To bring about an equitable city, we need to rapidly scale up the number of affordable housing units stewarded by business savvy, mission-oriented entities.
By Sam Marks
Although New York City boasts the largest public housing portfolio in the United States (180,000 units that house 400,000 people), the vast majority of housing units are privately owned. And while roughly half the city’s apartments are rent regulated, thousands of units are exiting rent regulation and becoming subject to market rates every year. Even with the de Blasio Administration’s Housing New York Plan—the most ambitious affordable housing production and preservation program in the US—on a net basis, New York City is losing affordable units every year.
Market pressure is the single most critical factor that contributes to rent-stabilized housing leaving rent regulation. What owner wouldn’t want to maximize cash flow by increasing rents to the market rate as quickly as possible? What we need are housing owners that balance business considerations with community considerations.
This is where mission-oriented ownership and stewardship can deliver. The City of New York, along with capacity building partners like LISC NYC, has a long history of cultivating non profit organizations that can effectively blend the public purpose of affordable housing with the business acumen of the private sector. These are organizations like community development corporations (CDCs), which have the business acumen necessary to run a successful operation, but are willing to forgo pursuit of the highest profits possible, instead pursuing the social purpose of maintaining affordability for residents.
A number of promising initiatives are trying to expand the universe of nonprofit-owned real estate assets, and even help nonprofits compete with larger for-profit affordable housing companies. The newly formed Joint Ownership Entity (JOE NYC) is an alliance of nonprofit CDCs that maintain local control of property management, but pool their assets into a larger entity to help them yield the benefits of scale and sustainability.
Another example, driven by the City of New York, is Housing Preservation & Development’s (HPD) Neighborhood Pillars program, which aims to provide CDCs with the tools and resources to acquire privately owned rent-stabilized buildings with the intent of stewarding them for permanent affordability. HPD, in collaboration with a number of nonprofit and philanthropic partners, is also working to expand the use of Community Land Trusts (CLTs) as an ownership model to promote affordable homeownership and preserve multifamily rental housing.
The City of New York should make a symbolic statement by setting a goal of 180,000 units under mission stewardship by 2025—a number equal to NYC’s current public housing portfolio. To maintain an inclusive and equitable city, we need more housing under control of mission-oriented entities that are business savvy but, by a function of corporate governance, committed to a bottom line of quality and permanent affordability.