Regional Plan Association Testimony to New York State Assembly Standing Committee on Housing on Affordable Housing Development

Thank you for the opportunity to testify today. My name is Maulin Mehta, and I am a Senior Associate at Regional Plan Association. RPA is a non-profit civic organization that conducts research, planning and advocacy to improve economic opportunity, mobility, environmental sustainability and the quality of life for those who live and work in the New York City metropolitan region.

The New York tri-state region suffers from a severe and growing housing crisis, due in part to stagnant earnings and rising housing costs. This has squeezed out middle-income families, while those with low incomes can face overcrowding, displacement, and homelessness. The demand for housing far exceeds supply, which is why the region needs more multifamily, affordable housing in every community, particularly near transit. A stable and rational housing market will require reforming zoning and financing rules to facilitate more transit-oriented and mixed-use development; allowing more two-family houses and accessory dwellings, and providing incentives for primary residences over secondary ones.

Building more housing is important, but equally important is making sure we build in a smart and equitable way. This means building more housing in neighborhoods that already have the infrastructure to support it. This means encouraging the development of more affordable housing in neighborhoods of all income levels. And this means continuing to ensure that residents have a voice in new development in their neighborhoods, including on good design and neighborhood improvements. 

Today we submit comments to the New York State Assembly committee on housing supporting four recommendations:

  1. Lift the Cap on Residential Floor Area Ratio
  2. Increase Funding for Public Housing 
  3. Set Municipal Targets for Housing Production
  4. Eliminate Exclusionary Zoning (single family housing)

1. The Case for Lifting the Cap on Residential Floor Area Ratio

There are many neighborhoods in New York with the infrastructure and amenities to support more housing and help solve the housing crisis. But in order to realize this potential we need to repeal an outdated 68 year-old state statute. In 1961, New York State passed an amendment to the State’s Multiple Dwelling Law forbidding the creation of Class A residential buildings with a Floor Area Ratio (FAR) larger than 12.0, meaning residential developments could not be larger than 12 times the size of the lot that they were built on.

Repealing this cap is a necessary first step in enabling high-rise neighborhoods in Manhattan, Downtown Brooklyn, and Long Island City to add mixed-income housing subject to the City’s Mandatory Inclusionary Housing (MIH) Law. But it is important to note that repealing the law does not mean that these developments will just sprout up all over. There are important controls that exist that will continue to ensure that residents have a say in what kind of development is allowed in their community – and in many cases allow them to shape better buildings than are currently permitted.

Neighborhoods would still have to pass land use and zoning changes subject to the City’s Uniform Land Use and Environmental Review procedures. Removing this cap does not mean existing height and bulk regulations would no longer apply. Instead, it would simply return more options to New York City. All changes in zoning would still have to go through the City’s extensive review process, allow for community input and feedback, and be voted on by the City Council.

New York City’s High-Rise neighborhoods are better served by infrastructure and services, which offers an opportunity to promote social mobility and diversity.

RPA mapped all of the land in New York City where it’s likely currently impossible to add enough residential density to trigger Mandatory Inclusionary Housing (MIH) – those zoned for at least 10.0 residential FAR as-of-right. This geography results in over 6,000 parcels across 149 census tracts representing non-historic high-rise areas (see figure 1). These sites are mainly concentrated in Manhattan below Canal Street and between 14th and 96th street; and also include Downtown Brooklyn, some parts of Long Island City, a few areas in Upper Manhattan and one tract in Jamaica, Queens.

These high-rise areas have the physical infrastructure and services to support more residential housing. They make up less than 5% of land in NYC, and are home to 9% of the population, but have access to a disproportionate share of employment opportunities, urban infrastructure and amenities. These tracts contain just over half (51%) of all the jobs in New York City. They are within a half-mile of over 1/3 (36%) of the subway stops in the city. All but two tracts are served by Citi Bike, and most of these sites are within walking distance to a large amounts of stores and amenities. In addition, most of these areas are within a half-mile walk of a park, including eight destination parks – most notably Central Park – supported by private conservancies, and four others with support from a dedicated partnership, corporation, or friends group. These areas have also been the recipient of much of the recent large-scale infrastructure investments in New York City, such as Brooklyn Bridge Park and the Second Avenue Subway.

These high-rise areas are also overwhelmingly more affluent, expensive, racially homogeneous and in need of affordable housing than New York City as a whole. More than half (51%) of the households in the high-rise areas make above $100,000, as compared to less than one-quarter (24%) of NYC as a whole. In addition, based on RPA’s analysis of displacement risk in the region, these high-rise areas are places where significantly fewer people are at risk of being pushed out. Finally, these high-rise areas are also not racially & ethnically representative of the diversity of NYC.

In spite of the fact that these areas are better served by infrastructure and services, and offer enormous potential for promoting social mobility and diversity, the existing FAR cap limits our ability to tap into such potential. Half of the parcels in these locations are already built to the maximum FAR or more and most of the largest underbuilt parcels are already spoken for. As a result, the MDL FAR cap is impeding the city’s ability to accommodate future growth in the areas where it makes most sense.

By allowing upzoning in these areas, which would require affordable housing by triggering MIH, we can allow for more affordability, combat segregation, and provide opportunities for low- and moderate-income households in areas of New York City where the housing market has long been inaccessible for all but upper income New Yorkers.

Billionaires Row Case Study

Currently many new developments in our high-rise districts, such as the “Billionaires Row” towers on 57th street, are constructed as-of-right despite being largely opposed by the local community. They are also not mandated to have affordable housing. 

RPA evaluated five towers along billionaire's row that have been recently completed or are in the final stages of construction. We then ran hypothetical scenarios using different FAR regulations to assess how these rules might have affected the density and programming on such towers. A rough estimation suggests that without the FAR cap restriction, and under MIH rules these developments might have been able to deliver around 750,000 square feet of residential zoning floor area dedicated to mandatory affordable housing, which would translate to at least 500 new mandatory affordable units. In addition, by assuming rules that limit floor heights and requiring counting certain mechanical uses as FAR, the resulting buildings might have actually been shorter (see attached infographic). While additional considerations should be explored, this exercise suggests that lifting the FAR cap would not only allow for MIH regulations to be triggered, but that new developments wouldn’t necessarily result in taller buildings.

In order to produce the desired result of well-designed, mixed-income development repealing the 12.0 residential FAR restriction should be done in conjunction with additional considerations. 

For example, we must ensure that the result is a significant amount of new apartments for New Yorkers as opposed to a few more large luxury penthouses. Recent condominium developments with overly large apartments supply significantly less housing than would otherwise be expected through the zoning code. For instance, while the recent luxury condominium development 432 Park Avenue has a total of 104 apartments, if it had built as many apartments as allowed by the zoning code, it could have provided 508 apartments – almost five times as many.

Both the city and state should explore legislation to better discourage overly large and non resident-occupied housing such as the concept of maximum apartment size regulations, or a minimum number of units per building, in districts with over a 12.0 FAR cap, a pied-a-terre tax to discourage non-resident usage, and reforms of the property tax code to properly value high-end condominiums. All of these would have the effect of discouraging oversized luxury apartments in favor of a greater number of smaller apartments.

New York City’s ability to shape its neighborhoods shouldn’t be contingent upon a law enacted in Albany more than 60 years ago, and intended to address the problems of a previous era. A repeal of this outdated law would allow the city to meet its housing needs while tailoring solutions to the different needs and capacities of each neighborhood. The ability to zone for more residential housing in our highrise neighborhoods, housing which would require affordable homes, would lead to more mixed-use, mixed income neighborhoods that contribute to a desirable, livable and affordable city for people of all income levels.

2. Restoring the promise of NYC’s Public Housing

The State needs to be fully committed to restoring New York City’s Public Housing to a state of good repair. We have been aware of the rapid deterioration of the New York City Housing Authority (NYCHA) for years, through multiple federal, state, and city administrations. Yet we have continued to take only half-steps to turn this situation around. As a result, conditions range from unacceptable to the deplorable.

Public housing has historically been a compact between the federal government, state, and local housing agencies. However, the federal government has slowly but surely disavowed this compact. NYCHA estimates they have cumulatively lost $1.34 billion since 2001 in federal capital funding, and the City now provides more capital funding than the federal and state governments combined. It is understandable that all levels of government will want to release funds to an agency which can be trusted to spend them responsibly, but Albany can and must do better. 

Earlier this fall, RPA issued a report presenting 10 actions that we believe will be major steps to restoring NYCHA. While all of them would benefit from the State legislature support, at least three of them would require legislative actions from this body.  

Creating a Separate Public Development Entity for NYCHA

NYCHA must not only be able to raise money quickly, it must be able to spend money quickly and efficiently. Part of this must involve a new entity which is not constrained by the unnecessary procurement rules and regulations that are part of NYCHA.

This function should be separated from NYCHA and made into an independent entity controlled by New York City, along the lines of the School Construction Authority. This entity should be chaired by the Commissioner of Housing Preservation and Development (HPD), and be the main conduit and coordinator for comprehensive rehabilitations and all major capital work to the extent possible according to federal laws and regulations. Any charter of this new entity should be designed to give it maximum flexibility regarding capital procurement and other processes. 

Consideration should be given for this entity to be physically and officially housed within the city’s Housing Development Corporation (HDC - created by the State legislature in 1971). In addition to the integration of NYCHA with greater city resources, making this entity part of HDC may also help with attracting and retaining talented professional personnel, which could also be assigned from these agencies. As the State legislature did in 1971, today it should be enabling the creation of a new development entity for NYCHA.

Have High-End Real Estate Contribute its Fair Share: Eliminate the tax abatement for high-end coops and condos and Institute a pied-a-terre tax

This desirability of New York City has driven the value of real estate - especially high-end real estate - ever northward. In just 13 years, the record for most expensive apartment sold in New York City went from $45 million to $238 million dollars, a 428% increase, and 16 times the rate of inflation. This presents an opportunity to use increasing value in order to help maintain the housing which allows us to have this diverse and desirable city.

In 1971 the State legislature established the New York Real Property Tax Law. Title 2 of such law describes the conditions in which exemptions may be granted to private entities. With regards to this matter the State legislature has two possibilities, reforming the cooperative and condominium abatement and instituting a pied a-terre tax, but there likely remain many other mechanisms as well.

The first option would be to cancel the tax abatement that high-value cooperatives and condominium owners receive - currently 17.5% of their tax bill - and redirect the resulting revenue to NYCHA’s capital program. An analysis by the Citizens Housing and Planning Council (CHPC) estimates that eliminating the cooperative and condominium abatement for the top 10% of cooperative and condominiums would generate $3.3 billion in capital repair dollars for NYCHA. Since abatements are essentially direct city expenditures, this would also have the effect of being revenue positive and not affecting other parts of the tax system.

Another idea which has been discussed in recent tax reform efforts is a pied-a-terre tax, especially on very high-end properties, something RPA called for in its Fourth Regional Plan and previous tax reform work. Since the cooperative and condominium abatement is only available for full-time residents, a pied-a-terre tax could compliment the co-op and condo abatement reform proposal.

NYCHA is a vital tool for helping with this crisis for very low-income New Yorkers. Dedicated revenue from a pied-a-terre tax could help fund major capital improvements in NYCHA in a way that would not negatively impact the city budget or housing affordability.

A pied-a-terre tax is not a substitute for comprehensive property tax reform and, similar to the cooperative and condominium abatement, it would need to be implemented in a way which would not affect other parts of the property tax system and lead to more revenue overall.

Bring Independent Voices to the Board of Directors

NYCHA is mayorally controlled, with the Mayor appointing all Board Members as well as the COO and CEO. It is vitally important that the Mayor continue to control - and be accountable for - NYCHA and public housing as a whole.

However, many mayorally controlled city authorities and boards - such as the City Planning Commission, Industrial Development Agency, and Health and Hospitals Corporation - also have Board Members appointed or recommended by other New York City elected officials.

This representation from other public officials and stakeholders ensures transparency and other avenues for stakeholders to address grievances, while not diminishing the responsibility and ultimate accountability of the Mayor. This should be added to NYCHA as well, in the form of a majority of Mayoral appointees on the board, but with at least one appointed by another elected official from New York City, such as the Comptroller or City Council Speaker. In addition, a resident representative directly elected by residents could also provide an important voice and directly represent the most important constituency of NYCHA.

It is true that NYCHA currently has strong and independent fiduciary oversight in the form of the federally appointed monitor. And there are currently several civic groups which monitor and evaluate conditions in NYCHA and make recommendations for change. However, neither of these are necessarily permanent structures.

Better structural oversight when NYCHA was in good repair could have allowed for its initial deterioration to be noticed by other elected officials and the public at large much sooner than it did.

3. Setting Municipal Targets for Housing

Affordable Housing is all of our responsibility. We can no longer allow entire municipalities to remain only home to extremely expensive housing. Not allowing affordable housing has repercussions beyond municipal borders - not allowing sufficient housing in in one municipality means overcrowding in and unaffordability on others. All municipalities should be required, by the state, to build a certain amount of housing and/or provide a certain amount of affordable housing. Setting construction of affordable housing targets is currently the practice in several states, such as California, Massachusetts, Connecticut and New Jersey. Each of these processes are different, leaving several models to choose from. New York should implement the one that is right for New York, but it should begin the official process of determining what that is.

This is especially the case considering the lack of housing being built in the New York suburbs, exacerbating a crisis of affordability. Take New York’s most unaffordable county, Nassau. Despite a population of over 1.3 million people, there are only 41,000 apartments renting for less than $1500/month. And despite adding more jobs, the New York suburbs in the Hudson Valley and Long Island have built less than half the new homes compared with that of the Northern New Jersey Suburbs. It is not a surprise that every northern New Jersey county has a lower median rent than Nassau and Suffolk counties, and all but one have a lower median rent than Westchester.

Targets are just that - targets. This would not mean the state would override local zoning, or determine when and how homes would be built. Each municipality would be charged with coming up with its own, local plan for meeting these needs, under local control. This is also supported by the State constitution. In the 1975 decision of Berenson vs. Town of New Castle then New York State Court of Appeals determined that “in enacting a local zoning ordinance, consideration must be given to regional needs and requirements.” Affordable housing is a desperate need throughout the downstate New York region, a study by AXIOMetrics found that New York City is the least affordable metro area in the United States to rent an apartment.

In addition to providing affordable housing and combating a legacy of entrenched regional segregation, mixed-income communities simply work better. It allows teachers to live near schools, caregivers to live near clients, and many others to live in the communities they serve. It lets the elderly stay in their community when they want to retire to a smaller home, and children grow up & not need to move away in order to find affordable housing.

4. Eliminate Exclusionary Zoning 

The prevalence of single-family homes in growing cities in the United States has become a hot topic. Cities – especially New York City – have limited amounts of land. Building single family detached homes means creating a few large, expensive houses instead of many smaller, less expensive houses, even if these are what is in demand. This adds to our housing shortage and ends up reflected in increasing homelessness, overcrowding and rent burdening. And the problem continues to get worse. The percentage of households spending more than 30% of their income on housing has increased from 30% in 2000 to 46% in 2015 in New York, New Jersey, and Connecticut.

This is a place New York City can, and should, lead by example. New York City has just 15% of residential land zoned single family detached housing. These areas – which include many neighborhoods like Midwood and Forest Hills with good public transit access – should be allowed to develop multifamily housing like surrounding areas.

We also need to look at suburban counties – places with quick rail commutes to midtown, as well as significant jobs centers of their own. Zooming in on to close-by counties – Nassau, and Westchester – 71% and 25% respectively, of all housing near rail stations in these counties is classified as detached single-family houses. In Nassau County, nearly three-quarters of its housing within walkable distance to a train station is detached single-family. And throughout the Tri-State Metropolitan area, there are 1.2 million single-family detached homes that are well served by public transit.

One of the most efficient methods of providing more homes would be to simply allow two smaller homes where zoning requires one large one. Developing incentives and imposing laws to change zoning in these areas to allow as-of-right Accessory Dwelling Unit (ADUs) or two-family conversions would help accomplish this. This is also a way of making sure new housing is more affordable, lessen the burden of housing costs on low- and moderate-income homeowners, easier to lodge aging family members, allowing seniors to age in place, and accommodating live-in caregivers.

Another possibility, especially in New York, would be to allow two-family homes to more easily convert to three family homes. Currently, Multiple Dwelling Law, which covers three family, but not two-family homes, makes this very difficult. Consideration should be given to changing this law to exempt three-family homes from all or some municipal dwelling law requirements, to allow these conversion to be easier while still maintaining appropriate building and fire safety.

New York is quickly falling behind, with Minneapolis recently voting to end single-family zoning, statewide legislation under serious consideration in Oregon and California, and cities like Fayetteville, Arkansas and Boise, Idaho, now allowing as-of-right Accessory Dwelling Units. New York State and our entire region is long overdue to follow suit.

Thank you for your time and consideration of these proposals. As always, we are ready to serve as a resource in helping to further think through these issues and develop the right mix of solutions to address our housing challenges. Please let us know if there’s anything we can do.