Speaker Quinn Announces Plans to Preserve Affordable Housing
On Feb. 11, City Council Speaker Christine Quinn gave her final state of the city speech and, in doing so, laid out a proposal she says will make housing more affordable for New Yorkers. During her speech, she also unveiled a new study about the city’s shrinking middle class, showing that the average middle-class income has declined steadily since 2001, while costs of living have surged.
“We need to make sure that the people who want to stay in our great city can afford to stay here,” said Quinn. “We have no greater challenge or obligation to the families we represent than to tackle this problem head on and deliver results. The future of our city depends on it. It comes as no surprise to any New Yorker that affordable housing is at the heart of this crisis.”
One plan she advocated for was to build 40,000 new middle-income apartments over the next 10 years. This would be financed through government efficiencies achieved through information technology system upgrades, consolidating the city’s office spaces, and new issuances of debt. According to Speaker Quinn, borrowing additional money is “the right move at the right time.” She highlighted that interest rates and federal mortgage rates are both at an all-time low, so that development dollars could be stretched even further.
But the centerpiece of her plan involved a bill called the “Permanent Affordability Act” that “would encourage landlords to make market-rate units affordable in exchange for a property-tax cap.” The proposed tax exemption would work by capping owners’ property taxes at a certain percentage of their rental income. This plan is a variation on a proposed tax subsidy for owners that Mayor Bloomberg rejected two years ago as an unacceptable giveaway to the real estate industry.
If owners accept the deal, they’d get a tax break as long as they offered market-rate apartments at affordable prices. Specifically, Quinn's proposal would impose a 30-year cap on real estate taxes for landlords who renew participation in a program that sets aside 20 percent of apartments for below-market rents. With dozens of owners threatening to withdraw from that program, known as 80-20 or 421a, the hope is that this new tax cap would encourage owners to keep charging lower rents, rather than convert units into market-rate apartments or condominiums.
In the speech, Speaker Quinn also said she would update the city’s housing maintenance code for the first time since its creation. And lastly, she proposed a Distressed Housing Preservation Fund. This money will be used by the Department of Housing Preservation and Development (HPD) to make bulk purchases of overleveraged housing. And the city will make sure repairs get made while properties make their way through the foreclosure process.
Then the city would transfer them to an approved developer who will keep the buildings affordable and in good condition. According to Quinn, because these properties would be bought at a bulk rate, the city would then be able to offer them to good developers at a price they can afford, while at least recouping the fund’s original investment. She estimates that the Distressed Housing Preservation fund will allow HPD to purchase as many as 400 units of housing in the first year alone.