Mandatory Inclusionary Housing Policy:

considerations for creating a truly inclusive city

Testimony to City Planning Commission

Elena Conte, Director of Policy

December 16, 2015

Chair Weisbrod, Commissioners, thank you for the opportunity to testify today on the critical issue of a Mandatory Inclusionary Housing (MIH) proposal. More than a decade ago, Pratt Center, alongside its community-based partners, began advocating for a mandatory inclusionary zoning program in New York City. Then as now, a confluence of factors are conspiring to cause housing prices to sky-rocket and rates of homelessness to soar, necessitating multiple strategies to ensure that our city offers all its people neighborhoods of opportunity and the basic human right of decent housing. We commend the Administration for advancing the conversation to this point, and hope that it will continue so that substantial changes can be incorporated before the City Council takes its vote. MIH has a significant role to play in creating those mixed neighborhoods of opportunity – in the short-term horizon of envisioned rezonings, and in the long term as a policy that must serve the city for decades to come.

To create inclusive neighborhoods where lower income residents have equal access to opportunity requires both the diversification of wealthier neighborhoods and the assurance that lower income residents can stay in the neighborhoods they have shaped and advocated for and where their social networks provide essential support, but that are now being targeted for redevelopment.

A Mandatory Inclusionary Housing policy should advance both these visions of inclusion.

Unfortunately, as has been highlighted by our community-based partners, the current proposal does not do enough to support either of these visions of inclusion. It falls short of capturing the market value of strong-market neighborhoods to create deeply affordable housing and it does not guarantee that new subsidized housing in weaker-market neighborhoods will provide existing residents with an opportunity to live there.

The MIH proposal could be modified to better contribute to these goals while still taking into account the realities of housing development and legal constraints. The following changes to the proposal would be significant in better aligning it with the goal of inclusivity:

Creation of

  • an expanded menu of affordability options for neighborhoods; among those options inclusion of

a tier that creates affordability at 30% of Area Median Income (AMI);

Elimination of

  • any option that solely creates units that exclude households earning less than 80% of AMI (~$55,300 for a family of two)

There is no denying that in seeking to craft a MIH policy, the Administration is charged with navigating a complex set of factors to strike a balance that will facilitate the creation of new affordable units, facilitate development under a range of conditions and withstand legal challenge. Nevertheless, in attempting to strike that balance, it appears as though certain viable scenarios were not fully considered.

There is no rationale offered for why the study commissioned by the City and conducted by Bay Area Economicsdid not look at scenarios that create housing at affordability levels lower than 60% of AMI. Scholarly literature[1] supports the assertion that in strong markets, the depth of affordability of any given non-market unit has significantly less impact on a developer’s bottom line than the overall percentage of non-market rate units. In other words, creating an option for deeper affordability is entirely feasible and in strong market (wealthy) neighborhoods, would result in the creation of these units even without subsidy. Such an option should clearly be added to the existing offerings.

In weighing the various factors that are relevant in creating MIH policy, it is essential to remember that policy made today will be in effect for decades to come and must be effective beyond the term of this mayoral administration. While no one knows for sure what the future will bring, over the long term it is reasonable to assume that the market will get stronger, and that rents in unsubsidized/unregulated units will continue to climb. In the future, more and more neighborhoods will be able to sustain more residential development without subsidy. It would be a major oversight and missed opportunity not tolock in an option that that accomplishesthe broadest and deepest affordability to create the greatest possible public benefit. A public policy opportunity like this will not come around again any time soon. It is incumbent upon us to make sure that we maximize the value that can be created for future generations of New Yorkers.

Finally, we strongly recommend that the Administration act swiftly to make clear the strategies it will implement for preventing displacement in lower income and rapidly gentrifying neighborhoods, whether they are slated for a rezoning action or not.

The MIH proposal excludes the more than 40% of New Yorkers who are part of households earning less than 60% of AMI, as well as countless others who will not be fortunate enough to win the lotteries for this housing or who, for various reasons will not be able to qualify for the new housing. These same people, family by family and neighborhood-wide, are experiencing rapidly escalating rents and landlord harassment that forces them to move to away from the communities that they have called home and/or places them on the brink of homelessness. They deserve a set of preservation and anti-displacement policies that address the depth and breadth of the issue, and that are backed by as much political effort, creative thinking, and commitment of funding as this initiative.

We look forward to continue to work with the Planning Commission, the Departments of City Planning and Housing Preservation, and the Mayor’s Office, as well as members of the City Council to craft those strategies alongside a MIH program that maximizes the public benefitit can deliver now and into the future.

NOTE: This testimony was prepared by the Pratt Center for Community Development. It does not necessarily reflect the official position of Pratt Institute.

[1]NYU Furman Center (March 2015) “Creating Affordable Housing Out of Thin Air: The Economics of Mandatory Inclusionary Zoning in New York City” Research Brief