Comptroller’s Report Shows Scope of City’s Affordable Housing Crisis

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The report closes in on housing needs for low- and extremely low-income households and proposes four initiatives on how to provide affordable housing for these households. On November 28, 2018, New York City Comptroller Scott M. Stringer released its NYC for All: The Housing We Need report showing the scope of the City’s affordable housing crisis. According to the report, the city’s population grew nearly half a million between 2009 and 2017 and city employment increased by over 800,000 jobs. While the city has experienced population and job growth, the growth of residential units has failed to keep the pace with a net increase of only 100,000 residential units for the 500,000 people.

The report explains several issues New Yorkers are facing including rent burden, crowding, and shelters as housing. Rent-burdened households are those that spends more than 30 percent of its income on rent and severely rent-burdened households spend more than 50 percent of its income on rent. New Yorkers are also faced with crowded housing conditions, which the report explains is an indicator of housing distress and is among the most frequently invoked reasons for homelessness entering the City shelter system. The 2016 American Community Survey showed that 12.3 percent of extremely low-income and very-low income households live in crowded conditions and 5.3 percent live in severely crowded conditions. Families with children are also faced with using shelters as housing with more than 5,000 of these families being in the shelter system for more than a year.

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Using Census Bureau data, the report details that roughly 580,000 households are in the greatest need for affordable housing, yet only less than 25 percent of the City’s current “Housing New York” affordable housing plan is targeting these households. Around 90 percent of these households make less than $47,000 per year for a family of three but spend over half their income on rent. Housing New York was launched in 2014 and has financed 109,767 affordable homes since.

The report found that two-thirds of the roughly 580,000 households make less than $28,000 for a family of three and another 20 percent make less than $47,000 for a family of three. Housing New York is currently only allocating 25 percent or 75,000 units these households. Of the 400,000 extremely low-income households have only been allocated to build 31,500 units under Housing New York. In comparison, under Housing New York, middle-income families earning up to $155,000 per year have been allocated nearly as many units as the extremely low-income households.

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In the report, Comptroller Stringer provides new strategies to build affordable housing for those most at risk and addressing the rising homelessness crisis. The Comptroller proposes to increase the number of units for the lowest income households and deepen subsidies for long-term affordability by increasing the capital budget for new construction by $375 million annually. This proposal also calls for repurposing the remaining 85,000 new units under Housing New York for the households with the greatest needs.

Another proposal calls for tripling the homeless set-aside to 15 percent for new construction and meeting that goal every year. Comptroller explained that in order to address homelessness, the City must take into account working families that are at the greatest risk of becoming homeless. Currently, the City sets aside five percent of all units for homeless New Yorkers but just one percent of those units have gone to homeless families as of November 2017. Under the Comptroller’s proposal, the homeless set-aside will be tripled to 15 percent.

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In order to achieve these two proposals, the Comptroller is also proposing to eliminate the Mortgage Recording Tax and replace it with a more progressive Real Property Transfer Tax. Under the current Real Property Transfer Tax, all home purchases are taxed based on the price paid. If a person borrowed to purchase or refinanced a home pay, they will also need to pay the Mortgage Recording Tax based on the amount financed. Thus, an all-cash buyer will only pay the Real Property Transfer Tax and avoid the Mortgage Recording Tax, while buyers who financed will pay both the Real Property Transfer Tax and the Mortgage Recording Tax and often paying double in taxes. In an example, the report provides that: “A[n] NYC home purchased for $500,000 in cash would pay an RPTT of $10,038.  Meanwhile, a buyer who got a mortgage to finance 80% of the house would pay the same $10,038, PLUS an additional MRT of $9,750.  Under the current plan, middle-class New Yorkers are penalized for financing their home.” In effect, borrowers, who the vast majority are first-time buyers, are penalized for financing the home purchase while all-cash buyers are not. The proposal will eliminate the Mortgage Recording Tax and treat all home purchases the same regardless of whether financing was used or not.

The final proposal asks the City to create a land bank to use City-owned properties for permanently affordable housing, an idea Comptroller Stringer first proposed in the February 2016 report, Building an Affordable Future. The land bank will help the development of hundreds of vacant lots into affordable housing and the Comptroller estimates the City could build at least 20,000 new, deeply affordable units on these lots. In order to move forward with this idea, the City Council will need to pass existing legislation proposed in 2015 creating a land bank for the City, which will acquire, warehouse, and transfer real property for affordable housing.

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“We are in the middle of a serious housing affordability crisis in this city and we cannot let a $2 million condo become the cost of entry.  This crisis is having the greatest effect on the people who are the backbone of New York City – like home health aides, childcare workers, taxi drivers, and so many others – and we’re failing them.  We have to face this crisis head on and build units for people with the greatest need.  This isn’t our first housing crisis, and in the past, the City put effective plans in place to meet those challenges – today we need real solutions to face the real need,” said Comptroller Stringer.  “Our proposal not only provides new units for some of the lowest income households and sets aside more housing for homeless families, it funds it through a new and progressive tax overhaul that makes it easier for middle class families to purchase a home.”

To read the full NYC For All: The Housing We Need report, click here.

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