Dive Brief:
- New York City spent $618 million in affordable housing in fiscal year 2015, creating 3,031 apartments — more than three times than the year before, Politico New York reported.
- The spike in construction of the units took place before Mayor Bill de Blasio announced changes to the program, and the increase is widely attributed to the uncertainty of the coming rule changes, concern over the possible loss of a popular developer tax break, and high demand.
- De Blasio’s proposed program, a mandatory inclusionary model, would require 25% of the total number of apartments built through rezoning to be devoted to tenants earning an average 60% of the area median income — or $46,620 for a family of three. Alternatively, 30% of apartments would have to be set aside to people earning 80% of the area median income — or $62,150 for a family of three.
Dive Insight:
Enacting mandatory inclusionary housing inevitably creates controversy and even lawsuits in some cases, and there is certainly a difference of opinion about whether builders can make a profit with this kind of project.
"I think when the talk about mandatory inclusionary came about,” said Michael Slattery, senior vice president for research at the Real Estate Board of New York, “I think not everyone heard that this was only going to apply in areas that were being rezoned. I think they heard 'mandatory inclusionary' and I think they probably thought if there was an inclusionary area now, they were going to get hit with a requirement at a higher number perhaps, and that probably encouraged people to move, to stay ahead of that wave of change," Politico reported.
The city's current voluntary inclusionary housing program allows builders to build more units overall, a reward called "density bonuses," in exchange for setting aside units for low-to-moderate-income renters.