How to Create Affordable Housing?

On Feb. 3, WNYW TV-Channel 5’s "Good Day New York" broadcast a debate among Met Council vice chair Kenny Schaeffer, Mary Brosnahan of the Coalition for the Homeless, and Joseph Strasburg of the Rent Stabilization Association. Felipe Luciano was moderator. Here are portions of the unofficial transcripts:

Felipe Luciano: A housing crisis is gripping New York City. How do you assess it?

Kenny Schaeffer: Well, it’s absolutely true. We’re living in an ever-worsening housing-affordability crisis for a number of reasons, and it’s the low-income people who end up being pushed out, whether it’s into homelessness, through evictions, being doubled and tripled up or living in very hazardous conditions, or being forced to leave the city.

Luciano: Joe, is there any compassion for people who are not making $150,000 a year? You’re a landlord advocate; do your people understand what’s happening at that end of the spectrum?

Joe Strasburg: Clearly, and in fact they have proposed ideas about how government in partnership with the private sector should come together and develop more affordable housing in the city of New York. Their greatest objection has always been that government shirks its responsibility and imposes an obligation on the private sector, the owners, to bear the cost of the subsidy to tenants. If we’re going to create an affordable-housing program, that cost has to be shared by society as a whole.

Luciano: Mary, do you foresee an increase in homelessness if these rent guidelines go through?

Mary Brosnahan: Just in the past two years we’ve had a 15% increase in homelessness in New York City. In December we went over the 25,000 mark. If you’re just focusing on the kids, it’s over 10,000 kids. Certainly there’s been a cutback in housing, particularly for the mentally ill, but across the board, where is the new Mitchell-Lama program, where is the help for the middle class?

Luciano: Let me throw out some facts. There are plans to raise the rents for 1,000,000 New Yorkers living in rent [regulated] apartments. [Reading:] "The [Rent Guidelines] board last night was expect to take a final vote last night approving 4% for one-year leases, and 6% for two-year leases."

Strasburg: Those numbers did not even cover the actual expenses of many owners. There are tremendous increases to owners that none of us anticipated in the past and that’s oil, water and sewer. The reality is, somebody has to bear these increased costs or the city will end up owning many of these buildings.

Luciano: The city is now saying, we have these buildings but we want to sell them to private developers. Will that raise the gentrification level in our city?

Schaeffer: Yes, it will. Let me back up, though, a little bit and talk about the RGB. It’s not true that landlords are not compensated properly for their costs. Two years ago, owners’ costs only went up 3/100th of 1%, but tenants were hit with 2% increases for a one-year renewal and 4% for two years. This past year, owners’ profits went up another 11%--owners’ profits are at an all-time high--and tenants were forced to pay 4% and 6% increases, plus the supplemental charge on low-rent apartments. And the reason that was given was an increase in the price of heating fuel. We said at the time that it’s a known fact that when the price of fuel goes up, owners provide less heat. They pooh-poohed it at the time, but the New York Times reported on December 27 that heat complaints are up 17% this year over last year.

Luciano: A study released by the National Low Income Housing Coalition found that the minimum wage would have to be increased 242% in order to afford the average national price for a two-bedroom apartment.

Brosnahan: One of the programs that the Coalition for the Homeless runs is SRO properties on the Upper West Side. We inherited these properties from some landlords who were trying to illegally evict the tenants. What I learned first-hand was that we couldn’t operate the buildings, given the fact that most of the people were desperately poor and the rent rolls were so low. Now we’ve just gotten some government relief to go in, Section 8 rehab, to actually turn these buildings into what they should be, beautiful and decent housing. But I’ll tell you, government has to step in in a major way.

Luciano: Joe, is it possible that landlords can begin to work with groups to begin to force government to give up some subsidies?

Strasburg: It’s clear to us. I’m glad the debate has gone from the early ‘90s to recognize that you need to do something in order to retain the middle class in the city of New York. How do you put together a program to create affordable housing, and affordable is defined as not just low-income but middle-income, so that we can deal with what clearly is a crisis? Those who are in the business, developers and bankers and everyone, they will tell you that the one thing that is lacking is a subsidy. Someone has to pick up the difference between what the individual can afford [as] rent, and the difference in terms of the market value. That’s where Mitchell-Lama came in, Section 8 has worked in that capacity by giving the owner an ability to charge, say, $600, and the government picks up the other $200. We need to create a greater subsidy program to get ourselves out of this crisis. But the bottom line is you need the political will to say this is going to cost us, whether it’s the city of New York, the state of New York.

Luciano: And we need the corporate world...

Schaeffer: The government has to make that determination. The real-estate industry is not a social-service agency.

Luciano: The government could care less, it seems to me.

Schaeffer: The private sector can’t solve the problem of providing housing to poor people. There’s no profit in it. Government has to do it, whether it goes back to building public housing--in New York City the waiting list is hundreds of thousands. There hasn’t been any new public housing created since the Nixon administration.

Luciano: I thought that went out of style. I thought they’re trying to co-op the projects.

Schaeffer: Under recent administrations public housing has been targeted, but there are hundreds of thousands of people who would love to live there. One thing I disagree with Joe Strasburg about is, certainly the government would need to provide subsidies to cover the difference between what people can pay and what it costs to run that housing, but not between what they can pay and the market rate. The market rate is completely artificial, with people paying $2,500 for a two-bedroom apartment. At the Rent Guidelines Board this past year there was testimony from a number of nonprofits that they can provide housing at about $400 to $450 per month.

Also, we have to not repeat the mistakes of the past. One of these is the 80-20 program, with 80% of the units being luxury and 20% trickling down as affordable. The other is permanent affordability. We have buildings all over the city that were affordable, and now 20 years is up and they’re not affordable any more.

Strasburg: It’s unfortunate that the only program that really does create affordable housing with the right of the resident to remain in Manhattan is the 80-20 program. If not for that subsidy, then most people who do live in Manhattan whose income is below a certain amount would not be residing here. So that’s a positive program. I think we need to build on it and expand it to allow greater development.

Schaeffer: But maybe 50-50 or some other ratio?

Strasburg: Uh...

Luciano: I’m concerned about what’s happening in Park Slope, where minority families have lived and raised their children, and all of a sudden the landlord says, "Mrs. Ramirez, I love you, but someone is offering me $2,500 and you have to go." How can we prevent this kind of conflict?

Brosnahan: What would be helpful would be to look at the huge cutback in capital construction over the past 10 years. New York City used to invest over $700 million annually for new construction for housing. It’s gone down to nearly $100 million under Giuliani, and with his new proposal we’re just inching our way back to the halfway point. The federal government has also completely abdicated its responsibility

Luciano: Mary Brosnahan, any final thoughts?

Brosnahan: I’m encouraged that housing is emerging as the issue in the mayoral campaign. What we’re hoping is that with this drumbeat, people are starting to recognize that what government is doing about housing makes a difference for their living situation.