What is the definition of “affordable housing”? The accepted rule of thumb is that no more than 30 percent of a household’s income should be needed to pay for a mortgage or monthly rent. Once you are paying more than 30 percent, you are considered “cost burdened” or “rent burdened”. The federal Department of Housing and Urban Development (HUD) estimates that there are 12 million homeowners and renters who are paying 50 percent or more of their household income on housing costs.
The divide between the number of affordable housing units being developed (or, more accurately, not being developed) and the need for affordable housing is ever-widening. One reason for this is that developers are unwilling to construct affordable units without huge tax exemptions and other incentives, such as building height limitation exemptions or allowing for less parking than building codes require. Another reason is that because of the recent recession, the incomes of homeowners and renters have not risen to meet the rising housing costs.
How can we close this divide between the need for additional affordable housing units and the lack of developers willing to construct affordable housing?
On a state level, Gov. Andrew Cuomo has been working on a plan to revive the property tax break for developers who build affordable units for low and middle income residents of New York City. However, this tax incentive is only for New York City. What about the rest of the state, Governor? We need more affordable housing in the Capital District, too. And, our local developers will not construct affordable units without huge tax breaks, either.
Albany Mayor Kathy Sheehan established the Housing Affordability Task Force in 2016 to investigate “the state of and need for affordable housing” in the city. The preliminary report of the Task Force related the efforts the Task Force had taken to collect the necessary data to make informed decisions and recommendations. One very interesting statistic came from the Albany Housing Authority (p.7): The waitlist for public housing is six thousand households long in a city with a population of only 98,500 (U.S. Census Bureau).
Meanwhile, a few years ago, a coalition of concerned citizens, public officials and housing and social services providers in Albany started meeting monthly to work on ways to address the affordable housing needs of Albany’s residents. The group is called Housing For All. (Full disclosure: I am a member of this group.) One of the primary goals of Housing For All is the expansion of affordable housing in Albany. According to a study done for ReZone Albany by BBC Research & Consulting, half of the renters in Albany earn less than $25,000 a year, yet at the median monthly rent of $896 in the city, a household needs an annual income of $36,000 to pay the rent. At the $25,000 annual income level, the affordable rent is calculated to be $625 per month. That is quite a difference to what is “affordable” rent to the actual median rent for half of the renters in Albany. On top of that, a Market Gap Analysis by BBC showed that there is a deficit of affordable housing units for households receiving less than $24,999 per year. That deficit is a whopping 6,591 units. But, if you think affordable housing is a problem just for low income households, the BBC study also showed a deficit gap of over 5,000 units in affordable housing for households with incomes of $50,000 or more. (Section III, p.1)
Currently, Housing For All is focusing its efforts on the need for an Inclusionary Zoning Policy for Albany. Housing For All would like this to be incorporated in the ReZone Albany proposal for the revised city code. Inclusionary Zoning would require developers of new market-rate apartments to also provide affordable housing units. The requirement is usually a percentage (say 10 percent) of the total number of units that are to be developed. Over 500 communities in the United States have adopted an inclusionary housing policy. In many cases, the policy provides tax exemptions and incentives to the developer for building affordable housing units.
However, there are issues associated with Inclusionary Zoning ordinances. These include: developers balking at designating a percentage of their newly-constructed units as “affordable,” despite the incentives; the high cost of real property taxes in Albany, even with a tax abatement; and competition for developers’ investment dollars by adjacent municipalities where Inclusionary Zoning is not a requirement. (For a good overview of the issues municipalities face in trying to get more affordable housing units built, see the series of articles on the affordable housing crisis in the city of Saratoga Springs as reported by The Alt’s Luke Stoddard Nathan).
So, what is a city to do? This is where we need Gov.r Cuomo and the state legislature to come into the picture. As I wrote above, Gov. Cuomo is reviving the expired 421-a tax exemption law as an incentive for developers in New York City to construct thousands of affordable housing units in NYC. We need the Governor to not forget that the rest of the state faces an affordable housing crisis, too. Individual cities cannot address this crisis on their own. Like I said, if Albany requires the setting aside of some newly constructed market-rate units for “affordable” housing, but Colonie doesn’t, guess where the developer is going to build his/her project? Yep, Colonie, not Albany. Therefore, state legislation is needed to require that all new market-rate apartment construction projects in the state set aside a certain number of units for affordable housing. The legislation will include corresponding tax exemptions/abatements for the developer. In this way, the playing field will be leveled, so as not to pit one municipality against another. For, as we see in the articles by Nathan, even the affluent city of Saratoga Springs has an affordable housing crisis and they don’t know how to solve it either.
Previous columns from Dominick Calsolaro:
photo Wikipedia Commons