It’s now more important than ever to help modernize and bring up to code informal basement apartment units, where living conditions may put people at risk of disease transmission.”

The basement pilot program stemmed from over a decade of advocacy by nonprofits such as the Chhaya Community Development Corporation, which founded the Basement Apartments Safe for Everyone (BASE) campaign in 2008.

A 2009 study by the Pratt Center for Community Development and Chhaya estimated that there are more than 114,000 units in New York City’s basement apartment housing stock. 

It also became a featured capital investment in the 2016  East New York rezoning plan; the terms of agreement included the stipulation that legislation would allow for the study of the basement program to be piloted in the Brooklyn neighborhood, where low-income homeowners and low-income housing were at risk for predatory lenders and speculative investment.

“The dynamic of the housing market in the neighborhood, before COVID-19, has been that those homeowners really, really struggle,” says Michelle Neugebauer, the Executive Director at Cypress Hills LDC, a key player in community advocacy around the East New York rezoning. They struggle, some of them with high-price mortgages. They struggle against predators and house flippers and people that want to rip them off, the rising water bills and utility bills. It’s not easy,” 

“And I would say that it was considered one of the few wins of the rezoning battle; there could be this pilot in East New York that at least for a small number of homeowners could help stabilize their finances by bringing in this additional source of income that would provide safe, habitable, healthy living accommodations for renters, not at high rates.” 

Along with several nonprofits, Cypress Hills Local Development Corporation sat on the city taskforce assigned to make the basement pilot program feasible and later implemented the Basement Apartment Conversion Pilot Program (BACPP) overseen by the city’s Housing Preservation and Development (HPD) in East New York. 

The  February 2019 legislation behind the basement program required a legal basement apartment to have a minimum clear ceiling height of seven feet, an automatic sprinkler system, emergency escape and rescue openings and smoke and carbon monoxide alarms, among other features. 

Under the program, HPD would work with community-based organizations to identify homeowners able to participate in the program. The program would assist homeowners with legalizing basement apartments with technical assistance, low-interest finances, helping select an architect and contractor from a pre-qualified list, assisting in the temporary relocation of any tenants and helping to monitor construction and leases upon completion of the renovations. Qualified homeowners would have to show an income at or below 165 percent of the Area Median Income, which is at $168,960 for a family of three, and occupy the home as their primary residence.

In New York City, typical illegal basement and cellar units have no lease terms, limited tenant rights and, possible poor and unsafe conditions. According to HPD, the basement pilot program’s main goal was to legalize 40 basement housing units in the duration of its course in East New York. The city had planned to expand the program into neighborhoods similar to East New York such as Jackson Heights and Richmond Hill in Queens where one- and two-families homes were in the housing stock. 

According to HPD, there were 8,000 potential program participants and the agency conducted follow up conversations with nearly 3,000. Cypress Hills LDC said out of those 3,000, an estimated 900 homeowners in East New York have expressed further interest in the program, 325 have submitted eligibility paperwork, 240 have had properties pre-screened, 102 have completed a home assessment with 37 waiting for their home assessment. 

So far, nine homeowners have been approved to move forward with the program’s application process and will continue to receive the assistance to legalize their basement apartments. 

“The basement pilot program is an innovative tool for unlocking more affordable housing and we have worked closely with our many partners to ensure its success,”  said an HPD spokesperson in an email statement to City Limits. “In the face of severe budget constraints and larger concerns about the health and safety of residents and workers during this crisis, we’ve made the difficult choice to pause the program for now, but remain committed to pushing forward with this important work as soon as possible,”

HPD was beginning to narrow down applicants and eligible properties before the novel COVID-19 epidemic hit the city. Some of the agency’s concerns involved whether it will be safe to complete the in-unit construction work required under the Basement Apartment Conversion Pilot Program, given the larger public-health crisis.. 

An early supporter and sponsor of the legislation behind the basement pilot program, Councilmember Brad Lander, regretted the program’s suspension.

 “On the one hand, we’re going to need basement policy moving forward because the fundamentals aren’t changed and if we cancel that pilot we won’t learn the set of things we need to learn to have a broader policy, and we’ll still be waiting another decade,” Lander told City Limits. “From the point of view of East New York, this was a commitment of the East New York rezoning and it shouldn’t be canceled because it was promised.”