Even more bad news for New York City: Housing advocates are sounding the alarm over the damage the nearly $1 billion in cuts to the Department of Housing Preservation and Development’s (HPD) capital budget will do to the city’s affordable housing prospects.
The novel coronavirus pandemic has decimated the city budget, to the point that Mayor Bill de Blasio recently proposed borrowing up to $7 billion from New York State to cover the city’s operating expenses—a move explicitly banned after similar measures brought NYC to the brink of collapse in the “bad old days” of the 1970s. Without a federal bailout or a tax increase on top earners (something the mayor has balked at in the past), it looks like austerity is on the table for the next fiscal year.
The cuts follow others made to municipal departments like the DDC, which was compelled to freeze all public design work (including projects that were already under construction), and the Department of Parks & Recreation, which has seen a dreadful reduction in park maintenance. In HPD’s case, its budget will be hobbled by a reduction of 40 percent; the mayor has proposed cutting $583 million in 2020 and $457 million in fiscal year 2021. As with public design work, a once relatively stable source of income for architects, affordable housing design is also looking more precarious.
Aside from the uncertainty this brings to firms looking to shore up their portfolios with longer-term projects, developers told Politico that the cuts could kill affordable housing buildings that have been in the works for years. For instance, HPD’s loan program for supportive housing, through which the department partly finances its projects, funds developments with at least 60 percent of the units set aside for the homeless or disabled and was expected to deliver 1,000 units this year and 1,500 in 2021 alone; now those projections are up in the air.
More concerning is that HPD has stopped issuing “soft commitment letters,” which affirm that a developer is set to receive city funding. Without that written commitment, affordable housing developers are having a much more difficult time luring in outside investors. With groundbreakings pushed back, those same projects are also at risk of losing investors who were angling for low-income housing tax credits but have been spooked at the uncertainty now involved.
Any delay in affordable housing construction or the preservation of existing units could endanger Mayor de Blasio’s Housing New York 2.0 plan, which in 2018 bumped up its goal of creating or preserving 300,000 housing units by 2026 from the original 2014 plan’s 200,000-unit target. It’s estimated that the combined 2020 and 2021 cuts to HPD’s budget would ultimately prevent 21,000 fewer affordable units from becoming available. More importantly, the current pandemic has greatly exacerbated housing insecurity among city renters, and slashing the availability of affordable units will be certain to cause ripple effects down the line.