ANHD 2016 Building the Community Development Movement
When it comes to financing affordable housing in New York, there’s not a lot of low hanging fruit in terms of additional resources. But there’s some – like public subsidy and financing that’s used to build market-rate units. Previously, tax-exempt bonds – a limited financing resources that lowers interest costs for developers – could be used to finance the entire cost of a building that was only 20% affordable.
But in 2014, New York State is set to make a switch.
From Crain’s New York:
The 80/20 program is designed to spur the construction of affordable units by offering not only slightly cheaper financing, but also qualifying a project for lucrative tax credits.
Prior to January, developers could finance more than half of an 80/20 building through the program, meaning much of the benefit was going toward the market-rate portion of construction. Now, according to a memo sent from the state division, which did not respond to a request for comment, 80/20 projects will essentially be split in two, and only the 20% of affordable units will be eligible.
This doesn’t mean that 80/20s won’t still get built – just that the “80” in the 80/20 will get financed the same way other market-rate projects do: through taxable bonds or conventional bank financing. This frees up a considerable amount of low-interest bonds that can be used on other affordable housing projects – meaning more affordable housing citywide, at the same cost to the state.
Kudos to the Cuomo administration for making the change.
ANHD blog team: Benjamin Dulchin, Moses Gates, Ericka Stallings, Jaime Weisberg, Barika Williams, Eric Williams. Anne Troy, editor.