Affordable housing budget cuts shortsighted, developers and advocates say

Eddie Small, Crain's New York, Mon, Jul 6th, 2020 8:12:29 am
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Affordable housing budget cuts shortsighted, developers and advocates say
By Eddie Small

The budget cuts to New York City's Department of Housing Preservation and Development will upend the city's plan to build or preserve thousands of new affordable housing units, according to frustrated developers and affordable housing groups.

"It's exactly what we were worried about," said David Schwartz, principal of Slate Property Group. "This is not the time to cut the affordable housing budget."

New York's recently passed austere budget includes multiple cuts due to a $9 billion revenue loss from the coronavirus lockdown. The New York State Association for Affordable Housing, a nonprofit organization, put the cut to HPD's budget at 40%, noting that the agency's preliminary budget for fiscal years 2020 and 2021 was about $2.68 billion but has since been reduced to about $1.64 billion.

The nonprofit predicted that these cuts will cause the city to lose 21,000 units of affordable housing, including 3,000 units of supportive housing, over the next two years.

This casts "serious doubts on the city's commitment to solving our housing crisis," the association's CEO Jolie Milstein said.

"We must now work to immediately fill these gaps with federal and state funding in order to provide New Yorkers with the affordable homes they deserve," she said.

Mayor Bill de Blasio's goal is for the city to create or preserve 300,000 units of affordable housing by 2026. It financed about 26,000 affordable units in 2019, putting its total at about 150,000 units since de Blasio took office in 2014, according to his administration.

Brendan Cheney, director of policy at the New York Housing Conference, maintained that the cuts were unreasonable and that the city's cash flow issues were not serious enough to merit them.

"We're really disappointed that the cuts remain in the budget," he said. "The pandemic has shown just how important affordable and adequate housing is right now, and these cuts are shortsighted; they're unnecessary; and they're going to have real costs to the city."

The de Blasio administration said the budget restrictions left them no choice but to trim the budget.

"Tough choices had to be made in light of the city's health and budget crisis," HPD spokesman Jeremy House said. The agency will continue "to close the deals that it can on a rolling basis and expects to pick up the pace, when the recovery permits, in order to continue our goal of building and preserving as much affordable housing as possible," according to House.

Schwartz argued that, if anything, New York should be increasing its affordable housing investments rather than pulling back on them in the wake of the pandemic.

"I think now is really the time to double down on affordable housing," he said. "We should be building more affordable housing because land prices are lower, construction prices are lower, and the need is greater."

Kirk Goodrich, president of Monadnock Development, stressed that the city's commitment to affordable housing has historically been very strong and that officials had extremely difficult decisions to make with the latest budget. However, he still acknowledged that the cuts "aren't great."

"If there was a path for those cuts to be restored and for the approach to be reevaluated, I would highly encourage it," he said, "because I think the impact of affordable housing is dramatic."

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