New Report Analyzes How City Can Better Leverage Private Housing Investment

Three rezonings under Bloomberg provide lessons for how New York can meet its housing goals

NEW YORK, NY — As New York looks ahead to an eventual economic recovery, housing will be critical to ensuring that the lifeblood of its economy—residents who supply most of its workers—can afford to live in the city. In a new Manhattan Institute report, adjunct fellow Eric Kober analyzes how the city and state could do better in leveraging private investment to meet their housing production goals. In light of the current fiscal crisis, this approach may be the key to providing sufficient housing for a range of incomes without unaffordable public subsidies.

Kober, a nearly 40-year veteran of the NYC Department of City Planning, examines three rezonings that occurred during former Mayor Michael Bloomberg’s final term: Astoria (2010), Bedford-Stuyvesant North (2012), and Crown Heights West (2013). These are “middle market” areas where market rents are high enough to support new privately financed housing, but not high enough to make the typical options under Mayor de Blasio’s Mandatory Inclusionary Housing (MIH) program economically feasible. The MIH program requires new residential buildings in areas the city rezones to include a substantial portion of their units as affordable housing.

The report examines the new housing built in these areas, subject to less stringent affordability requirements, since the rezonings were approved. Its key findings include:

• New York has the capacity to generate substantial amounts of new, privately financed housing through neighborhood rezonings that are arrived at through amicable discussions among community members and elected officials.
• Where city zoning incentives and tax exemption requirements approved by the state legislature were aligned, affordable housing objectives were met. When they failed to align, developers took advantage of generous state-level tax breaks without providing the promised additional affordable housing.
• To induce more developers to participate in its MIH program without subsidies, the city should utilize a fuller range of income options in middle-market areas. 

Click here to read the full report.