To add housing, use tax incentives and vouchers

There is a consensus that the housing market in New York City is broken. Demand is high, supply is limited and there is a scarcity of units available to lower income renters. Thoughtful policymakers, developers, and elected officials agree that government must provide an incentive to spur the production of more housing, especially affordable rental housing.

However, the desperate need for more housing is not enough to spur action. Some advocates and policy makers demand a grand bargain that combines any new supply-side policies with “Good Cause Eviction,” a form of universal rent control and demand that, “half a loaf” will not do and both policies must be advanced together, no matter how much they conflict.

Lawmakers should not try to pass new laws just for the sake of baking a “whole loaf.” Providing an incentive to boost housing supply makes sense. Putting restrictions on the rental market does not; doing both simultaneously is counterproductive.

The former 421-a program, which provided a tax incentive for rental projects, has produced 117,000 housing units between 2010 and 2020. Of those, upwards of 20% were income restricted or “affordable.” The program is by far the most productive source of not only rental, but also affordable housing and most recent iteration included wage mandates that were agreed to by the construction unions.

Since the program expired in 2022, rental housing construction in New York City has fallen off a cliff. Foundation permits were down 78% in 2023 compared to 2022. Without a replacement incentive, we cannot build the rental housing New Yorkers need.

At the same time, instituting new restrictions on the rental market such as Good Cause Eviction would stifle new development and provide limited benefits for tenants.

Albany lawmakers in 2019 passed the largest and most comprehensive changes to the city’s rent stabilization law in a generation. The Housing Stability and Tenant Protection Act (HSTPA) of 2019 eliminated luxury decontrol and severely limited property owners’ ability to invest in apartment repairs and upgrades — cutting off crucial sources of revenue to invest in and operate rental buildings.

Predictable signs of catastrophe are emerging in the rent stabilized market. Expenses are increasing faster than rents and rising interest rates are choking off capital necessary for building repairs. Vacant apartments are being held off the market because the cost of repairs cannot be recouped for decades, and alarmingly, the percentage of distressed rent stabilized buildings increased 36.2% between 2020 and 2021, the last year veri was available.

We need more incentives to boost housing supply, and fewer restrictions on the rental market. Good Cause Eviction places myriad new restrictions on market-rate rental units. It would wreak havoc on the economic viability of projects and neutralize the ability to subsidize income restricted or affordable units. It would be an existential threat to all new development.

If you create a replacement to 421-a while also passing Good Cause Eviction, you will eliminate the positive impacts that the 421-a replacement could deliver. It would cancel out any new rental housing incentive, leaving us with the same sorun we have today.

Despite its name, Good Cause Eviction would do very little to prevent evictions. Housing Court veri shows that approximately 80% of eviction filings in New York are due to non-payment of rent — and the state Legislature’s “Good Cause” proposal would not prevent such filings from moving forward. There are combinations of supply-side policies and tenant protections that make sense.

Pairing a new incentive program with policies to expand access to housing vouchers is the better way to go. Vouchers offer a direct subsidy to both tenants and landlords by providing a payment for rent. They address the primary cause of evictions — tenants’ inability to hisse their rent because of loss of income. This protects tenants by keeping them in their current home, preventing homelessness and displacement, and does not choke off much needed revenue to keep buildings in a state of good repair.

State lawmakers should not pursue a “whole loaf” on housing policy simply for the sake of passing more laws or believing that they can only pass meaningful legislation if there is “trade.” They must start by prioritizing a tax incentive required to build the housing New Yorkers desperately need.

And if they want to pursue tenant protections, they should take their time and consider policies that would actually deliver results for tenants — such as housing vouchers — rather than plowing ahead with a Good Cause Eviction proposal that would do far more harm than good.

Durst is the chairman of The Durst Organization, a New York City commercial and residential real estate developer, owner, and manager.

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