Bloomberg Retools Affordable MF Program

NEW YORK CITY-The Bloomberg administration’s revamp of its affordable housing plan does more than bump up the eight-year-old program’s cost by $1 billion. By focusing more on preserving existing apartment units than on building new ones, it also expands the program’s capacity, housing advocates say.

“Given where the market is right now, it’s an opportune time to do more preservation work,” Abby Jo Sigal, VP and New York director of Enterprise Community Partners, tells GlobeSt.com. “You’re able to do more units than you could do in a frothier market.”

First implemented in 2002, the city’s New Housing Marketplace Plan aims at creating 165,000 affordable housing units citywide by 2014, whether through preservation or new construction. To date, it’s financed the construction of 35,900 new affordable housing units and the rehabilitation of 62,500 existing units citywide.

The injection of $1 billion into the NHMP, thereby increasing its funding from $7.5 billion to $8.5 billion, can be seen as a positive as well. “It shows that while preserving and building housing units is tough, there’s a commitment to doing it,” Sigal says.

One reason the NHMP price tag increased, Sigal says, was the increase in construction costs in recent years. And while the per-unit cost of preservation is less, “at the same time, there’s a tendency to do it as portfolios, so it could end up being more expensive.” Moreover, energy costs and other expenses associated with running affordable multifamily properties have gone up, Sigal says. That the Bloomberg administration is able to scale up the program’s funding “shows the tenacity of the administration to find the resources to do what they’ve committed to doing,” says Sigal. “Of course, I’d love to see even more units, but this is the boldest plan in the country.”

It’s also among the best managed, Mayor Michael Bloomberg asserted Monday in a speech at New York University’s Furman Center for Real Estate and Urban Policy. “Over the past two years, the finances of other housing agencies across the nation have suffered enormously,” said Bloomberg. “The State of California’s housing finance agency, for example, required a $5.4-billion federal bailout just to stay afloat,” while housing agencies in Illinois and Florida are “in bad shape, too.”

By contrast, the New York City Housing Development Corp.’s financial resources “have actually grown in value right through the recession, even as they’ve also helped us create thousands of units of affordable housing,” Bloomberg said. “The value of HDC’s assets has increased from $8 billion to $10 billion during the past two very difficult years. And HDC’s bonds have retained their very strong ‘double-A’ rating.” It’s why, Bloomberg said, HDC’s “prudent and productive investments” could be used “to fill the holes” in the NHMP budget, even though the agency’s budget itself had to be cut amid declining tax revenues.

Bloomberg said Monday that his administration is pursuing a four-pronged strategy for furthering the program’s goals. Those tactics include: “creatively exploiting private market forces; vigorously combating residential foreclosures; employing innovative—and fiscally responsible—financial management; and capitalizing on the combined talents and resources of government agencies and our private and nonprofit partners.”

In the realm of tapping into private market forces, Bloomberg said that current conditions make the city’s property tax incentives, low-interest refinancing and rehabilitation loans and other subsidies for long-term affordability commitments “a lot more attractive than they were at the height of the market.” Even at the market’s peak, he said, “Our policy of inclusionary zoning used market incentives to encourage construction of affordable units in new developments. Now, with the downturn in the housing market, we’re pivoting to make that our ally, too.”

The mayor’s remarks were delivered at the Furman Center’s recently launched Institute for Affordable Housing Policy, for which seed money was provided by Ron Moelis, CEO of L+M Development Partners. L+M last month closed on $27.7 million in construction funding for its latest NHMP project, the rehabilitation of 1428 Fifth Ave., a 120-unit Harlem multifamily property the company purchased last year for $21.5 million. L+M will also develop a vacant lot adjacent to the property.

In announcing the financing, Moelis said in a release, “In times of economic crisis, it is more important than ever to develop and preserve affordable housing for the people of New York City.” He cited L+M’s partnership with HDC and the city’s Department of Housing Preservation and Development, along with private investment organizations.