Tackling New York City’s Housing Crisis: A Blueprint for Action | This Robin Hood Moment

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Read about Robin Hood’s position on affordable housing in the State Budget from Richard Buery, CEO of Robin Hood and Jessica Katz, Former Chief Housing Officer for the City of New York and Founder and CEO of Silver Bullet Consulting LLC.

Learn more about Robin Hood’s 2024 Annual Poverty Tracker.

Thoughts? Guest suggestions? Email us at info@robinhood.org.

“This Robin Hood Moment” is produced by Cory Winter; graphics are produced by Mary Power; visuals are provided by Motion Array; music and sound are provided by Epidemic Sound. Special thanks to Jessica Katz and Chloe Sarnoff.

The views and opinions expressed by external podcast speakers and guests are solely their own and do not reflect the opinions of Robin Hood or its personnel, nor does Robin Hood advocate or endorse any individuals or entities featured on the episodes.

TRANSCRIPT

This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.

Crystal Cooper: Welcome to “This Robin Hood Moment.” I’m your host, Crystal Cooper, joined by Kevin Thompson. In New York, a unique dynamic is at play. 2 million people are living in poverty, with annual earnings of $43,890 or less for a family of four, and more than half of all New Yorkers, 4.6 million people, are living paycheck to paycheck, struggling to regularly afford bills, food, and housing.

Today, we’re shining a spotlight on the dire state of affordable housing in New York City. New York City is still the largest and most expensive rental market in the country. The rental vacancy rate has plummeted to a historic low of 1.4%. More than half of households are rent burdened. Thousands are on the brink of eviction, and a record number of New Yorkers are living in shelters and staying in them longer than ever before.

This crisis boils down to a sheer lack of supply of affordable housing on the market, and insufficient protections to keep vulnerable tenants from losing their homes. After years of political gridlock and a failed attempt to galvanize cities and towns statewide to pursue ambitious construction targets, in April, Governor Hochul passed a budget that purports to offer relief. But is it enough?

Helping us navigate this complex policy landscape is former Chief Housing Officer for the City of New York, Jessica Katz. Jessica, welcome to the show, and thank you for joining us.

Jessica Katz: Thanks so much for having me!

Kevin Thompson: Jessica, it’s so great to have you here. I just want to get right to the punch because I, I don’t understand how we got in this situation, and I’m hoping you’ll be able to explain that and why housing is so expensive in New York City, just to begin with, and what’s impeding our ability to really address this issue.

Jessica Katz: So, in many ways, the housing crisis in New York is about us being a victim of our own success. This is an amazing city. Millions and millions of people want to live here. I think the reports of our demise in the pandemic were really overblown and we bounced back, I think, thankfully, a lot faster than we had feared. At the same time, you know, we’re we have a limited amount of space, and we have an ever increasing number of people that come here either domestically, internationally, as well as just the natural growth of our own population. So, supply and demand, we really see that at work in some really vicious ways in the New York City housing market, and our supply just simply has not kept up.

Kevin Thompson: So, there was this housing deal that was alluded to in the top of the broadcast here. I want to understand the complexities of that deal and understand how the proposal compares to, the Robin Hood proposal that was floated, compared to what was actually passed. But maybe before we get there is if you could just take us on a little journey and help us understand, like what happened last year, and why did housing sort of crumble in the legislature, and what brought us to this point this year and constructing sort of a deal that ultimately could pass?

Jessica Katz: Sure. So, you know, it’s been several years in a row that we have really desperately needed a robust housing package in Albany. New York City is ultimately a creature of state government, and so many of the tools that the city would need to be able to do our jobs as well as possible to create… to moderate the housing crisis, are functions of the state, and so, we really need the state legislature and the governor to give the city the tools that we need in order to moderate the housing crisis and to address it.

The last couple of years, the governor had proposed a very, very robust and very ambitious, what she called the “Hochul Housing Compact”. It was, on the one hand, an extremely extraordinary and ambitious piece of legislation. On the other hand, it’s also a type of legislation that exists in many of the expensive coastal states already, that have been successfully implemented around the country. So, Massachusetts has one, Oregon has one. California already has one.

Kevin Thompson: I heard New Jersey, as well?

Jessica Katz: New Jersey as well. This exists already in many places, and we’ve not had it in New York, and we’re really behind the curve. So, I really commend the governor last year for trying to put something forward. The politics were just not in our favor to get something like that pushed last year. But I still give the governor a lot of credit because I think she knew how hard it would be, and she decided to make it a centerpiece of her proposal last year.

Kevin Thompson: So, that’s what happened last year. Now, bring us forward to tell us a little bit about how we got to this place during the current session.

Jessica Katz: Sure. So, I think the good news this year is that having failed a couple of years in a row, the pressure was really, really on the legislature to produce something and to produce something big. So, I think we had that in our favor this year that failure was not an option, and that, you know, complacency was not going to be an option.

I think the depth of the housing crisis has gotten worse and worse. So, I think people who never had to worry about their own housing instability in New York City are finally starting to worry about themselves. I think that kind of fear is reaching more and more people, unfortunately. So, that created a kind of political pressure that they simply could not walk away with nothing.

There are really, very few housing silver bullets left these days, and so we really needed a comprehensive package that did a lot of things, because there’s no one thing that can solve the problem. So, this year, we came through with a really significant number of the pieces of the puzzle that we need to put together to try to address the housing crisis.

Crystal Cooper: So glad you’re taking us here, Jess. So, given the current challenges in affordable housing production, and there are many, what solutions have been put forward in this year’s state budget? Part of what Robin Hood was advocating for, I think, was removing a Floor Area Ratio (FAR) cap to allow for more dense construction of apartments. And anyone who’s been paying attention to the news cycle has heard about the old 421a program and providing tax breaks to developers constructing affordable units. Give us a sense of the landscape of what was on the table this year and what actually passed.

Jessica Katz: Actually, a pretty good majority of the different options that were on the table did pass in this year’s budget, particularly on the housing supply side. So, the FAR cap has long been one of the few places where state government, governs the city’s local zoning. So, I think there’s a misunderstanding that the FAR cap means we’re going to get bigger buildings. It doesn’t mean that. We can already build the 30-story office building or a 30-story hotel. What we couldn’t do was build a 30-story apartment building, in many places.

Crystal Cooper: And this is in areas where we’re allowed to build that high anyway. Is that true?

Jessica Katz: Correct. For other uses, but not for housing. So, there was a particular restriction that the State government was placing on local zoning. It’s very rare for the state to place restrictions on local zoning. But here was one very significant place where the state was kind of reaching into the city zoning resolution and requiring us to do something.

We’re still going to require a ULURP process. The City Council is going to vote on it every single time. It’s going to trigger mandatory inclusionary housing. But we’re going to be able to kind of even the playing field for uses around housing and residential that we already have the capacity for in terms of offices or hotels or other uses.

Crystal Cooper: Which is so interesting because there are folks who want to convert office buildings for the ability to use it as housing. And in this instance, here’s a solution that allows us, you know, in some of these very same neighborhoods where we have offices to house folks.

Jessica Katz: Yeah. So, the FAR cap and removing the FAR cap was really important component of this year’s package. We also replaced the old 421a program with a 485x program, which is a similar type of production program that requires some portion of affordable housing in a large new construction project, but does it through cross subsidy with the market rate units versus the government paying for it itself. So, we’re just trying to create as many options in our toolkit as possible. We need tax policies, we need zoning policies, and we need, you know, straight cash to be able to create affordable housing.

Kevin Thompson: And just for the benefit of the listeners that aren’t familiar with these details, what is the 421a program and what is the 485?

Jessica Katz: So, they’re both relatively similar programs that subsidized through a tax abatement. The construction of new housing and requires that a percentage of that housing be affordable. So, depending on where you are and how big you’re building, somewhere between 20% and 25% roughly on that order, will be required to be affordable in both programs. The old program had a little less oversight than I think many of us would have wanted, so we created some new oversight and enforcement measures in the new 485 program.

We also eliminated a very high-income tier at 130% of area median income that’s now eliminated in the new program and made some other tweaks to make to create a new program going forward.

Kevin Thompson: So, the new program gives us more flexibility?

Jessica Katz: The new program gives us more flexibility, but I think primarily it just adjusts to current market conditions and also the understanding that the 130% of AMI option was both, it was like a public policy failure as well as a market failure. So, we didn’t we saw relatively little demand for those units. We had a hard time renting them up, and we also saw that that was much higher than the affordable housing that we really needed in the city.

Crystal Cooper: Would you say that for 485x will do a better job at making units available to the population that Robin Hood cares about, but also just low-income families in general? So, who does this help address?

Jessica Katz: So, 485x would ensure that the tenants weren’t rent bought. And when you move in, you’re not going to be paying any more than 30% of your income. But what it probably will not serve is those very, very low-income households, the $43,000 a year households that you’re talking about. But there isn’t really a tax program that can address that, as well as a rental subsidy program. But you can’t have a robust rental subsidy program with no housing supply. So, it’s been a kind of a chicken and egg process, so we got the chicken this year. We also have, in New York City at least, we have very significant rental subsidy programs that exist already. We’re always going to need more of those. And I think, now that we’ve sold the supply piece will be able to do, you know, it’ll be a much better discussion next year to advocate for more rental subsidies.

Kevin Thompson: And where do you think we should start with advocating for rental subsidies? You know, because on a state level, it didn’t make it into this final deal, and Robin Hood was really pushing for that. Just given your background and your expertise and your knowledge of this space, where would you advise advocates to kind of go to get going on this?

Jessica Katz: You know, I think to start with, I wouldn’t underestimate what a win this current package is in terms of some of the supply pieces. So, there was never going to be… the worst-case scenario would have been to create a rental subsidy program that couldn’t be used because there was no place for people to go, and I think that was a real risk. So, I think now that we have some of those supply pieces in place, we’ll be able to lift the FAR cap. We have a 485 that can spur some more new construction in New York City. I think now that creates a better set of conditions to advocate for a rental subsidy program.

Crystal Cooper: So, the Housing Access Voucher Program might live to fight another day, another session.

Kevin Thompson: It will!

Crystal Cooper: All right! That’s exciting.

Kevin Thompson: So, let’s talk about the tenant protections. I’d love to understand what some of the components there were, and which ones made it to the final line, and which ones are kind of still hanging out there that we are going to have to focus on at a future date.

Jessica Katz: As you’ve seen, about a quarter of New Yorkers are living in some sort of a poverty, and that is a core constituency that Robin Hood wants to serve and to help improve. That is a constituency that desperately needs housing supply in order to have a place to go and a place to stay and to be able to have their kids continue to remain in the city, but at the same time, the numbers just don’t work out, the math doesn’t work to be able to serve people at that low-income level without a rental assistance program.

So, one thing that was really a crisis of housing supply in New York City is that it used to be that if you had a Section 8 voucher, a CityFHEPS voucher, that was your golden ticket, it was your ticket out of shelter. It was your ticket to housing stability forever.

And then we suddenly got to a point where the housing supply crisis was so bad that even with one of those vouchers in your hand, there wasn’t a place to go. So that really created…

Kevin Thompson: Which is where we are now.

Jessica Katz: Which is where we are now. So, I think that the deal that was made in Albany this year addressed the supply crisis in an extremely robust way. It was missing the rental assistance piece. I think that, what Robin Hood was so focused on, the Housing Access Voucher Program, but I think that that’s, you know, that that’s just going to be a fight that we have to fight next year.

Crystal Cooper: One of the solutions that made it into the final budget was ‘Good cause.’ So, can you talk a little bit about that, and does that address sort of the immediate needs of New Yorkers who, you know, are otherwise struggling to remain in their homes?

Jessica Katz: Sure. So, generally speaking, New York City has some of the most robust tenant protections that you see across the country. There’s other places where you can evict people for no reason any time, you can raise their rent to anything you want, any time. So, I think New York is pretty unique in how robust our tenant protections are. But there were still about a million households in New York City that were left unprotected.

And so the “good cause” bill that was passed was sort of a compromise between making sure that we could protect as many people and make sure that there was no rent gouging and that you weren’t subjecting tenants to unconscionable rent increases, while still kind of facing the worries of the real estate world, that that would help, even that would further diminish the ability to build new housing, which would then kind of defeat the purpose.

So, I think the “good cause” that was passed was the one that was doable in a market that is kind of very conservative in terms of what we’re worried about. And I think in the supply crisis that it stood to reason that we got less than, you know, 100% of the “good cause” that the advocates were hoping for.

But I do think that it’s a very significant foot in the door. And I think that it was even more significant in a political sense, because I think it brought a lot of parties together that typically had thought of themselves as opposing sides, really realizing that they had to work together to bring the package to the finish line.

Kevin Thompson: Another component of the housing issue is really the preservation of the existing housing stock. And I wonder if you could just touch a little bit on how we could make it easier for landlords to keep our older buildings up to a livable standard.

Jessica Katz: Sure. So, preservation is a really important component of the housing package. I think we talk a lot about new construction because that’s kind of the big new sexy buildings. But we really also want to make sure that for tenants’  sake, we have properties that are in livable condition as well. So, the housing package addresses that in a few separate ways.

We have a basements legalization pilot that would address health and safety issues in some of the smaller buildings, where we typically see illegal apartments, makes it very hard to bring them up to code. So, that’s going to be helpful in a certain few neighborhoods. We also had really, really robust anti-discrimination language for insurance, which is going to help property owners have some money left over in their pocket that can be used to invest back in the building, as opposed to paying an insurance premium.

We also saw some updates to the rent stabilization guidelines that would allow individual apartment increases, so, property owners can invest back into their properties. And we’re just updating those numbers because they had last been updated many years ago, to make sure that you could pour some money into your building and be able to get that back. And we tried to moderate the impact of that on low-income tenants as much as possible.

And then finally, the budget comes with very significant investment in the Mitchell-Lama Program, which is a middle-income affordable housing program. But we built Mitchell-Lamas years ago now, and so, we’re starting to see that portfolio start to decay. So, it’s really important that we have that investment for the Mitchell-Lama portfolio, which is such an important piece of the affordable housing stock in New York City.

Kevin Thompson: And was it decaying, in part, because what we mean to be a middle-income person is different today than it was at the inception of the program?

Jessica Katz: I think the buildings are just aging, and we just really want to make sure that we’re finding some resources to preserve that. And again, you have to balance the ability to invest in the program with the cost to the tenants themselves. So, this will be an infusion of capital into those buildings that will allow us to upgrade the buildings without increasing the rent to the tenants more than is necessary.

Crystal Cooper: And are those buildings citywide? I think when folks think about acronyms in association with affordable housing, they know NYCHA, but, you know, this program you described, I’m not sure where those buildings are.

Jessica Katz: They’re all over.

Kevin Thompson: They’re scattered.

Jessica Katz: So, they’re all over scattered. There actually are some statewide as well, although the majority are in New York City.

Crystal Cooper: So, just you kind of touched on some of this already in terms of the road ahead, but no one gets everything that they want out of these deals; not the real estate industry, landlords, or sadly, you know, tenants, including those who are struggling. You asked the question as negotiations approached the final hours, “grand bargain, for whom?” So, where does this year’s budget leave us, and what is the path forward at both the city and state level as, you know, sometimes the state budget often sets the tone for our city level advocacy.

Jessica Katz: So, I think there was a lot of different constituencies, fighting over the details and a lot of details to fight over in this year’s budget. So, I do think that it’s quite remarkable that we made it through with, you know, 7 or 8 different pieces. We got the FAR cap, we got 485, we got a basement legalization pilot, which nobody thought was possible.

Crystal Cooper: Wow!

Jessica Katz: We got good, really good anti-discrimination in insurance language. There’s an office conversions program that didn’t exist before. The IAI increases, a “good cause 2.0” as we call it, very significant money for repairs in Mitchell-Lama programs, which is another area where we really were starting to worry about housing quality as well. So, there’s a really quite a long laundry list of programs that got through in the budget this year, each of which were very, very complex to negotiate. And, you know, you move a comma around and it completely would change the target population for the bill.

I do think that getting some of those out of the way will really clear the path for next year being much more targeted. I think we could spend more time focusing on how the housing package can help homeless people. So, often when we think about homelessness, we kind of view that through a social services type lens that really focuses on individual people’s pathologies and why they may have become homeless, but not enough on the fact that if you have a roof over your head, you won’t be homeless anymore. So, I think one of the goal, one of my goals for next year, would be to make sure that the housing package or a legislative package would focus on homelessness as a housing issue specifically, and be able to create some opportunity for housing homeless people.

And I think next year the decks will be cleared to kind of be more laser focused on that, as opposed to this year, the kind of puzzle pieces to put together, to be able to satisfy labor and the real estate industry and the tenant advocates and the city and the state and the legislature. I just think that was kind of a pretty impressively scary Jenga tower to try to solve for. And I think having done that, and most of these are, most of these different programs are in effect for a significant period of time, 485 will be there for ten years, “good cause 2.0” ten years as well, I think it’ll clear the path to really focus next year just on how are we going to help housing for homeless people specifically and for extremely low-income people specifically.

Kevin Thompson: That was Jess Katz, and that’s it for “This Robin Hood Moment.” Today’s show was produced by Cory Winter. Our graphics were produced by Mary Power. I’m Kevin Thompson, along with the ever-insightful Crystal Cooper, for Robin Hood, New York’s largest poverty-fighting philanthropy. Thanks for listening.