Lack of affordable housing cramps New York's economy

High maintenance costs, population growth, limited space fuel problem

March 10, 2002|By Antonio Olivo | Antonio Olivo,BLOOMBERG NEWS SERVICE

NEW YORK - Behind a small grocery store in Manhattan's East Harlem, Alejandro Vasquez worries about leaks, exposed wires and rats in a $900-a-month converted basement he shares with 12 men.

On the Upper East Side, Kim Storniola, 27, a New York City public school teacher, said she might change careers because of the $2,300-a-month, two-bedroom apartment she shares with an older sister.

"Half my paycheck goes to my rent," she said. "I can't afford to live in this city and be a teacher."

Their problems, reflected throughout the city, are part of the most extensive affordable housing shortage in the United States, said Naomi Bayer, director of the New York office of Fannie Mae, the largest buyer of U.S. mortgages.

The chronic deficiency, which is driven by high construction and building maintenance costs, limited space and a population increase of 700,000 since 1990, threatens the city's efforts to regain economic vitality, said Michael Schill, director of the New York University School of Law Center for Real Estate and Urban Policy.

`The Achilles heel'

"Affordable housing is the Achilles heel of our economy," as 94,000 jobs have been lost since the Sept. 11 World Trade Center attack, Schill said.

"The building codes are antiquated, the bureaucracy is ridiculous and the city has the highest tax structure in the country, not to mention the price of land," said Randy Lee, a New York developer for 40 years. "Everything here is more expensive, including rents if a developer wants to see a decent profit."

The U.S. Department of Housing and Urban Development defines affordable housing as "reasonably comfortable" with rent or mortgage payments equal to 30 percent or less of a household income.

About half of New York City's 2 million apartment households paid 30 percent or more of their incomes in rent in 1999, according to the city's 2000 Housing and Vacancy Survey. More than 500,000 households paid at least half of their incomes, even though the rents of 1.1 million apartments are regulated by the city.

In December, rents ranged from an average of $1,025 in the South Bronx to $3,270 in Manhattan, real estate brokers in those areas said.

M/PF Research Inc., a Dallas-based firm that tracks real estate outside New York, said average monthly rents in December were $1,602 in San Francisco, $1,135 in Los Angeles and $982 in Chicago.

Wait for housing

The U.S. Census Bureau's 2000 American Housing Survey showed 26.7 percent of San Francisco renters had "severe rent burdens," while 30 percent did in Los Angeles and 26.1 percent in Chicago. In New York, the largest rental market in the U.S., 22.4 percent reported such hardships.

The magnitude of New York's problem is reflected in a wait of several years for one of the 170,000 units in the city's public housing system, housing advocates said. The homeless population in the city's shelter system is about 30,000, the highest ever.

Mayor Michael Bloomberg, whose efforts to close a projected $4.77 billion budget in the fiscal year starting July 1 led to a proposed reduction in city Department of Housing Preservation and Development funds of as much as 9.2 percent, has said affordable housing is among New York's most serious issues. The mayor is founder and majority owner of Bloomberg LP, parent of Bloomberg News.

His administration wants to stimulate private investment in low- to middle-income housing through new zoning laws for residential development on community gardens and by using cleaned up hazardous waste sites and other manufacturing areas, Housing Commissioner Jerilyn Perine said.

The administration favors allowing higher density structures in single-family areas, and building code changes that would reduce construction costs, she said.

Housing advocates said those steps wouldn't be enough to reverse an estimated shortage of 200,000 affordable units.

"We haven't been spending enough government money on housing for years," said Irene Baldwin, director of the Association for Neighborhood and Housing Development, constituted of 89 community groups.

Perine said the city plans to follow a strategy accelerated under former Mayor Rudolph W. Giuliani to move away from direct government spending on housing programs and toward projects financed through tax credits, government grants and low-interest loans.

Tenants, landlords

The department will continue rehabilitating homes in blighted areas, she said.

Schill estimated in a 1999 study that rents on new apartments might drop as much as 29 percent through lowered construction costs if, among other things, more manufacturing properties were allowed for residential use and the city building department increased efficiency.

Although private investment has helped improve such neighborhoods as Harlem in Manhattan and Bedford-Stuyvesant in Brooklyn, escalating rents that force out longtime residents show "there is no private sector answer," Lee said.

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