A Step Toward Market-Rate Housing for NYCHA

Julia Vitullo-Martin, November 2008

How is it that diversity of all kinds—economic, racial, intellectual—is promoted as an ideal in New York except when the debate turns to public housing? The moment a proposal is put forward to reform or remake public housing in any significant way, many housing activists abandon arguments for the virtues of diversity in favor of arguments for economic segregation. No one calls it that, of course. It's called protecting low-income households from gentrification or preserving the low-income housing stock. Maintaining public housing as exclusively lower-income becomes the rallying cry. Witness the T-shirts worn by public housing residents at a recent City Council hearing: "Keep public housing 100% affordable" (affordable being the new euphemism for subsidized). Nonetheless, the New York City Housing Authority—the largest landlord of low-income housing in the country—has this week triumphantly shepherded through the city's land-use review process a mixed-income new development that will include market-rate apartments.

Helpful as a market-rate component will be in strengthening NYCHA's fragile finances, its true importance lies in its promise to repair the fabric of New York neighborhoods, rent by decades of urban renewal, demolition, clearance, and massive projects.

A HISTORIC STEP AT HARBORVIEW
For the first time in its history, NYCHA has authorized the building of a small number of market-rate units on property it owns—in this instance, Harborview Terrace on West 55th Street, between 10th and 11th Avenues in Manhattan. On Wednesday, November 19, in the finale of the city's ULURP (Uniform Land Use Review Procedure), the City Council voted—correctly—to let the deal go forward. A private developer, Atlantic Development, will pay some $15 million to fit two new mixed-income buildings onto underutilized land, now holding a parking lot and a cheerless playground and basketball court. A 14-story building will hold roughly 125 units for seniors and families earning up to 80 percent of the city's median income, and a 15-story building will have 194 units mixing moderate-, middle-income, and market-rate households. No more than 65 units will be market-rate. The rest will be "affordable."

Even though the project is far from perfect, permitting NYCHA land to be used for mixed-income housing should establish a precedent that will help NYCHA ease its serious financial problems and allow it to put up more attractive buildings on its sites while promoting economic diversity—rather than economic segregation. As opponents point out, the money is not enough to erase the deficit while enhancing services. But it helps.

In obtaining the council's approval, NYCHA faced difficult opposition both from elected officials and activists. Only the executive director of the Citizens Housing & Planning Council, Jerilyn Perine, testified in favor of the Harborview project, saying, "Here is an opportunity that should not be missed. No project can meet every need. However, this one comes awfully close. It is in effect a creative use of NYCHA property, government subsidies, and private investment that creates the outcome of the federal Hope VI program—creating mixed-income areas with housing opportunities for NYCHA residents. But unlike HOPE VI, which is predicated on the demolition of public housing, here it is preserved, and additional affordable housing is created."

Her remarks prompted a reprimand from Councilmember Gale Brewer (D-West Side), who criticized NYCHA's ineffective use of Hope VI in the Arverne and Edgemere projects in the Rockaways, in Queens. But her reprimand tended to reinforce Perine's point: NYCHA never before committed itself to mixed-income development, even when the federal government encouraged it to do so. Both Arverne and Edgemere were slightly improved (better lighting, signage, and landscaping) with Hope VI funds but remained utterly low-income in defiance of the mixed-income mandate of Hope VI. NYCHA's was hostile to Hope VI partly because it didn't want to demolish any buildings, but also because it didn't want to be involved in market development. Now it's ready.

Several witnesses before the council urged the city to increase its subsidy to the new buildings from $40,000 per unit to $90,000. But why should city taxpayers be expected to take on this burden when a simple market-rate solution would do not merely just as well but better? Harborview sits on prime Manhattan real estate capable of generating, as Perine noted, cross-subsidies. Profits from market tenants can help subsidize the "affordable" rents. This technique, which has been implemented successfully in several other jurisdictions, most notably Atlanta, is well worth trying here.

COMMUNITY BOARD OBJECTIONS
Still, Community Board 4, which consistently and unanimously voted against the project, had some legitimate complaints, most of them handled during negotiations. The most fundamental was made by Anna Levin, chair of CB 4's Land-Use Committee, who testified that to finance the project, Atlantic Development "plans to qualify the low-income housing as inclusionary housing, generating 400,000 square feet of development elsewhere in our district under the inclusionary housing bonus. This will supply certificates for all the remaining development sites in the Special Clinton District where the inclusionary bonus can be used, with the result that no more on-site inclusionary housing will be built." In other words, the developer has supplied such a large amount of affordable housing that it has certificates to spare. These it can sell to other developers, who by purchasing them can fulfill mandates accompanying their own developments and avoid actually building any additional affordable housing. Equally serious, the certificates give the purchasing developer the right to build at greater bulk than would otherwise be allowed because it is "providing" the affordable housing. In most neighborhoods, residents who find themselves on the receiving end of the extra bulk become very unhappy indeed.

On this matter, the parties negotiated long and hard to come to an agreement that limits the inclusionary benefits. The developer of Harborview will not be allowed to sell inclusionary bonus development rights (the certificates) usable on any sites within the Hudson Yards or West Chelsea, or the sections of 11th Avenue that are now being considered for rezoning. Councilmember Brewer notes that the district extends all the way south to 14th Street, providing plenty of sites where the bonus rights can be exercised. But CB4's conceptual contention—that development on publicly owned land should not be eligible for an inclusionary-housing bonus because it amounts to a land-use form of double dipping—is unresolved. The issue will emerge again in future projects.

PUBLIC HOUSING'S REMNANTS
A serious impediment to correcting the known problems of traditional public housing is the ongoing control of the federal government's Department of Housing and Urban Development. Thanks to HUD, this project retains some of the worst vestiges of old-time public housing—most notably HUD's mandated parking requirements. Before building on what's now a surface parking lot—a ludicrous underuse of land in Manhattan to begin with—Atlantic must, under federal rules, agree to replace all the displaced parking. This is terrible public policy. Why should a development on West 55th Street, where cars should be discouraged, even be permitted to build accessory parking, much less actually required? Worse, because the project is on top of an Amtrak rail cut, the garage is being built on the ground floor, since it cannot be built below ground. Could anything be uglier or more hostile to the streetscape?

How ironic that just as the Bloomberg administration is preparing to require private developers to provide parking places for bikes, NYCHA's developer will build two new garages for automobiles. In the future, NYCHA and Bloomberg officials need to tackle HUD’s destructive policies before a development moves too far along to be modified.

WHAT’S NEXT
The Harborview project is the result of a Bloomberg initiative announced in 2006 to find sites for new development by inventorying under-utilized city-owned land—including public housing. NYCHA's general manager, Doug Apple, says, "This is the floor, not the ceiling. There will be sites coming up that we believe have a much higher percentage of market-rate potential." New York neighborhoods are in for an interesting set of proposals.