Sample Memorandum: Addressing Housing Crisis in New York City

Memorandum

To: Mayor New York City

From: Senior State policy Adviser

Date: August 16, 2014

Re: Addressing Housing Crisis in New York City

Background

New York City continues to face a variety of challenges as it continues to grow in terms of size and population. A major area of concern in the city is the housing problem that has escalated at a very high rate.[1] The changing face of the city and increased population due to urbanization has contributed to increased demand for housing. As a result, four major housing crises in the city have been reported, and they include lack of enough housing facilities, rents and prices of houses has gone up, city housing stock has deteriorated, and most houses remain under maintained.

The New York housing crisis affects health and economic conditions of the New York residents. Lack of proper and adequate housing make it impossible for families to achieve the desired state of living and, therefore, most residents are subjected to living in conditions that are dangerous or that expose them to diseases. Poor health as a result of poor living conditions has increased health budget for the New York City government as noted in the last ten years. Economically, housing has been noted to consume a big portion of New York resident’s household income and thus they are unable to pay for other necessities such as food and clothing. The rapidly increasing housing cost has also deterred economic activities in the city since residents have low saving that can be invested. Businesses are also unable to attract skilled works due to high costs of house allowances.

For years, the New York City government has shown effort in combating the rising problem of housing by redeveloping Brownfields into residential properties, renovating abandoned properties, subsiding construction costs to ensure affordable housing and subsidizing rents.[2] The city government attempts to addresses housing problem has resulted in the creation of several apartments that house thousands of New York City residents. Nevertheless, despite the increased government effort the problem of housing in New York City remains a key are of concern. It has been noted that low-income earners are the most affected by the housing crisis in the New York City. The increased house rents have resulted into upper and middle-class income earners move into low priced housing apartments which were previously occupied by low-income earners. As a result, low-income earners have been left homeless since they are unable to afford housing facilities. Currently, a significant number of the city population lives in shelters or temporally accommodation since they cannot afford to rent an apartment. Majority of those who live in decent housing around New York City are paying a large portion of their income as house rent or home ownership costs, therefore, limiting economic development in the city. Research has indicated that the problem will continue to worsen if the current local government does not address it immediately.

Existing Policies and Programs to Address Housing Crisis

It has been noted that New York City is has been facing a major housing crisis for more than a two decades. There has been lack of enough houses in the city; house rent has escalated rapidly; most of the houses are in substandard conditions, and the price houses have gone up. The department of housing preservation and development (HPD) is responsible for addressing the housing issues in the New York City. As an effort to curb the emerging housing crisis the department in conjunction with other major state agencies such as New York State housing finance agency (HFA), regional economic development council, and department of environment among other state agencies has enacted laws and policies that govern housing in the city[3].

One of the major policies to address housing crisis is controlled rental program that aims at making rental houses affordable to New York residents. New York has enacted a rental regulation law under state law that regulates rental apartments in the city. A study conducted in 2009 indicated that more than half of all rental houses in New York City were either rental controlled or rent stabilized. This ensured that most of the residents in the city receive affordable housing.[4]Another policy is partial tax exemption to homeowners to encourage reducing rent for their tenants. There are also programs that promote home ownership in New York City. The New York City housing partnership has produced over 20000 units of housing. This has been achieved through provision of subsidized mortgages that encourage housing development. There is also Nehemiah program where churches have built houses for rent and sale. The prices of the houses are relatively lower that of private apartments. The new housing opportunity program also promotes the development of houses for both rental and home ownership. The housing development corporation (HDC) provides capital subsidies and low-interest loans to house developers to encourage housing development.

The New York City government also noted that there were large numbers of abandoned and vacant house around the city as well as idle land that is underutilized. As an effort to increase housing supply, the government has been encouraging renovation of the abandoned apartments and development of the idle land.  As an effort to stimulate housing development, government passed laws that increased tax charges to vacant properties to encourage their development.[5] The city government also enacted laws that facilitated the development of new rental houses and renovation of abandoned apartment through third party programs. Through New York City Housing Authority (NYCHA), the city government has been promoting public housing in New York. NYCHA has constructed over 200,000 household units in the city where it offers subsidized housing to low-income earners.

Influence of the Interest Groups, Political Parties and the Media 

The current New York policy to address housing crisis in the city have failed to combat the situation ultimately. Many interest groups, political parties and media have exerted a lot of influence to the current policy to solve the existing problem. One of the main interest groups that have been influencing the current policy is the US government. The government has promised US citizen that they access to affordable and quality housing.  To achieve this goal US federal government has put putting pressure to the state local government to initiate programs and policies that will ensure housing affordability. The national government through it legislature branch have passed laws and regulations that requires banks and mortgage companies to make loans accessible to all citizens and also offer them at a low interest. The main aim of these laws and regulations is to ensure that New York City residents have access to better housing, as well as encouraging development of new housing.[6] The effectiveness of government involvement was recorded much in mid 2000s when there was an emergence of the housing bubble in the US. At this time, the development of residential houses increased at a rapid rate, and most of the US citizen were able to achieve their dreams of owning a home.

Other interest groups of the current policies to address the housing problem include business corporations, NGOs, healthcare centers, and insurance companies among many others. The most sustained policy by these interest groups is the control of rent in most residential houses. The groups have supported local government in their effort to control the escalating rental charges. It has been noted that high-income charges has been limiting business corporation from hiring skilled workforces due to the high cost of house allowances.  The high rent has also been affecting most low-income earners driving them to live in unfavorable conditions where they are exposed to risks of poor health conditions[7]. This has been affecting healthcare facilities and insurance companies by increasing the cost of providing their services. As a result, these groups have been supporting New York City government to regulate rents by putting maximum rent that can be charged to tenants to ensure equality.

Political also have a significant impact in influencing the current policy on housing in New York City. Addressing house crisis have been one of the main campaign manifesto of political parties when they are seeking for leadership positions. Each party has promised their supporters that will make houses affordable to every resident by construction of new housing apartments and renovation the abandoned apartment around the city. The parties have worked hand in hand with the city government in ensuring it achieve its objective of ensuring housing affordability to the residents.

On the other hand, media is in the first line in supporting the current housing policy in the New York City. Through the media, most of the city residents can raise their concerns and air their views on the current housing situation.[8] The media have also been following the implementation of the policy thus ensuring that the city government does not sleep in their job.

Available Options to Address the Current Housing Crisis

As noted, the past city government effort to handle the housing crisis in New York has failed to achieve its objectives fully. About 15% of New York inhabitants are rendered homeless since they cannot afford to rent or own a home. These residents usually live in shelters that are considered unfavorable residential areas. Majority of those who have access to rental houses pay more than 50% of their income as rent that is non-proportional considering that these individuals have other basic needs.  Therefore, a variety of options need to be considered in order to ensure that every resident have access to affordable home. The recommended options should ensure that they increase development of new housing structures, reduce rental charges, reduce cost of home ownership and increase accessibility. The following options are available for city government to achieve its mission.

  • Development of vacant lands and Redevelopment of Brownfield
  • Tax exemption to house developers
  • Partnership with private investors
  • Increasing rental control and mandatory zoning of residential areas

Redevelopment of Brownfield and Vacant Lands

It has been established that scarcity of land for development is a major obstacle in creating affordable housing in New York City. As more people move in the city, there is deprivation of resources around the city, and this has led many industries to move out of the cities. The industry leave behind contaminated land due to their previous use and these vacant lands are referred to as Brownfield.[9] In New York Brownfield account for the largest portion of vacant land and have a detrimental effect of the health of their neighborhood. An analysis has concluded that these Brownfield in the city can serve as a good remedy to affordable housing if they can be redeveloped. Analysts consider Brownfield as wasted resources and argue that if they can be used efficiently they can reduce housing problem in the major cities.

Pros and Cons of Brownfield Redevelopment

Brownfield redevelopment combines serves as a remedy to environmental problems; leads to economic development and increase social improvement. As a remedy to environment, Brownfield redevelopment ensure that the sites are cleaned and are left free of contamination that have been a health risk to the neighborhood. Economically, redevelopment of Brownfield ensures that the idle land has been put into good use that increase its economic value. Socially, redevelopment of Brownfield into housing properties will ensure that the city resident will have access to affordable houses. Another advantage of Brownfield as a measure to reduce house crises is low cost of development. Brownfields have existing infrastructures such as water, electricity, sewer lines and accessibility to public transportation.[10]  Brownfields also enjoy the benefit of industrial sites that can be used as shopping centers, public parks, and office buildings by the neighborhood community.

On the other hand, redevelopment of Brownfield into residential properties has some disadvantages.   One of the major disadvantages of Brownfield redevelopment is the high cost of cleaning. Brownfields are mostly contaminated with chemical deposits from previous industrial use. As a result, proper treatment is required to reduce environmental and health risk involved by developing such land. This exercise is usually costly and can use a large portion of city government resources. Some resident argues that the redevelopment of Brownfield will affect low-income earners who live in their neighborhoods. Currently, areas that neighbors Brownfield are occupied by low-income earners since they are cheap due to health risk exposure. Developing Brownfield into residential houses will attract high and medium income earners, and this will raise the cost of the neighborhood houses making them unaffordable to their current tenants.[11]

Tax Exemption to House Developers

The city government should exempt residential house developers from tax in order to encourage the development of new housing apartments. Tax exemption will serve as an incentive to attract investors in developing more residential properties than commercial properties thus addressing the housing crisis in the city.[12]

Pros and Cons of Tax Exemption

One of the major advantages of tax exemption to residential house developers is that it will attract several investors. Most of the idle land in the city will be developed into residential properties, and this raises the supply of residential houses in the city. Tax exemption will also reduce the cost of housing development leading to low cost of home ownership.

On the other hand, tax exemption will be disadvantageous to the city government. The city government collects most of its revenue from residential properties, and thus, tax exemption will significantly reduce government revenue. Tax exemption on residential property can also lead to unplanned investment that can affect the city in the future.

Partnership with Private Investors

The city government should partner with private investors in developing new housing apartments that will increase the supply for affordable housing. The partnership should allow private investors to develop housing apartments on behalf of the city government where they will be repaid over a period.

Pro and Cons of Private Partnership

Private sector has proved better managerial skills than public sector. Thus, encouraging partnership with private partners will ensure development of new housing apartment at a faster pace that the government would have provided. Involving private investors will also cut most of the cost of developing new housing apartment due to high managerial skills and reduced overestimation of development costs. Private partnership can also bring new ideas for designing the apartments that will ensure their affordability.

Despite several advantages of government partnership with private investors, it is likely that most investors will exploit the state resources for their own benefits. The government will end up using most of its revenues to private individuals in the long run hence failing to achieve its objectives of providing affordable housing to its residents.

Increasing Regulations on Rent and Mandatory Zoning of Residential Areas

For a long period, rent regulation has proved to be one way of ensuring affordability of houses especially to low-income earners.[13] Thus, the city government should increase rent control to ensure house affordability in the future. The city will be required to zone its residential areas in order to ensure equalities when implementing rent regulations. Zoning allows the city government to separate areas occupied by low and moderate income earners to those areas occupied by higher income earners.[14]

Pro and Cons

One of the main advantages of rent regulation and zoning is that it ensures affordability of houses by low-income earners. It also reduces exploitation of residents by landlords who have tendencies of charging high rents.

Nevertheless, rent control has been criticized since it discourages investors in residential property. It also reduces the quality of the rental houses since most of the apartment owners are reluctant in renovating their apartments. Rental control and zoning have also seen as a form of discrimination since high low-income earners are separated from higher income earners

Recommendation

It is recommended that the city mayor should develop vacant land and redevelop Brownfield to increase housing supply in the city. New York City has the most Brownfield lands in the US. If the city government can take advantage of its unutilized resource, it is can be able to control the increasing house crises in the area.  A study conducted by United to End Homeless (UHF) concluded that the current housing crisis can only be addressed by increasing housing supply in the city.[15] Since there are limited Greenfields left in the city for housing development, the city government is only left with the option of redeveloping Brownfield. Redevelopment of the Brownfields will not only address the housing crisis in the US, but it will also reduce health risk of the neighboring community as well as preserve the environment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bibliography

Adams, David, and Craig Watkins. Greenfields, brownfields and housing development. John Wiley & Sons, 2008.

Bloom, Nicholas. Public housing that worked: New York in the twentieth century. University of Pennsylvania Press, 2009.

DeFilippis, James, and Elvin Wyly. “Running to stand still: through the looking glass with federally subsidized housing in New York City.” Urban Affairs Review (2008).

Lee, Barrett A., Kimberly A. Tyler, and James D. Wright. “The new homelessness revisited.” Annual Review of Sociology 36 (2010): 501.

McDonnell, Simon, Josiah Madar, and Vicki Been. “Minimum parking requirements and housing affordability in New York City.” Housing Policy Debate 21.1 (2011): 45-68.

Winston, Nessa, and Montserrat Pareja Eastaway. “Sustainable housing in the urban context: international sustainable development indicator sets and housing.” Social Indicators Research 87.2 (2008): 211-221.

Wyly, Elvin, and James DeFilippis. “Mapping public housing: The case of New York City.” City & Community 9.1 (2010): 61-86.

 

[1] Elvin, Wyly, and James, DeFilippis. “Mapping public housing: The case of New York City.” City & Community 9.1 (2010): 61

 

[2] Nichola, Bloom. Public housing that worked: New York in the twentieth century. University of Pennsylvania Press, 2009.

 

[3] James, DeFilippis, and Elvin Wyly. “Running to stand still: through the looking glass with federally subsidized housing in New York City.” Urban Affairs Review (2008), 36.

 

[4] Ibid

 

[5] Barrett A., Lee, Kimberly A. Tyler, and Wright, James D. “The new homelessness revisited.” Annual Review of Sociology 36 (2010), 501.

 

[6] Nessa, Winston, and Montserrat Pareja Eastaway. “Sustainable housing in the urban context: international sustainable development indicator sets and housing.” Social Indicators Research 87.2 (2008), 212.

[7] Elvin, Wyly, and James, DeFilippis. “Mapping public housing, 65.

[8] Nessa, Winston, and Montserrat Pareja Eastaway. “Sustainable housing in the urban context: international sustainable development indicator sets and housing, 215.

[9] David, Adams, and Craig Watkins. Greenfields, brownfields and housing development. John Wiley & Sons, 2008, 324.

 

[10] Ibid

 

[11]Simon, McDonnell, Josiah Madar, and Vicki Been. “Minimum parking requirements and housing affordability in New York City.” Housing Policy Debate 21.1 (2011), 45.

 

[12] Nessa, Winston, and Montserrat Pareja Eastaway. “Sustainable housing in the urban context: international sustainable development indicator sets and housing, 216.

 

[13] Ibid,. 216.

 

[14] Nicholas, Bloom. Public housing that worked: New York in the twentieth century. University of Pennsylvania Press, 2009, 99.

 

[15] David, Adams, and Craig Watkins. Greenfields, brownfields and housing development, 326.