New York City Department of Housing Preservation and Development (HPD) Commissioner Vicki Been and New York City Housing Development Corporation (HDC) President Gary Rodney announced new affordable housing programs and significant changes to a number of existing programs that will align them with the priorities of Mayor de Blasio’s Housing New York plan. The guidelines of the new programs and changes are reflected in the agency’s term sheets, which are documents that define the parameters, qualifications, and scope of specific affordable housing programs. Combined with three new affordable housing programs, key changes to term sheets of existing programs will help to stretch public subsidy, encourage mixed-income development, and help address the homeless crisis and provide housing for those with special needs.
Mayor Bill de Blasio’s Housing New York: A Five-Borough, 10-Year Housing Plan aims to create and preserve 200,000 units of affordable housing over the next ten years. The most comprehensive affordable housing plan in the City’s history and largest municipal housing plan in the nation, its goal is to help address New York City’s affordability crisis by reaching more than half a million New Yorkers ranging from those with very low incomes to those in the middle class, all of whom face ever-rising rents.
“These changes reflect Mayor de Blasio’s commitment to stretch our subsidy dollars further, to focus more of our efforts on those with very low incomes, to promote mixed income housing in every neighborhood throughout the City’s five boroughs, to use all available leverage to preserve the affordability of housing over the long term, and to increase the availability of affordability housing for seniors, the formerly homeless, and those with special needs,” noted Vicki Been, Commissioner of HPD.
“These new programs and changes will increase our ability to finance affordable units at a broader range of incomes,” said HDC President Gary Rodney. “HDC’s new M2 program builds on the success of the award winning 50/30/20 model. By focusing half of the units on middle-income households we’re working to fill a void left by the private market while still promoting mixed-income development. Taken as whole, the changes throughout our term sheets align our programs and priorities with those set by the Mayor, and will keep us on target to reach the goals of his Housing New York plan.”
HPD and HDC use term sheets to define the parameters of specific affordable housing programs so that prospective developers understand the expectations and requirements that must be met when developing housing under these programs. The developers use the term sheets to plan their development proposals, and make investments in land. A program’s term sheet stipulates such things as the maximum amount of subsidy the City will provide, a requirement for a specific number of units to be affordable at certain income levels, the duration of affordability, the number or percentage of certain sized units in a project, and other key aspects of the City’s priorities.
Stretching Public Subsidy Housing Dollars
Housing New York pledged to re-evaluate HPD and HDC programs to stretch city subsidy housing dollars further. By tying city subsidies to the priorities Housing New York set forth, the changes aim to increase the effectiveness of HPD and HDC programs, better leverage private financing sources, and ensure that no more public subsidy is provided than is necessary to ensure quality production.
· Adjusting terms to leverage additional private financing: Offering developers financing that is payable at the end of the loan term, instead of throughout the term of the loan allows the developer more flexibility to leverage additional private financing and reduces the amount of public subsidy needed on a project.
· Reduce public subsidy when the developer is also getting tax exemptions or zoning bonuses: In an affordable housing project, the City may reduce the amount of subsidy provided when the developer is already getting other public benefits, unless the developer agrees to provide deeper or broader affordability than already is required for those pubic benefits.
· Containing costs and finding efficiencies: The City will prioritize proposals that demonstrate proficient cost containment measures that reduce the need for public subsidy, such as: using less than the maximum subsidy available, offering private land at below-market costs, plans for efficient construction timelines, etc.
Mixed-Income Housing Strategy
The City needs programs that can accommodate a range of households at a diversity of income levels. Affordable housing should address the needs of those at the lowest incomes, as well as middle-income households whose housing needs are not being met by private market development. Three new affordable housing programs have terms that help create more mixed-income opportunities for New Yorkers at a diversity of income levels.
· Address the need for extremely-low and low-income housing: The Extremely Low and Low-Income Affordability (ELLA) program will require 40% of the units in a project to be affordable to very-low income households earning between 30% - 50% of Area Median Income (AMI), which doubles the percentage of the units targeted at those with very low incomes over what the prior low-income rental program required.
· Create a more flexible mixed-income program: The Mix-and-Match program will provide a sliding scale of funding based on a mix of affordability, including moderate and extremely low household income tiers. This will finance a wider range of affordability tiers than past programs whose term sheets locked projects into a narrow range of income tiers.
· Mixed-income housing that targets middle-income New Yorkers: The Mixed-Middle-Income (M2) program is a 50/30/20 model that requires all units to be afforable. Instead of having 50% of the units at unrestricted market rents, those units will now be limited to middle-income households earning up to 165% AMI. Thrity percent of the units will be affordable to moderate-income households, and 20% will be affordable to low-income households.
Addressing the Homeless Crisis and Special Needs Housing
The City is committed to creating caring environments for homeless individuals and others who have special needs and require permanent supportive housing options. Homeless and supportive housing adds stability to communities by bringing safe, stable permanent housing that offers a continuum of supportive services to victims of domestic violence, youth aging out of foster care, formerly homeless and homeless veterans, and others with special challenges. Finding new ways to meet the demand for this housing has become more critical as the federal government has slashed subsidy sources and defunded programs that have traditionally served our most vulnerable citizens.
· Use existing units to support homeless households: When existing affordable units that are currently subsidized for very-low income households become vacant, they will be targeted to homeless households.
· Increase homeless units in newly constructed projects: HPD will increase the homeless set-aside option in its low-income new construction portfolio from 20% to 30%.
· Expand Supportive Housing production: HPD will require developers to leverage more mainstream financing sources to compliment available subsidy with the aim of increasing supportive housing production.
· Support very low-income senior citizens: The Senior Affordable Rental Apartments (SARA) program will provide financing to support the construction and renovation of affordable housing for very-low income senior citizens.
For more information regarding the new term sheets please visit the HPD and HDC websites.
The New York City Department of Housing Preservation and Development (HPD):
HPD is the nation’s largest municipal housing preservation and development agency. Its mission is to promote quality housing and viable neighborhoods for New Yorkers through education, outreach, loan and development programs, and enforcement of housing quality standards. HPD is tasked with fulfilling Mayor de Blasio’s Housing New York: A Five-Borough Ten-Year Plan to build and preserve 200,000 affordable units for New Yorkers at the very lowest incomes to those in the middle class. For more information visit www.nyc.gov/hpd and for regular updates on HPD news and services, connect with us via www.facebook.com/nychpd and www.twitter.com/nychousing
The New York City Housing Development Corporation (HDC)
HDC is the nation’s largest municipal Housing Finance Agency and is charged with helping to finance the creation or preservation of affordable housing under Mayor Bill de Blasio’s Housing New York plan. Since 2000, HDC has issued roughly 10% of all the multi-family housing revenue bonds in the U.S. and since 2003 HDC has financed 122,513 housing units using over $13.7 billion in bonds, and provided in excess of $1.5 billion in subsidy from corporate reserves. HDC is the #1 issuer in the nation of mortgage revenue bonds for affordable multi-family housing in eight of the last ten years (2013, 2012, 2010, 2009, 2008, 2006, 2005, & 2004). HDC bonds are rated Aa2/AA+ by Moody's and S&P. In Affordable Housing Finance magazine’s annual listing of the nation’s top ten funders of multi-family housing, HDC is the only municipal entity on the list. In 2013, HDC was the third largest affordable housing lender in the U.S. after Citi and Wells Fargo, beating out Bank of America, JPMorgan Chase and Capital One. Multi-family buildings financed by HDC contain more than 1.7 million square feet of commercial space. For additional information, visit: www.nychdc.com.
