Housing Advocates Still Hope to Save Funding for Affordable Construction

Housing advocacy groups say there may be an opportunity to save some, if not most, of the city’s capital budget for housing despite a cut to Mayor de Blasio’s affordable housing program in the city’s 2021 budget.

The advocates are ramping up their efforts to restore some of the city’s housing budget over the next couple of months, while counterparts in Washington along with New York’s Congressional delegation work on making sure the next federal stimulus package addresses state and city housing needs. 

“I think both the city and the state, really, right now they’re looking to the federal government and … whether or not this next tranche of federal funding includes money for states and municipalities,” said Patrick Boyle, director of policy at New York State Association For Affordable Housing. “This is really what they’re looking toward to be able to kind of get us back to where we were.”

In 2014, the de Blasio administration announced the Housing New York plan, which set a goal to  finance the construction or preservation of 200,000 affordable housing units over a 10-year period and in 2017, Mayor de Blasio announced he would expand the program 300,000 affordable housing units over a 12-year period. At last count, the city was a little less than halfway toward the 300,000-unit goal.

The most recent capital budget for the city’s Department of Housing Preservation and Development, adopted by the City Council on June 30th, included a 40 percent shift in the budget for its affordable housing program into later years. Housing experts said the cut to de Blasio’s administration’s affordable housing program would mean fewer affordable apartments, job opportunities, new schools  and infrastructure projects—exacerbating the same inequities that have led to a housing and economic crisis across the five boroughs.

“The situation in shelters and the need for affordable housing as people are experiencing this kind of economic shock is greater than ever. Unfortunately the fiscal crisis has created a real tightening of the amount of projects that are going to be able to close due to the restrictions on the capital budget,” said Boyle. 

According to the city’s Independent Budget Office, $583 million was removed from the HPD capital commitment plan for 2020 and an additional $457 million was cut from 2021. “This decrease in capital funding for 2020 indicates that HPD expects to make smaller capital investments for financing affordable housing projects this year than previously planned,” read an IBO analysis.

The proposed capital budget shift could result in a reduction of over 5,000 new and 15,000 preserved affordable and supportive housing units over the next few years, based on analysis and testimony by the New York Housing Conference (NYHC). 

The cuts “could slow everything down,” says Boyle. “It restricts the pipeline. That means less housing overall. And it means there’s a ripple effect to that, because if you’re a developer and you’re looking at a site, you’re considering it for pre-development, you want to start the process, are you going to do that? When so few deals are being funded and you don’t know what the outlook is over the next few years?”

However, the capital budget is not finalized until the fall. And there is a possibility that changes in federal funding between now and then could reflect the budget landscape.

Typically, the city assumes a conservative estimate of federal funding in the budget. The city’s HPD budget includes a little over half a billion dollars in revenue from Section 8. In fiscal year 2019, HPD received an estimated $528 million in Section 8 funding and in fiscal year 2020 the city’s housing agency received an estimated $552 million, according to an IBO budget breakdown for City Limits. For fiscal year 2021, the city made the conservative estimate of $505 million for Section 8 federal funding. In the following years from 2022 through 2024, the city estimated $515 million federal dollars for Section 8 housing for each fiscal year. 

However, Brendan Cheney, director of Policy and Communications for New York Housing Conference, says federal funding for Section 8 may not see a drastic cut, especially during an election year. If the federal numbers come in better than the mayor predicted, that could help relieve some of the budget pressure that led to the capital cut.

“Our understanding is that the capital budget actually doesn’t get adopted until October. And so we’re going to keep advocating to get them to reverse the cuts to the capital [budget],” says Cheney.   

According to HPD, despite the cut in the affordable housing program there are multiple sources, besides city subsidies, for funding which can be fostered to fill the gap such as bonds, tax credits or private investments to create new housing affordable units or preserve affordable housing units. And another federal stimulus package could also change the future outlook of the affordable housing program, according to the city’s housing agency. 

While advocates hope for change on the capital budget, HPD’s operating budget has also been slashed. Some of those cuts reflect the possibility of lower development volume. But other cuts—like a 27 percent slash to emergency housing—could affect other aspects of the agency’s operations. At the same time, anti-abandonment funding is 23 percent higher this year.

The basement pilot study program, which was supposed to be funded for almost one million dollars but will see less than $100,000 in fiscal year 2021, is one casualty.  But other HPD expense budget programs have not seen a major change in their funding. These include the 7A program, where administrators are appointed by the court to manage privately owned buildings in disrepair; the alternative enforcement program for apartment buildings with many housing maintenance code violations; the emergency repair program where HPD steps in to correct an emergency repair in a residential building. The landlord ambassador program, where HPD works with landlords of small- and medium-sized multi-family buildings to help them adopt best property management practices saw a significant jump, but the amount of money involved is minimal.

Budget Function Categories	2020	2021	Change
Administration	$52,158,413	$50,461,846	-3.25%
Administration Program	$447,847,443	$270,724,297	-39.55%
Development	$96,882,388	$30,324,829	-68.70%
Housing Operations: Section 8 Programs	$552,257,103	$505,624,542	-8.44%
Housing Operations: Emergency Housing	$39,439,784	$28,952,511	-26.59%
Housing Operations: Management & Disposition	$33,694,841	$30,995,163	-8.01%
Preservation: Anti-Abandonment	$9,495,978	$11,698,279	23.19%
Preservation: Code Enforcement	$37,506,551	$36,883,276	-1.66%
Preservation:Emergency Repair	$31,197,330	$33,004,866	5.79%
Preservation: Lead Paint	$19,156,190	$21,269,007	11.03%
Preservation: Other Agency Services	$46,728,619	$35,535,417	-23.95%
Specific Programs
7A Program	$835,653	$845,408	1.17%
Alternative Enforcement Program	$8,961,104	$9,440,735	5.35%
Basement Apartment Conversion Pilot Program	$966,708	$94,980	-90.17%
Emergency Repair Program	$6,800,591	$13,148,224	93.34%
Landlord Ambassador Program	$247,209	$750,000	203.39%
Lead Paint	$9,473,333	$11,577,042	22.21%
HPD Total	$1,366,364,640	$1,055,474,033	-22.75%