New York City wants to build affordable housing in wealthier neighborhoods

New York City officials will unveil a plan Tuesday to direct public money to mixed-income housing projects in wealthier neighborhoods — a proposal aimed at addressing the lack of affordable housing and spurring development after a lucrative property tax exemption expired last year .

Currently, the Department of Housing Preservation and Development uses city money to subsidize new construction projects with only affordable housing. But under the new plan, officials would make money available to projects with a mix of affordable and market-rate housing.

The hope is that revenue from high-rent, market-rate apartments would supplement city financing and allow for lighter public investment, while producing more low-cost units than normal. These units would also be located in neighborhoods where affordable housing has not traditionally been built.

“It allows us to expand our public resources,” Maria Torres-Springer, deputy mayor for housing, economic development and employment, said in an interview.

The proposal is an acknowledgment by the city that its traditional affordable housing tools have hit a wall.

A controversial New York State tax exemption known as 421a, introduced in 1971 but increasingly relied upon by developers in nearly every major residential project in recent decades, expired last spring under pressure from progressive lawmakers, who criticized it as a giveaway to the real estate industry . Even the industry lobbying group, the Real Estate Board of New York, admitted that the program no longer fit the city’s housing needs, but it is uncertain if or when a replacement program will be adopted.

A special one federal program driven by tax-exempt bonds has been stretched to the extreme, city officials said.

The new plan is essentially a solution to get around these restrictions. The agency, which could implement the proposal without additional legislation, will first seek input from developers through February to see where and how it could be deployed. Jolie Milstein, the president and CEO of the New York State Association for Affordable Housing, called it an “innovative technique” that allowed the city to “build more affordable units in high-opportunity neighborhoods.”

The proposal is one of several ways local officials are responding to a deepening housing crisis.

For decades, not enough homes have been built in New York City to house everyone who wants to live there. As in other cities and states, the shortage has raised housing costs and helped increase homelessness.

But while states like California and Massachusetts have spent years tackling the housing shortage, lawmakers in New York state have lagged behind.

That has shifted the focus to New York City. The Adams administration is pushing for zoning changes that could spur construction in many neighborhoods, but the changes require City Council approval. City officials are also trying to help people build basement homes and garage apartments.

Under the plan announced today, developers would apply for the grants directly from the city. City officials would evaluate projects based on the number of units they create and how affordable those apartments are.

At least 70 percent of apartments built under the plan would have to be “affordable,” although housing advocates have long criticized the way that is calculated. To be considered affordable, the units would be limited to certain income levels – for example, for a family of four today, the highest allowable income for these units would be almost $170,000.

At least 15 percent of the apartments must be available for the formerly homeless. At least 7.5 percent more should be affordable for people with limited incomes — no more than $70,600 for a family of four, for example.

Projects can also receive tax exemptions, which must be approved by the city council.

It is far from clear how well the new plan would address the housing shortage.

The idea of ​​subsidizing developments that include market-rate units could also prove controversial, with many in the progressive wing of the Democratic Party questioning how much public investment private developers should receive.