Tag Archives: affordable housing

Six Lessons for Cultivating Leadership of Color in the Community Organizing Movement

Non-profit organizing institutions have long struggled with the fact that their leadership is disproportionately white and middle class. We all know that our organizing will ultimately be more effective and more grounded in a true commitment to justice, if the primary actors are directly impacted people, those who come from the marginalized communities in which we work. Yet, for many reasons, groups in the Community Development movement too often fail to achieve this.

Cultivating movement leadership of color must include an effective approach for recognizing, attracting, and training new community organizers of color, then supporting them as they hone their skills to more advanced levels. But even here – or maybe, especially here – our movement falls short; we have seen that it is consistently difficult for people from marginalized communities to overcome the barriers to both entry and advancement in community organizing. Consequently, people of color and other marginalized people are grossly underrepresented in leadership positions. There are many reasons for this, including implicit bias and the glorification of mainstream career and educational backgrounds, both of which hinder the recognition of candidates from marginalized backgrounds. Consequently, our organizations often ignore or undervalue the critically important skills and experiences that directly-impacted leaders can bring to movement organizations.

One important step is to have community organizing training programs with rigorous approaches to skills-building and intentional strategies for training, supporting, and promoting leaders of color. ANHD’s Center for Neighborhood Leadership (CNL) Apprenticeship Program helps make organizing a viable life and career option for directly impacted people by providing new organizers with ten months of intensive support, high quality training, on the ground experience, and access to critical resources. Since the program was founded ten years ago, 91 individuals have graduated from the Apprenticeship Program with 86% of those Apprentices finding full-time employment in the movement after graduation, and many later becoming lead organizers or directors of organizing departments.

Through the years, CNL has seen the transformative impact these ten apprentice-training months can have on new organizers, and we have paid close attention to what makes an effective support model for developing indigenous community leadership. CNL’s experience directly challenges the notion that communities of color, poor, immigrant, and other marginalized communities need external actors to organize them.

Here Are Six Lessons We Have Learned:

It Takes Time: Oppressive systems teach people to be small, attempting to strip us of our voice and power while simultaneously obscuring the contributions of marginalized people. As a result, people – and more specifically those in the community development movement – too rarely look at a directly impacted person from a marginalized community and think, “Now, there’s a leader!” More importantly, despite having tremendous talent, people from marginalized communities may not look at themselves and recognize a leader.The CNL program invests a considerable amount of time to help Apprentices explore, identify, reclaim, and cultivate their leadership while developing the skills to help others in their community do the same. Having a 10-month long program allows us to dig in deep, creating time for exploration and personal growth. Sometimes, people recognize and assert their leadership early in the program, and sometimes it takes the whole ten months for people to feel comfortable stepping forward. But for most people, the length of the program allows it to be intense, challenging, and ultimately, transformative.
The Training Has to be Solid: Comprehensive and applicable course content is essential for a successful organizing training program. As experienced organizers, CNL staff know what it takes to win campaigns, build power, and strengthen institutions, as well as how to hire and supervise organizers. All of CNL’s trainers have real on-the-ground organizing experience as well as deep knowledge of diverse approaches to community organizing within marginalized communities. CNL also recognizes that everyone learns differently, so trainers utilize a broad array of training modalities to accommodate different learning styles. And, we constantly review and refine the curriculum to meet evolving Apprentice needs.
Practice in the Real World: Communities of color are under near constant attack, so we recognize that we don’t all have the luxury of thinking exclusively about theory. However, we also know that a coherent organizing model is essential for effective organizing work. At CNL, we marry organizing theories with the messy work of real life organizing, rather than teaching one neat and static theory. The CNL Apprenticeship Program teaches organizing concepts in a way that is grounded in actual organizing work. For four days a week, Apprentices are out doing organizing work at a host organization alongside an experienced organizer. They spend one day per week in training so they can test the approaches they’re learning in practice, and then have the space to step back and think through the day-to-day challenges of organizing work. CNL intentionally avoids having a dogmatic approach; instead we help participants learn to innovate and tailor their work to meet the needs of their communities. Because our participants live the struggle every day, they constantly push training staff to think more broadly and examine our own assumptions and orthodoxies.
Adapt an Intentional Selection Process: Leadership is often thought of as a special trait possessed by a small and exclusive set of people. At CNL, we see leadership more broadly and take chances with non-traditional leaders who may not present as expected. We look at the whole person, not just their resume and what degrees they attained or didn’t attain. We also don’t just check demographic boxes or look for the loudest person in the room. The ideal CNL Apprentice is of course passionate and committed, but they are also interested in learning collective models of social change and have a concept of justice that extends beyond their own immediate self-interest.
Find Role Models: When we look at New York City organizations, including social justice organizations, people of color and other marginalized groups are under-represented in senior positions. Consequently, new people of color, queer, immigrant, and women organizers are challenged by an inadequate supply of mentors and role models who share their experiences and identities. At CNL, the staff, training materials, and guest speakers all reflect diverse backgrounds, creating an environment where the program participants can see their identities reflected in positions of leadership and expertise.
Build Community: Organizers from marginalized communities are too often responsible for high levels of emotional labor and carry a double burden of living with oppression while simultaneously fighting it. Organizing work is usually under-appreciated and under-paid. Organizing work can also be surprisingly isolating; by utilizing a cohort model, the CNL Apprenticeship is able to build a tight-knit, supportive community that helps Apprentices navigate the common challenges for new organizers. During the ten months of the program, Apprentices build authentic relationships with each other and with CNL staff. Apprentices are cared for as individuals, in a community bound together by ties of affection, respect, and trust. In the CNL space, Apprentices always have people who will challenge, frustrate, and support them.

Each program year, we see that the CNL model works. In the last graduating class, 35% of graduates from CNL’s Organizing Apprenticeship Program were hired by their host sites and 71% remain in the field of community organizing. CNL Apprentices have contributed to multiple important local and city-wide campaigns. Just last year, Apprentices helped over 2,600 community members form tenant associations, hosted neighborhood events, fought for fair immigration policies, and so much more.

The Apprentices are, individually and collectively, an inspiration to us; the intelligence, compassion, and drive they bring to the work has made the social justice world in New York City stronger, more vibrant, and more durable. Cultivating leaders of color in the community organizing movement matters, and it’s worth getting it right.

In addition to the Apprenticeship, CNL also supports and trains currently employed community organizers at varied career stages through the CNL Organizing Academy and provides strategic technical assistance to organizations to help them build or reinforce their organizing through the Community Impact Project. To learn more about our programs and our impact, visit www.cnlnyc.org.

Become a Community Organizing Apprentice!

We are currently recruiting for our next cohort of the CNL Apprenticeship Program. Apprentices receive a stipend to work nearly full-time in a neighborhood-based host organization and receive high-quality, weekly training and support services. Apprentices are paid a total of $17,000 for their ten months of service and receive health care, child care, interest-free student loan deferments, and up to $5,750 in an education award to pay back student loans or pay for future education.

Applications Due: March 30, 2018

If you are interested in applying to be an Organizing Apprentice, you must complete the application by March 30, 2018.
After reviewing applications, strong applicants will be invited to attend an interview.
Following the interview, selected candidates will be matched with a Host organization via the CNL Matching Fair.
Apprentice finalists invited to the CNL Matching Fair will meet the Host Site finalists. Hosts and Apprentice candidates will have time following the fair for more in-depth interviews, reference checks and will then communicate preferences to CNL staff. Participation in the CNL program is contingent upon making a successful match with a CNL host site.

Click here for the Apprenticeship Application Link.

Community Demands Scope of Jerome Rezoning Be Reduced, As City Moves Proposal Forward

On Wednesday morning the City Planning Commission (CPC) voted to approve the proposed rezoning of Jerome Avenue in the Bronx. As the Association for Neighborhood & Housing Development (ANHD) has highlighted throughout this process, this rezoning continues to move forward despite consistent and clear demands from the community that the City reconsider and adjust. Yet with CPC approval of the rezoning, only a final vote by the City Council remains to determine its fate. The Bronx Coalition for a Community Vision is urging the Council to reduce the scale of the Jerome Avenue rezoning by half – from roughly 4,000 to 2,000 projected units. Coalition members were at the CPC vote on Wednesday to express their disapproval and make their voices heard. Here’s why they’re concerned and why they’re pushing for the rezoning to be reduced.

The crux of the Coalition’s argument is this: the scale of the proposed rezoning will make it more difficult to construct and preserve truly affordable housing in the neighborhoods around Jerome Avenue. Currently the City is doing a good job of subsidizing affordable housing in Community Districts 4 and 5 in the Bronx – and at much deeper affordability levels than it’s achieving city-wide. Of the 1,580 affordable units created in the CDs through Housing New York between 2014 and the first half of 2017, 35% of them were set aside for Extremely Low Income (ELI) households making up to 30% of Area Median Income (AMI), or about $25,000 for a family of three. In Jerome, the Mayor’s Housing plan currently produces a significantly higher percentage of ELI units than the citywide benchmark of just 15% ELI; the proposed rezoning threatens to put the production of these deeply affordable units – ones that actually come close to matching the needs of the community where half of households make under $25,000 a year – at risk.

The City cannot produce affordable housing using subsidy – as they are doing to good effect today – unless developers choose to partner with them. One consequence of the scale of the proposed rezoning would be to make this less likely. DCP’s Jerome Avenue proposal represents a marked change in land use, opening up the possibility of a massive amount of new residential housing where it’s currently not allowed. This type of wholesale changing of land use has the potential to significantly increase land value for private developers, and with it the housing market around Jerome Avenue. As it does, this will change the calculus for developers; rather than taking subsidy in exchange for affordability many will decide they are better off building market-rate. Yes, many of these market-rate developments will have to include affordable units set aside through Mandatory Inclusionary Housing (MIH), but as we’ve detailed before, these units will be out of reach for a majority of the community. Neighborhood residents understand this and this is why they’re pushing back. Their message to the City is: Don’t trade the deeply affordable units you’re subsidizing right now for the possibility of a gentrifying housing market where the only guaranteed affordable housing would be out of our reach.

There are indications that the City understands this is a risk. As part of the rezoning, HPD has made a commitment to guarantee certain affordability levels in all HPD-financed new construction: with at least 10% of units for families earning less than 30% AMI, and an additional 10% for families earning between 30 – 50% AMI. But these committed numbers are in fact significantly lower than what is currently being created in the community. Currently, 35% of new affordable units in Community Districts 4 and 5 are going to households making below 30% AMI; the City’s commitment would provide less than 1/3 of that amount. This tradeoff makes no sense to the community.

This is why the Bronx Coalition for a Community Vision is calling for reducing the scale of the Jerome Avenue rezoning by shrinking the boundaries, lowering the zoning designations or some combination of the two. The community understands that the smaller the influx of new market-rate housing, the greater the possibility of constructing and preserving truly affordable housing. If the rezoning is reduced by half, there is a better chance that the market won’t undergo a drastic change and that what gets built will get built with subsidy; the City, furthermore, can dedicate their financial resources to ensuring these subsidized developments happen faster.

The City makes a larger argument about the need for the Jerome Avenue rezoning, reasoning that we need to increase the overall supply of housing of any type in order to meet the rising citywide demand and citywide affordability crisis at almost all rent levels, so the bigger the rezoning, the better. But where the City choses to site the major neighborhood rezonings matters; there is an opportunity to generate significant new private production in neighborhoods where housing markets have been relatively weak, such as Jerome Avenue, but those are also the exact neighborhoods that are most vulnerable to secondary displacement pressures when a significant amount of new market-rate housing is built. The amount of new private, market-rate housing that is incentivized by a rezoning must be very carefully balanced with the number of new affordable units that are created, and the depth of that affordability. If the balance isn’t right, then the net impact on the community will be to undermine actual neighborhood affordability. The Coalition knows that neighborhoods like those around Bronx’s Jerome Avenue are among the dwindling number of actually affordable neighborhoods in the City, and they have seen the inevitable worsening of gentrification of far too many neighborhoods where CPC and the City got it wrong.

As the rezoning moves to the next and final step of the process, the City Council should listen to the Coalition’s arguments and respond to their demands to reduce the scale of the rezoning. As Coalition member Roman Sigilfredo put it, if the City had “listened to us better, they would have a better understanding of our neighborhood and understand what it means to make the right decision.” It’s not too late. There is still time to listen and get it right.

Christopher Walters, ANHD’s Rezoning Technical Assistance Coordinator

What Would the Trump Tax Bill Mean for NYC Affordable Housing?

Although Trump has broken more norms than we thought possible since his election, the tenets of affordable housing development in New York City have remained unscathed and stable for the past year, until now.

The House of Representatives passed their version of the Trump tax plan last week, and now the Senate version has been passed out of committee and appears to be headed for a full vote. If the Senate bill passes, the two versions will go through a process of reconciliation. We don’t know what would be in the final bill, but the amount of destructive policy that may be enacted is so enormous that it’s hard to wrap your mind around it.

One threat in the House version of the legislation that would have a major impact on affordable housing development is the elimination of the federally-authorized Private Activity Bonds, which are essential for cities like New York to build affordable housing. Our colleagues at the New York Housing Conference have estimated this would result in the loss of $2.6 Billion per year for affordable housing financing – including both debt ($1.5 Billion) and Housing Credit Equity ($1.1 Billion), which would take away the financing for 9,700 desperately needed affordable homes each year.

Private Activity Bonds are not widely known by the public, although many people have heard about the Federal Low-Income Housing Tax Credit (LIHTC) financing and understand that it is essential to the creation of new affordable housing. LIHTC is generally popular, and the “LIHTC 9% program” was preserved in the House bill (although the effectiveness of the tool will be greatly diminished if corporate taxes are drastically cut). But, Private Activity Bonds are equally essential to affordable housing since they provide direct deal financing, and they underlie the “LIHTC 4% program”.

The Senate version of the bill preserves Private Activity Bonds, thanks in part to the work of our national colleagues. But, if the Senate bill does pass, the reconciliation process with the House will be chaotic and the final version unclear.

And then, the next big threat comes.

Once the Trump tax reform is passed, Congress will quickly begin work on a new federal budget. Over the past year, the dysfunction in Washington D.C. has meant that Congress has passed Continuing Resolutions that largely extend the final Obama budget. The current Continuing Resolution expires on December 8, 2017, and soon after we may have the first true Trump budget in place.

Some of the ideas that have already been floated include enormous cuts to core city funding programs such as:

the Community Development Block Grant, which will put major New York City housing preservation programs at risk;
major cuts to essential New York City Housing Authority funding, which will put tens of thousands of units of irreplaceable and deeply affordable housing at risk;
new rules designed to punish and destabilize poor people, such as work requirements or time limits for Section 8 and Housing Authority assistance recipients.

These fights will be hard, but cities and jurisdictions like New York that value affordable housing will make our voices heard.

Stay tuned for action updates.

Benjamin Dulchin, ANHD’s Executive Director

Community Perspective: Why Folks Are Saying No to the Jerome Avenue Rezoning

Bronx Residents See Realities that the City Won’t Acknowledge

From the Bronx Coalition for a Community Vision Facebook Page

The proposed rezoning of Jerome Avenue takes a step forward with the City Planning Commission hearing taking place today. This hearing comes as community residents continue to express serious concerns that their voices have not been truly heard in the rezoning process or their feedback meaningfully incorporated by the City.

As ANHD’s Technical Assistance Coordinator to neighborhoods facing major rezonings, I spend a lot of time at local Department of City Planning hearings and at local community-led planning meetings. Part of my job is to translate the obtuse language of professional zoning-speak, but mostly my job is to listen to what the community is saying and help them to powerfully bring that perspective to the zoning process. There is often a lot of distance between what the community is saying and what the City and the Department of City Planning seems to be hearing. In light of this, it’ important to understand how many Bronx residents see the Jerome Avenue rezoning and to highlight the fundamental difference between their perspective and the City’s.

Here is what I have heard in my time working with the Bronx Coalition for a Community Vision, from residents at meetings, marches and rallies asking the City to listen to the voices of the community; this is what I have heard at Community Board and Borough President hearings – both in the testimony that residents have delivered, and in the back of the room and in the hallways, in the discussions that residents are having among themselves.

At its root, the community’s concern is this: there’s a difference between a housing plan and an affordable housing plan. What the City is proposing for Jerome Avenue is presented as an affordable housing plan, but a clear eyed assessment of its outcomes shows this isn’t nearly as true as it needs to be. The clearest impact of the rezoning will be to increase the total amount of housing that can be built in the neighborhood, rather than to specifically increase the amount of affordable housing available. Yes, this new housing encouraged by the rezoning will include a certain percentage of affordable units through Mandatory Inclusionary Housing (MIH). But these can only come in conjunction with market-rate units – about 2 to 4 new market rate units for every 1 affordable unit produced. The community understands this, and sees the proposed rezoning of Jerome as, more accurately, a market rate housing plan.

This is the fundamental concern of community residents and one they feel the City has not properly addressed. Instead of acknowledging this distinction between new development and affordable units, the community continues to hear the City represent the Jerome rezoning, in their discussions and presentations, as being primarily an affordable housing plan.

The creation of affordable housing is vitally important for the neighborhoods surrounding Jerome Avenue, but the way in which it’s done matters profoundly to community residents. The rezoning represents a marked change in land use – from primarily manufacturing to high density residential districts – opening up the possibility of a massive amount of new residential housing where it’s currently not allowed. This type of wholesale changing of land use has the potential to significantly increase land values and with it the housing market around Jerome Avenue, creating waves of secondary displacement effects as higher-income renters move into the neighborhood. It’s a story that local residents have seen played out countless times throughout the city. It’s a story that Jerome residents are well aware of, and in many cases have experienced themselves before moving to the Bronx. This is why they are pushing back against the City’s plans.

To address these concerns, the City says that the new affordable units produced under MIH will mitigate the displacement effects of the rezoning. But here are two key issues that local residents understand and that the City seems to ignore: 1) the rent levels set for MIH units are already higher than most current residents can afford to pay, and 2) there’s absolutely no guarantee that MIH units will be held for households that are displaced. The City also says that displacement won’t be an issue for Jerome, since this is a neighborhood where subsidy is generally needed for new construction, a trend the City believes will continue after the rezoning. But building deeply affordable units is contingent on private developers taking City subsidy, and as the market changes post-rezoning, there is no guarantee that developers will continue to do so. The only guaranteed affordable housing this rezoning would provide are MIH units, comprising some 20%-30% of the total units built. Considered all together then, the tradeoff of MIH units for the possibility of significantly more market-rate simply isn’t worth it for many Jerome residents.

Meanwhile, the City has actually been doing a good job of subsidizing new construction at affordability levels that meet the neighborhood’s current need, with over a third of Housing New York units in the Jerome vicinity going to Extremely Low Income households. This is a crucial need being served, and it makes a difference with local residents. The City should strongly consider why it wants to risk changing this dynamic with the proposed rezoning and all the ramifications it brings.

Residents of Jerome Avenue understand these risks and complexities, and this is why they’re pushing back. They understand that a true affordable housing plan, especially for an area like Jerome Avenue that is threatened by market-rate development, would need to result in more affordable housing than market rate development. This is what the City and the Department of City Planning need to hear: that the anger and opposition being expressed by the community is not coming from ignorance, or NIMBYism, or “fear of change,” but from a deep understanding, rooted in experience, that a housing plan and an affordable housing plan are two very different things.

Christopher Walters, ANHD’s Rezoning Technical Assistance Coordinator

The Updated AMI Cheat Sheet is Better Than Ever!

We’ve Added Some Helpful Information For Our Groups and Now Other Areas Can Create Their Own Cheat Sheets

Our Area Median Income (AMI) Cheat Sheet was so helpful that the Association for Neighborhood & Housing Development (ANHD) was contacted by nearly 10 jurisdictions outside of New York State who wanted to make their own local versions.

Since the AMI Cheat Sheet has gone from a handy dandy desk guide to a tool being used in offices, trainings, and community meetings throughout the City – and across the country – we’ve made some updates to both the methodology and the layout. Below is the updated 2017 AMI Cheat Sheet. This AMI Cheat Sheet gives you all the information you need in a clear, visual form, including the following for each AMI level:

Maximum income for a 3-person household
Maximum net affordable monthly rent for a 2 bedroom apartment
Percent of NYC households at each AMI level
Percent of NYC households in each AMI category

ANHD is excited about helping local residents understand what those AMI levels actually mean for their own communities. Understanding what each AMI level really means is critical for helping families qualify for affordable housing and for shaping policies and programs that address community needs.

Are you a jurisdiction that would like to make your own AMI Cheat Sheet? Send us an email here and we will send you a Cheat Sheet Toolkit.

And for our local ANHD partners, hard copies of your AMI Cheat Sheets will be in your mailboxes soon, so keep an eye out!

Click here to download your copy of the updated 2017 AMI Cheat Sheet!

Barika Williams, ANHD’s Deputy Director

Albany Agrees to Resurrect the 421-a Tax Exemption

Taxpayers and Tenants Should be Disgusted

Albany has come to an agreement on that includes resurrecting the 421-a real estate tax exemption, with a vote on the full State budget expected today. There is no acceptable reason that everyone except luxury real estate developers should be expected to pay their taxes. Taxpayers and tenants should be disgusted.

We will need the $1.4 billion – and growing – that we spend each and every year on 421-a to fill the holes that will be left in the local budget by Trump’s federal budget cuts for essential services. 421-a does little to actually create affordable housing, with 79 cents of every 421-a dollar spent going to luxury development, and only 11 cents going to support affordability. A growing body of evidence suggests that the 421-a exemption doesn’t even accomplish the most minimal public purpose of incentivizing new market-rate development.

Resurrecting 421-a is also a body blow to tenants because changes in the law, for the first time, include the interests of the construction trade unions, which severely limit the ability of tenant-friendly legislators to use the program as leverage to defend or strengthen rent regulation against and anti-tenant legislators. Rent regulation is New York City’s most effective affordable housing and community-stability preservation program, which is now left far more vulnerable. This is especially true because under the new agreement, 421-a expires in 2022 and rent regulation expires in 2019, stripping tenants of essential leverage.

What is the New 421-a Program?

The new 421-a program, now titled “The Affordable New York Housing Program,” is essentially an expanded and amended version of the expired June 2015 421-a exemption that passed the legislature, but with modifications intended to resolve the conflict created from a trade union wage provision that was inserted at the last minute. This subsequently led to legal complications and suspension of the exemption.

The new 421-a program does not improve the affordable housing requirements passed by the legislature in June 2015, but it does add significant cost to the taxpayer.

The June 2015 version was citywide and would have been used by almost all new residential development projects over 6 units, allowing developers affordability Options A, B, C, and D. (See image below for an explanation of the options) The new program adds Options E, F, and G and requires developers to pay higher construction wage levels. The new Options E, F, and G also extend the length of the tax exemption to an unprecedented 35-year, 100% exemption. This is a major increase in the lifetime value of the exemption to the developer and a major increase in the cost to the New York City taxpayer.

The program currently costs taxpayers $1.4 billion a year – and growing – and the NYC Independent Budget Office have estimated that the changes to the new program will add significant additional cost.

The proposed new REBNY program is citywide, and would widely be used across most neighborhoods. Development of new buildings with 300+ rental units will be required to participate in the program in some areas and eligible to participate in all other areas of the City. The new program is exceptionally generous to the developer, and most will take advantage of this financially generous opportunity.

And the increase in cost won’t just come after year two of the extended tax exemption; it will come immediately. Developers will find the enhanced benefit irresistible since it allows them to not pay taxes for an additional ten years. We will see a rush of developers applying for the new 421-a program and see developments from the last 1.5 years retroactively being granted 421-a, at a great cost to taxpayers.

No additional affordable units, or deeper level of affordability will be generated by the REBNY proposal, and the increase in the length of affordability is minor. The primary beneficiaries will be market-rate and luxury real estate developers, who will have their already substantial public subsidy increased by an estimated 22.5% in each new building. A fraction of the increased value given to the developer will be passed along in the form of higher wages for the short-term construction labor.

How Do the New “Options” Work?

Option E is allowed within any of the Enhanced Affordability Areas, and requires 10% of the apartments be affordable at 40% of Area Median Income (AMI), 10% at 60% of AMI, and 5% at 120% AMI. The average hourly construction wage must be $60. Additional public subsidy is not allowed.
Option F is allowed within any of the Enhanced Affordability Areas, and requires 10% of the apartments be available at 60% of AMI, and 20% at 130% AMI. The average hourly construction wage must be $60 an hour. Additional public subsidy is allowed.
Option G is allowed only within the Brooklyn and Queens Enhanced Affordability Areas, and requires that 30% of the new housing is affordable at 130% of AMI. The average hourly construction wage must be $45 an hour. Additional public subsidy is not allowed.
Any building with 300+ rental units outside of the Enhanced Affordability Areas can opt-into Option G, which, given the extraordinary value of the 35-year 100% abatement to the developer, is the most likely outcome.

A New Model and a Step Forward for Mission-Driven Developers

A New Model and a Step Forward for Mission-Driven Developers:

JOE NYC Moves into High Gear

Earlier this month, the ambitious new collaboration called the Joint Ownership Entity (JOE NYC) announced the acquisition of a 43-building, 248-unit portfolio of at-risk affordable housing in Brooklyn. This signifies another important step forward for neighborhood-based housing groups. The purchase was done by the well-respected local not-for-profit developer St. Nicks Alliance and was backed by the shared scale and financial resources that is the hallmark of the JOE model.

This acquisition represents a rare example of a not-for-profit organization acquiring an at-risk portfolio owned by a for-profit organization. This type of model ensures that the buildings remain affordable and benefit the community over the long term.

ANHD congratulates St. Nicks Alliance and JOE NYC on this notable step forward.

Mission-driven developers – including Community Development Corporations (CDCs) – have been key assets for the New York City affordable housing development infrastructure for decades. But under Mayor Bloomberg, the City shifted towards policies that favored for-profit developers, a shift that Mayor de Blasio did not correct. This fact, combined with a more expensive and competitive development environment, has created challenges for mission-driven developers.

JOE NYC is an ambitious answer to this challenge. Mission-driven developers bring essential benefits to their local neighborhoods, including permanently affordable housing, deeper affordability, essential social services funded by the “profits” of the buildings, and stronger neighborhood civic infrastructures. These are community benefits that only mission-driven developers bring.

Launched in spring 2016, JOE NYC was founded by a group of CDCs to expand their capacity to build and preserve affordable housing in their communities. JOE NYC expects to take ownership of over 3,000 affordable housing units across New York City in the next year. CDCs that participate in the collective JOE NYC model have a seat on the organization’s board and share in the financial benefit and increased economies of scale that have a direct, positive impact on their local communities.

JOE NYC strengthens the capacity of asset and property management across its portfolio by giving participating CDCs the opportunity to benefit from shared efficiencies and JOE’s balance sheet. And, JOE NYC will serve as a guarantor for CDCs, which will allow its members to secure financing in future development projects.

The recent St. Nicks Alliance acquisition is a key step forward. 43-building cluster was at-risk because it was reaching the end of the 15-year low-income-housing tax credit compliance period, putting all 248 units at risk for losing their affordability. With a $5.3 million loan from the Local Initiatives Support Corporation (LISC), $1.24 million dollars in equity coming from JOE NYC, and over $900,000 from St. Nicks, these units are now guaranteed to remain a safe, stable, decent, affordable resource for the local community.

Understanding REBNY’s New 421-a Tax Exemption Proposal

What does it do? What does it cost?

In January 2017, a revised 421-a Tax Exemption, rebranded and given the title “The Affordable New York Housing Program,” was introduced and inserted into the proposed FY18 New York State budget. This version of the 421-a Tax Exemption is essentially an expanded and amended version of the expired June 2015 exemption that passed the legislature but with modifications intended to resolve the conflict created from a trade union wage provision that was inserted at the last minute, which subsequently led to legal complications and suspension of the exemption.

What is REBNY’s Proposal?

REBNY’s proposed 421-a program does not improve or change any of the affordable housing requirements passed by the legislature in June 2015.

The June 2015 version was citywide and would have been used by almost all new residential development projects over 6 units, allowing developers affordability Options A, B, C, and D. (See image below for an explanation of the Options) The new REBNY proposal adds Options E, F, and G and requires developers to pay higher construction wage levels. The new Options E, F, and G also extend the length of the tax exemption to an unprecedented 35-year, 100% exemption. This is a major increase in the lifetime value of the exemption to the developer and a major increase in the cost to the New York City taxpayer.

The proposed new REBNY program is citywide, and would be widely used across most neighborhoods. Development of new buildings with 300+ rental units will be required to participate in the program in some areas, and eligible to participate in all other areas of the City. The new program is exceptionally generous to the developer, and most will take advantage of this financially generous opportunity.

What is the Cost of the REBNY Proposal?

The NYC Independent Budget Office recently reported that the current “421-a remains the city’s largest tax expenditure at $1.4 billion this fiscal year.”

New York City’s Department of Housing Preservation and Development (HPD) has stated that the REBNY’s proposed changes will increase the overall cost of the program by yet another 22% on top of the billion-plus dollars we are already spending on the program every year.

And the increase in cost won’t just come after year two of the extended tax exemption; it will come immediately. Developers will find the enhanced benefit irresistible since it allows them to not pay taxes for an additional ten years. We will see a rush of developers applying for REBNY’s 421-a program and see developments from the last 1.5 years retroactively being granted 421-a, costing tax payers an estimated additional $820 million in the first ten years, according to HPD.

Is 421-a an Affordable Housing Program?

Although the current 421-a Tax Exemption includes some requirements for affordable housing, it cannot be accurately described as an affordable housing program. It was designed in the 1970s to incentivize the creation of private, market-rate, and luxury housing at a time when the City economy was stagnant. The affordability benefits were a minor, late add-on the program. In fact, a 2014 analysis of the annual cost by ANHD shows that the exemption cost the City over $1.1 billion in lost tax revenue and covered 152,402 residential units, but only 12,700 of those units were affordable. That’s $11 of affordable housing benefit taken for every $100 given away to subsidize luxury development. That’s not an affordable housing program.

Who Will Benefit from the REBNY Proposal?

No additional affordable units, or deeper level of affordability will be generated by the REBNY proposal, and the increase in the length of affordability is minor. The primary beneficiaries will be market-rate and luxury real estate developers, who will have their already substantial public subsidy increased by an estimated 22.5% in each new building. A fraction of the increased value that is given to the developer will be passed along in the form of higher wages for the short-term construction labor, but this will be a minor amount.

Additional beneficiaries of the REBNY proposal will be landlords and politicians who oppose rent stabilization laws. The New York State Assembly, which tends to support rent stabilization laws, has often used the threat of not renewing 421-a as leverage to prevent the weakening of rent stabilization laws by the New York State Senate, which tends to support the 421-a Exemption. Since this version of 421-a included a higher construction wage for the first time, the Assembly – which tends to also be pro-organized labor –will find it far more difficult to use the threat of not renewing 421-a as leverage.

How Do the New “Options” Work?

Option E is allowed within any of the Enhanced Affordability Areas, and requires 10% of the apartments be affordable at 40% of Area Median Income (AMI), 10% at 60% of AMI, and 5% at 120% AMI. The average hourly construction wage must be $60. Additional public subsidy is not allowed.

Option F is allowed within any of the Enhanced Affordability Areas, and requires 10% of the apartments be available at 60% of AMI, and 20% at 130% AMI. The average hourly construction wage must be $60 an hour. Additional public subsidy is allowed.

Option G is allowed only within the Brooklyn and Queens Enhanced Affordability Areas, and requires that 30% of the new housing is affordable at 130% of AMI. The average hourly construction wage must be $45 an hour. Additional public subsidy is not allowed.

Any building with 300+ rental units outside of the Enhanced Affordability Areas can opt-into Option G, which, given the extraordinary value of the 35-year 100% abatement to the developer, is the most likely outcome.

Albany 421a Deal May Mortgage NYC’s Future for Bigger REBNY Tax Break

New Evidence Suggests that the Exemption May Not Have Any Public Benefit

The controversial 421a tax exemption for developers – now popularly known as the Trump Tax Break – is back in the news with reports of a possible pre-Election Day deal that would mortgage New York City’s budget for decades to come.

As a recent article in Politico New York reports, decision-makers are not only conferring to bring the 421a Trump Tax Break back, but they are also considering making the tax break even more costly by extending the term of the exemption. This would give private developers up to 45 years of paying no property taxes – 10 years longer than the law that expired in January and 20 years on top of an earlier version – all at the expense of New York City taxpayers.

This would give private developers up to 45 years of paying no property taxes – 10 years longer than the law that expired in January and 20 years on top of an earlier version – all at the expense of New York City taxpayers.

The new 421a proposal is unconscionable on its face. Our NYC classrooms need supplies and 21^st technology; our roads, bridges, and mass transit need investment and repair; and our nurses and firefighters need paychecks.

With at least a $3 Billion City budget deficit by 2019 just around the corner, we cannot afford to mortgage our City’s fiscal future in exchange for a tax break for private developers to create primarily market-rate housing. It is unconscionable that the ability of New York City to pay for essential government services for its citizens for the next 45 years might be mortgaged away and handed over to REBNY as a pawn in the negotiations between the real estate lobby and the building trade unions to revive the 421a Trump Tax Break.

The cost of the 421a Trump Tax Break to our City is dramatic and increasingly indefensible. A 2015 analysis of the exemption by ANHD shows that in fiscal year 2013-14, the 421a program covered a total of 152,402 residential units, and granted $1.1 billion in tax abatements. But, only 12,748 of those units had affordability restrictions. That translates very roughly to about $86,000 a year that taxpayers are transferring to private developers to subsidize each affordable unit, making 421a tax break by far the most inefficient affordable housing program on the books.

This 421a Trump Tax Break deal will hand a hefty portion of the City’s tax base over to REBNY. The fact that these negotiations are happening under the shadow of Election Day coverage and between the real estate industry, the build trades, and without any conversation on rent regulation or with affordable housing stakeholders make it all the egregious.

And evidence is mounting that the 421a Trump Tax Break may not even accomplish the most minimum public purpose.

Last week, a data update released by the NYU Furman Center titled, “NYC New Building Permits Recovered to 2014 Levels in the Third Quarter [of 2016], Despite 421a Suspension,” notes that not only have the number of new construction permits returned to normal levels, but the number of units per building has also returned to normal levels – growing from an average of 26 units per building in the Bronx in the 1^st quarter of 2016 to 39 units per building in the 3^rd quarter. This suggests that the surge in new rental developments without 421a is not limited to small-scale, one-off development sites.

As ANHD’s previous blog examining 421a noted, “There is one thing the real estate lobby has asserted unequivocally [in order to justify the existence of the tax exemption]: ‘It was not feasible to build rental housing in New York City without the 421a subsidies.’… However, new trends suggest this may not be correct. In the past few months, there has been increasing evidence of new market-rate rental private construction in exactly the types of low-cost housing markets where the real estate lobby insisted would never happen.”

But new data indicates that new construction has adjusted to a housing market without 421a Trump Tax Break and is quickly recovering, and that the existence of 421a itself may have been hindering development in key markets.

The general consensus of housing researchers and experts has been that the broad availability of the 421a Trump Tax Break has the effect of artificially inflating land prices, thereby increasing the cost of new housing development. One possible outcome of the suspension of 421a is that land prices in relatively weak real estate markets – where new privately-built housing will be more naturally affordable – would soften without the artificial stimulant of the tax exemption, with the effect of making new housing development in those neighborhoods more affordable.

This position was made in a 2015 NYU Furman Center report hypothesizing that “the loss of the 421a exemption would reduce the amount that residential developers would be willing to pay for the land.” The report continued, “In the medium and long term, as landowners adjust their expectations of the value of development parcels downward, or as market rents rise, the pace of development could resume.”

Further evidence from a New York City Development Update through the 2^nd quarter of 2016, released by the investment firm NGKF Capital Markets, shows that the trend of increasing price per square foot for development sites in some key areas has slowed dramatically since 421a was suspended:

In Manhattan above 96th Street, the average price per buildable square foot for development sites rose by 71% from 2014-2015, but only rose by 6% from 2015 through the first half of 2016.
In the Bronx, the average price per buildable square foot for development sites rose by 24% from 2014-2015, but only rose by 2% from 2015 through the first half of 2016.

Together, this new data suggests that the suspension of 421a has softened land prices, which makes new development more economical even without 421a. The fact that new development is now more robust in these neighborhoods suggests that, as the return of 421a is debated, policy makers should examine what policy goal 421a actually accomplishes and whether the cost to the taxpayer is worth it.

Evidence is growing that we should be moving away from any 421a Trump Tax Break. Our City’s housing market is booming without it. Giving REBNY an unnecessary and unreasonably lucrative tax break at the expense of the tax paying public is unconscionable.

Giving REBNY an unnecessary and unreasonably lucrative tax break at the expense of the tax paying public is unconscionable.