REMARKS
HPD explains resource allocation challenges for homeownership projects
1:37:48
·
3 min
Kim Darga from HPD provides a detailed explanation of the resource allocation challenges faced when trying to finance homeownership projects alongside other affordable housing initiatives.
- Illustrates the cost of financing homeownership units using the example of Arbor East (90 units costing $36 million, half of the annual Opendoor budget)
- Explains the need to balance resources across multiple projects and communities
- Discusses the impact of increased costs and limited resources on HPD's ability to finance projects quickly
- Highlights the challenges of financing affordable housing with static federal funding sources despite rising costs
Kim Darga
1:37:48
Okay.
1:37:49
So for context, right?
1:37:51
So that is what we're trying to figure out is if we can finance some homeownership in the next phase.
1:37:56
At 90 units of homeownership, let's say, in the next phase, would cost us 36,000,000, which is basically half of our budget this year for Opendoor.
1:38:06
We have projects and many other communities that are also where they are they are ready to close, and so we're trying to figure out it this is this is the this is the question that we are constantly grappling with.
1:38:19
Right?
1:38:21
Every council member here has potential projects that they're interested in financing that have that too.
1:38:27
So I'm trying to balance the resources and figure out how to advance as much as possible.
1:38:33
So we are interested in doing that, but it it really is gonna come down to do we have the resources in the near term to to do it.
Selvena Brooks-Powers
1:38:41
And those ninety units for that phase is out of how many?
Kim Darga
1:38:46
I don't have the I don't have
Ahmed Tagani
1:38:48
the I think the full arc
Selvena Brooks-Powers
1:38:49
No.
1:38:49
No.
1:38:49
The full for that phase because 90 is just a fraction of how many rental units you're still getting out of it.
1:38:56
And then also, I might always have this question, you know, we're acts and pressured at times to make these votes on these large developments that HPD is not prepared to even push through the pipeline for years to come.
1:39:09
So are we taking these votes too soon?
1:39:13
To at this point because HPD does not have the capacity or bandwidth to make sure that they are going in in a timely fashion.
Kim Darga
1:39:23
So let me take a step back and give some context.
1:39:28
The 5 years ago, 6 years ago, if somebody came in and wanted to work with HPD, the predevelopment period on new construction project might be 2 to 3 years.
1:39:41
If you have to entitle a site, go through your lurid could be longer.
1:39:47
Costs have escalated at such a degree the last couple of years.
1:39:51
We cannot finance as quickly because the pot of resources just does not go as far.
1:39:58
So for example, we get $800,000,000 a year in volume cap.
1:40:03
That is one of the major sources to finance affordable rental housing in New York City.
1:40:08
That $800,000,000 is essentially the same from 5, 6, 7, 8, 9, 10 years ago as it is today.
1:40:16
Right?
1:40:16
So it's not that we don't want to to be on to the projects as quickly as possible.
1:40:20
In fact, that is our goal.
1:40:22
Right?
1:40:22
It's that we have been in an environment where costs are up 30, 40, 50%.
1:40:29
Right?
1:40:30
Interest rates are up.
1:40:31
Operating costs are up.
1:40:33
Construction costs are up.
1:40:34
And so we're trying to do as much as possible, as quickly as possible, but some of that is out of our control.
1:40:41
Fortunately, the capital budget has is very robust, but all of the other resources that we depend on have not grown.
1:40:50
Right?
1:40:50
So our Section 8 budget has not grown.
1:40:53
Our locum housing tax credit allocation has not grown.
1:40:57
And so we're basically doing we're trying to do as much as we were 5 years ago without necessarily the resource landscape to do it.
1:41:05
So all of these you know, we can go through and ask every one of these questions, but that is the heart of one of the challenges that we're grappling with with this legislation, right, is that we are trying to do as much we have a hundred thousand people in shelter We have a vacancy rate on the rental side, a point 4% for the lowest cost units.
1:41:27
We have, I think, a moral obligation to try to finance as much deeply affordable rental housing as we can in New York City.
1:41:34
So homeownership is absolutely an important prong, and that's why we have this robust strategy retain
