Q&A
Challenges in meeting the 6% homeownership requirement of Intro 958
0:45:33
·
6 min
Deputy Commissioner Kim Darga and First Deputy Commissioner Ahmed Tagani explain the challenges HPD foresees in meeting the 6% homeownership requirement of Intro 958.
- Concerns about unintended consequences of a percentage target for overall financed construction
- Significant additional investment required to reach 6% ($382 million more)
- Potential trade-offs between homeownership, affordable rental housing, and preservation work
- Inability to use low-income housing tax credits for homeownership projects
- Need to balance resources across various housing priorities and existing commitments
Adrienne E. Adams
0:45:33
Okay.
0:45:34
You touched on this a little bit in your testimony about the bill specifically.
0:45:40
Tell us again in a little bit more detail, what are the challenges that you foresee in meeting the requirement of my bill of intro 9 58, that 6% of all affordable units, HPD subsidizes are for homeownership.
Kim Darga
0:45:55
So I think we're certainly committed to homeownership.
0:45:58
We we talked talked about the 3 pronged approach.
0:46:02
I think what is concerning us is the potential unintended consequences of having it structured, having that commitment structured as a percentage target of overall financed construction.
0:46:16
And I think that's there's a couple potential issues there.
0:46:22
1, we have a set capital budget every single year.
Adrienne E. Adams
0:46:26
Mhmm.
Kim Darga
0:46:28
So this year, the capital budget available for financing affordable housing at HPD is about $2,200,000,000.
0:46:38
If we have to get to 6%, and that is overwhelmingly new construction, right, because we're really talking about to qualify new construction through programs like open door, down payment assistance, as well as conversions, which largely happens through the Affordable Neighborhood Cooperative Program.
0:46:59
We Let me take a step back.
0:47:01
In FY 20 4, we financed 396 qualifying units.
0:47:07
That was about 2.5% of the financed production.
0:47:13
We financed through subsidy programs about 15,695 units.
0:47:19
K?
0:47:21
In order to get to the 6%, we would need another $382,000,000 invested in homeownership to get to that 6%.
0:47:33
So one of the potential concerns that we have is that the demand for both producing a 4 the demand that we're seeing on preservation right now is extremely high.
0:47:50
This is the one of the highest cost environments that we've ever seen in doing this work.
0:47:57
And for especially existing buildings, Mitchell Llamas, HDFC Cops, and restricted affordable rental properties, they're facing some really difficult situation right now with escalating operating costs and interest rates.
0:48:14
So our one of the concerns that we have is that unless we had we knew that we had the additional resources, we would have to make a choice between investing the money to meet this target, right, or investing in affordable rental housing in the city and or preservation work.
0:48:38
And you know, I think the implications of that could be, right, if we had to cut $382,000,000 out of our affordable new construction, we would not be fully utilizing our long home housing tax credit resources in New York City, which is a major federal source that we leverage.
0:48:56
So that's not a situation I think any of us wanna be in.
0:49:00
Right?
0:49:00
I think we wanna fully be able to maximize those federal sources.
0:49:05
And at the same time, you know, we are I said, we're seeing increasing needs in some of the existing affordable housing in New York City, including limited equity coops.
0:49:14
And, you know, one of you know, we last year alone, we invested about a $100,000,000 in Mitchell Llamas.
0:49:24
You know, I'd hate to be, you know, in a situation where we couldn't make that investment in a given year because we were focused on creating new homeownership opportunities.
0:49:33
So I think it's that, like, how we manage the resources is certainly a major question.
0:49:38
And then I think the other thing 2 other things may be worth noting.
0:49:47
We we do have this 3 pronged approach.
0:49:50
I think we all understand that we are trying to create new opportunities for first time homebuyers in New York City.
0:49:59
The concern is that creating real estate is actually more expensive potentially.
0:50:06
We could do that in other ways.
0:50:07
Right?
0:50:08
And creating real estate alone or having a majority of that 6% be through creation of no real state is a much more recent public resource intensive strategy.
0:50:22
We may be able to do similar work through down payment assistance, let's say, which we currently offer a $100,000.
0:50:30
The typical requests that we've been getting since we raised it.
0:50:36
The limit to a $100,000 is about 80,000, and that that may actually allow many New Yorkers to access upper opportunities within the city today without the same commitment of public resources.
0:50:51
So I think it's that, you know, this really emphasizes one major prong of our over role homeownership strategy, and we're concerned about the preservation component not being included in it, the resource implications and very hard choices we may be faced with making.
0:51:12
And I think those are really the big concerns.
0:51:17
I don't know how bad if there's anything else that you would add to that.
Ahmed Tagani
0:51:19
Just to go back to the low income tax credit, the light tax piece.
0:51:23
So it's it's important to know also that we can't use it on the home ownership.
0:51:27
So as a result of that, we wanna make sure we maximize it on our rental piece.
0:51:32
Also, it's something that we continue to advocate to the federal government that New York City can use much more of.
0:51:38
So every year and every time that we're pushing, we're trying to maximize our amount and push it.
0:51:43
So we would not wanna leave any on the table.
0:51:45
This way, to emphasize that we would definitely need to make sure we have the capital in place to maximize the light tech so we can continue successfully advocating for it at the federal level.
