Why ‘Rental Assistance Is Crucial’ to Make NYC Housing Affordable
The New School's Alex Schwartz is a widely recognized expert on national and local housing policy.
Urban Matters: For decades, New York City’s housing strategy has relied on incentivizing private developers to include affordable units in their projects. Governor Kathy Hochul intends to push for renewing a property tax incentive along these lines. Some housing advocates and legislators advocate a “social housing” alternative to produce or preserve publicly owned housing. Do we need either? Both?
Alex Schwartz: They are not mutually exclusive. Rental housing construction has stalled since the expiration of 421-a [actually, “Affordable Housing New York,” the State’s successor to the previously expired 421-a property tax exemption for developing multiple-dwelling buildings on under-used land in New York City, including some designated as affordable apartments]. The proposal by some State Assembly members for a social housing program could, depending on appropriations, yield a significant amount of affordable housing, but it’s unlikely by itself to reach the necessary scale.
A critical problem is that property taxes for rental housing in the current property tax system are untenable for anything other than luxury housing. Either the property tax system must be reformed – a gigantic and fraught undertaking – or rental housing will require some kind of property tax exemption, with the requirement that a substantial share of the units is made affordable to low-Income households.
As for the proposed social housing program: As I understand it, the State would pay for the construction of affordable housing to be owned and operated either by government, nonprofit agencies, community land trusts, limited-equity coops, and the like. Removing the profit motive from affordable housing production may bring costs down. However, it’s important to recognize that the rents that very low-income households can afford will likely be too low to cover the basic operating costs of the housingproduced by this new program in the absence of rental subsidies.
The program would support mixed-income housing, with a small share of the units designated for very low-income households, as is already the case in several existing City programs. But the number who would benefit would be quite small.
UM: The City Council has decided to join a suit against Mayor Eric Adams over his refusal to fund an expansion of low-income housing vouchers that the Council recently approved, over the mayor’s veto. It’s certainly an attention-grabbing standoff. But let’s put this in perspective. In the past, you’ve written about the really heavy lift using rental subsidies to relieve the city’s housing crunch would take, haven’t you?
Schwartz: The City is currently budgeting almost $800 million on its own voucher program [FHEPS, or the Family Homelessness and Eviction Protection Supplement]. That’s vastly more than any other city spends on rental subsidies. In my view, vouchers or some other type of rent subsidy, are essential for preventing families and individuals from becoming homeless. It seems to me that it would be less expensive, and certainly less traumatic, to help people remain in their homes with rental assistance than holding off on that assistance until they have been evicted and entered a homeless shelter.
The problem is that the need for rental assistance is vast. Back in 2019 I estimated that it would cost at least $3 billion to provide every impoverished rent-burdened New Yorker with a voucher, an amount that would exceed the budget of many City agencies. That said, broadening the FHEPS program to include households at risk of eviction would probably be less costly than restricting it to people who have already become homeless and entered the shelter system.
UM: So, final question. For the last two weeks we’ve been dissecting housing problems afflicting New Yorkers. But is there any good news out there concerning the city’s housing crunch?
Schwartz: The problems have worsened, but at least the public has become more aware of the city’s and nation’s housing challenges. There seems to be more recognition of the housing issue and perhaps more political will to address it. For example, support seems to be growing for land use and other policies that would allow for the construction of more housing and less expensive types of housing.
What is not yet adequately understood is the fact that people in poverty simply cannot afford the basic cost of operating a housing unit. If rents only covered insurance, taxes, utilities, management, repairs, and other essential costs, and generated zero profit for the owner, they would still be unaffordable. For example, the average operating and maintenance cost for a rent-stabilized apartment built before 1974 is $1059, and more than $1200 for units in newer buildings. This is why rental assistance is crucial.
Alex Schwartz is a professor at the Milano School of Policy, Management, and Environment at The New School, and chairs the Milano School’s Master’s Program in Public and Urban Policy. He is the author of Housing Policy in the United States, now in its fourth edition.
Photo by: Steven Pisano