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Affordable housing construction will drop in the coming year, undercutting one of Mayor Eric Adams’ key priorities, unless the city invests hundreds of millions of dollars in new capital funding, according to a new analysis by an affordable housing trade group.
Under the mayor’s April executive budget proposal, the Housing Preservation and Development Department would be given $2.1 billion for capital projects. But the nonprofit New York Housing Conference says that proposal, if approved by the City Council, would cause the number of new affordable units financed through city subsidies to shrink by about 32% next year — from an average of 14,700 over the past five years to just 10,066 in the coming fiscal year.
Rising costs of construction mean the city would need to increase its spending further, by about $812 million, just to keep affordable production at current levels, according to the report. The Adams administration has a stated goal of starting construction on 20,000 affordable units next year.
“We’re really concerned that we’ll see a significant drop in affordable housing if this budget is not restored,” said Rachel Fee, executive director of the nonprofit Housing Conference. Fee said the projection was based on a detailed analysis of the city’s different subsidy programs and the capital needs of affordable projects that recently closed.
City Hall spokesman William Fowler said in a statement that the administration “has been crystal clear about the dire stakes of our housing crisis and is responding to that crisis with once-in-a-generation housing wins,” pointing to the wide-ranging City of Yes plan and last month’s approval of a 1,400-unit project at Willets Point.
“With the funding we are proposing, new tools from the state, and ‘City of Yes’ all working together, we fully expect that HPD will continue to be able to hit their targets,” Fowler said.
How much to spend on affordable housing programs may be a central question of upcoming budget talks between the Adams administration and the City Council, which must result in a deal by July 1. Lawmakers have already said they will push to increase HPD’s capital budget by about $732 million annually over five years compared to the mayor’s plan, which the council says would allow some 60,000 additional units to be built or preserved in that timeframe.
The group’s analysis was released ahead of Tuesday’s housing-focused budget hearing at the City Council, where other affordable housing groups are expected to testify in favor of spending more money on financing and construction.
In its report, the Housing Conference raised alarms about what it called a cut in HPD’s capital budget — from $2.6 billion in the current year to $2.1 billion in Adams’ plan for Fiscal Year 2025. But City Hall called that a misinterpretation, since the current year’s capital budget is inflated by unspent funds shifted over from past years. The current year’s capital budget also grew by about $500 million to accommodate a few projects expected to close this fiscal year, the mayor’s office said.
Still, the Housing Conference analysis found that the proposed budget for fiscal 2025 would cause significant slowdowns. The number of new construction units to be financed could fall by 52%, while preservation projects — which use city subsidies to upgrade existing buildings — would have 15% fewer units financed.
A dropoff in financing would also have secondary effects. Without new capital funding, New York City will probably fail to fully use federal Low Income Housing Tax credits, which the city pairs with its own funding to subsidize low-income rents and finance new construction.
And a slowdown in financing would likely worsen HPD’s existing backlog. Housing Commissioner Adolfo Carrión told the City Council in March that the agency has 750 affordable projects sitting in its pipeline now awaiting funding — a backlog that worsened in recent years due to vacancies in the city’s workforce.
The Housing Conference, for its part, argues for a $1 billion increase to HPD’s capital budget next year over current levels — including the $812 million that it says is needed simply to maintain current financing levels. The additional $187 million would help alleviate the backlog and finance some 400 newly built units, according to the analysis.
Allowing affordable housing growth to slow would be a setback for Adams, who ultimately hopes to build 500,000 new homes over the next decade. His hopes have been buoyed in recent weeks thanks to the housing deal in the new state budget, which would bolster his City of Yes plan by creating a new tax break for construction, encouraging more office-to-apartment conversions and eliminating a residential density cap in the city.
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Nick Garber , 2024-05-13 22:04:27
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