MAKE ROOM FOR MIDDLE-INCOME HOUSING
We have a serious shortfall in housing. Our total population is expected to rise by another million by 2030. The vacancy rate has stayed below 5% since it was first recorded in the 1960s. And half of New Yorkers pay more than 30% of their income on housing. The costs of construction and the regulatory processes are extremely high in New York City, and property owners are paying as much as 30-36% of gross income in taxes. When the tax exemption expires in many of the properties in the 80/20 Housing Program, property owners will likely convert to condos since they can no longer maintain the rentals as low-income housing.
We propose to create a new tax exemption program that addresses the City’s affordable middle-income housing needs. We propose implementing a new housing program for families making 80% of the average median income (AMI) or higher. Currently, the 80/20 Housing Program offers affordable housing to families living in the 40-50% AMI range, but we need to broaden our definition of affordability. Higher AMI for some units should be permitted in exchange for a greater percentage of affordable units, as done in Williamsburg.
Furthermore, we need to consider how to extend the 20-year tax benefit schedule. A 25-year tax benefit schedule would provide sufficient benefits to build and operate the affordable units during the exemption period. And with a fair and predictable real estate tax, perhaps capped below 25% of gross revenue, we could extend the middle-income housing benefits in perpetuity.
Steven Spinola is President of the Real Estate Board of New York, the real estate industry’s leading trade association in New York City.