The Community Service Society of New York

10/14/2019 | Press release | Distributed by Public on 10/14/2019 07:47

How will the candidates’ housing plans affect New York City?

The Democratic presidential primary campaigns have been paying an unprecedented amount of attention to housing policy. Most of the top ten candidates have talked about housing on the campaign trail, and half - Booker, Castro, Harris, Sanders, and Warren - have made detailed policy proposals - something that has not happened in past primary seasons. While housing has not yet been a focus during the debates, candidates are recognizing the breadth and depth of the housing affordability crisis and are promising to commit hundreds of billions of additional dollars to address it. And while campaign proposals generally provide only a rough guide to the policies that presidents eventually succeed in enacting, they do provide insights into a candidate's priorities and understanding of key issues.

All these proposals have big implications for New York City. The affordability and homelessness proposals from five candidates with detailed plans would mean anywhere from $1.9 billion to $12.9 billion a year in additional federal subsidy. These sums would not only help to address the city's entrenched housing needs, but would also provide a significant economic stimulus, especially to the city's poorer neighborhoods.

Today the federal Department of Housing and Urban Development (HUD) spends $42.6 billion on direct subsidies to build and operate affordable housing. Of that, 53 percent goes to Section 8 vouchers for tenant families to help pay their rent, 17 percent goes to public housing, and 30 percent goes to privately owned subsidized developments. In addition, HUD and other agencies spend $5.8 billion a year on various homelessness programs, the Internal Revenue Service allocates Low Income Housing Tax Credits to the tune of $9 billion a year, and the national Housing Trust Fund received $248 million last year from Fannie Mae and Freddie Mac.

Central to many of the candidates' plans are proposals to make rental housing more affordable by spending a lot more federal money - whether through building new housing, providing rent assistance to individual families, or dealing with the massive need for capital reinvestment in public housing developments around the country. But the plans also call for other reforms, such as regulating rents and evictions, combatting exclusionary land-use practices in local jurisdictions, and addressing redlining and other forms of racial exclusion by expanding fair housing practices and support for homeownership.

New production and preservation

The Booker, Castro, Sanders, and Warren campaigns have released proposals for expanding affordable housing production and preservation. All four rely on the Housing Trust Fund (HTF) as the primary funding mechanism, a welcome focus on the first new federal housing program in over 40 years to explicitly serve what the federal government calls extremely low income renters. In New York City that translates to up to about $29,000 a year for a family of three. Other subsidies for new housing construction, including the Low Income Housing Tax Credit, primarily benefit people with much higher incomes.

HTF is a block grant program: The federal government distributes funds to the states using a formula and state governments make the funds competitively available. In 2019, Congress allocated $248 million to the trust fund, which then passed on $19 million to New York State. New York City probably received about half of that statewide benefit. The chart below illustrates projected HTF commitments under each candidates' plans, and the resulting increases to the New York State share.

In New York, both the governor and the mayor have been criticized for failing to meet the need for deeply affordable housing. A major federal commitment to extremely low- income renters would help with this goal, especially when paired with other proposals, like rental subsidy assistance proposed by Booker, Castro, Harris, and Sanders or the $50 billion grant program for community land trust development, proposed by Sanders.

(Although they have not made detailed proposals, Buttigieg has discussed the need for housing production and O'Rourke includes housing in his climate agenda.)

Rent assistance

Booker, Castro, Harris, and Sanders all propose to expand direct assistance to tenant families to help them pay their rent. Sanders would greatly expand the federal Section 8 voucher program, in which the federal government pays for part of a low-income household's rent in private apartments. Booker and Harris would create a new refundable tax credit, which would serve to reimburse tenants for excessive rents on a similar basis. This approach would take the benefit out of the annual budget process, but could make the benefit harder to access, by making much of it into an annual tax rebate instead of a monthly payment directly to the landlord. Castro would combine an expanded Section 8 for very low- income people with a tax credit for a somewhat higher income group.

All of these proposals would lower tenants' net rent to 30 percent of household income. Because New York City has more than 700,000 households in unsubsidized housing paying more than that threshold, it stands to benefit greatly from any of these plans. There are 104,000 of these households already on the waiting lists for the city's existing stock of Section 8 vouchers.

On the other hand, the city's very tight housing market could present problems. Already, many families that receive Section 8 vouchers are unable to find an apartment that meets the program's conditions where the landlord will accept them. Expanded rent assistance programs would work best when combined with expanded affordable housing production programs - something several candidates already propose.

Although the Booker, Castro, Harris, and Sanders plans differ in design, with different rent and income limits, the end results are quite similar. All would provide rent assistance to between 640,000 and 685,000 households, with average amounts of assistance between $560 and $600 a month, for totals ranging from $4.5 to $4.8 billion a year. (We base these estimates on CSS analysis of the Census Bureau's New York City Housing and Vacancy Survey.)

Public housing

Castro, Sanders, and Warren all propose adding new funding for the capital needs - long-delayed major repairs - of the country's existing stock of public housing. Public housing across the country receives about $7.4 billion a year in federal money, an inadequate amount that contributes to deteriorating conditions. The poor physical condition of much of the country's public housing developments, together with the poverty of the residents, may explain why so many politicians are reluctant to embrace public housing, but the program urgently needs capital funding.

Today, the New York City Housing Authority estimates its capital needs at $32 billion over the next five years, based on actual survey of the condition of its properties. The best estimate for the total national need is $70 billion, but that is based on extrapolations from surveys of a sample of housing authorities in 2010 and it appears to include only $20 billion for NYCHA.

Two candidates have proposed funding at least approximately on the scale of need - $50 billion from Castro and $70 billion from Sanders. Warren proposes a much smaller amount - $3.6 billion, and the other candidates ignore existing public housing in favor of subsidies to build new affordable housing. We can allocate the national sums of money to NYCHA on the basis of the $20 billion out of $70 billion ratio. (These are total capital amounts, not annual appropriations, so we have divided them by ten in order to estimate the annual totals mentioned above. Nydia Velázquez, congressional representative for parts of Brooklyn, Lower Manhattan, and Queens has also introduced legislation that would allocate $70 billion for public housing capital repairs.)

These proposals would not only help improve living conditions for NYCHA residents, they could also reduce the housing authority's reliance on controversial means of raising money, such as partial privatization or building market-rate housing on public housing campuses.

Ending homelessness

The Booker, Castro, and Sanders campaigns explicitly address homelessness in their housing proposals, relying primarily on the McKinney-Vento Homeless Assistance program as the funding mechanism. McKinney-Vento provides funding to localities, states, and public-private partnerships for homeless services, shelters, supportive housing, rent subsidies, and permanent housing. Under the McKinney-Vento umbrella, HUD distributes funding through a number of programs, including the formula-based Emergency Solutions Grant and competitive Continuum of Care program. In 2018, Congress allocated $2.4 billion for McKinney-Vento and New York State received $240.6 million.

The chart below illustrates projected increases to homelessness funding under the three campaign proposals, and the resulting increase in the New York State and New York City shares.

These commitments would significantly expand local capacity to address the city and state's growing homeless population : there are 92,000 homeless people statewide and 78,700 in New York City. For example, expanded federal funding can help sustain a proposed rental assistance program like Home Stability Support, and the development of new, deeply affordable housing statewide.

Tenant protections

The Booker, Castro, Sanders, and Warren campaigns all include proposals to bolster renter protections. Long framed as a local policy realm, proposals that provide federal funding for the implementation of tenant protections are a welcome sign and could lead to increased resources for New York.

The Booker, Castro, and Sanders campaigns all call for the establishment of a national fund to support local right to counsel laws, which would guarantee low-income tenants facing eviction the right to legal representation in housing court. Sanders commits $2 billion to the fund. The Sanders and Warren campaigns both draw connections between exclusionary zoning ordinances and anti-renter laws (such as rent control pre-emption). Warren commits infrastructure funding to de-incentivize exclusionary zoning and incentivize tenant protections, while Sanders calls for a new HUD office that would channel funding to states and localities that strengthen tenant protections and implement fair and inclusive zoning ordinances. The Sanders campaign calls for a national just cause eviction law and rent increase cap, unlike the other three candidates who rely on incentive-based models. (Alexandria Ocasio-Cortez, the Congressional representative from the East Bronx and northern Queens, has proposed similar legislation.)

New York serves as a model for a number of the above-mentioned proposals. Federal funding can help offset the implementation of the city's existing right to counsel law, which cost $15 million in 2018 (and will become more expensive as the program is expanded to include more tenants), or provide additional funding to the State's woefully underfunded Tenant Protection Unit, tasked with detecting fraud and harassment in the state's rent regulation system.

At the same time, not all of New York City's, much less New York State's, tenants are universally protected. Federal funding may be the push necessary for the State to pass a just cause eviction law, which would protect an additional 1.6 million households who are currently vulnerable to arbitrary evictions. The Sanders campaign's call for national rent control and a just cause mandate would expand renter protections statewide, without the need for politically difficult campaigns in certain jurisdictions.

Addressing redlining through down payment assistance

Acknowledging the role the federal government played in exacerbating segregation and widening the racial wealth gap, Harris and Warren have proposed a major down-payment assistance program for households living in historically redlined communities.

Harris's $100 billion program would provide $25,000 grants to first time homebuyers who have lived for at least 10 years in a historically redlined community, for homes valued under $300K. Warren's program would provide loans equal to 3.5 percent of the assessed home value for first time homebuyers living in a historically redlined or high poverty areas for at least 4 years, for homes eligible for FHA insurance. This could serve as a down payment towards an FHA-insured or other mortgage.

New Yorkers are likely to benefit from these proposals. But gentrification and high real estate costs may make their intent - to provide restitution to black and Latinx communities excluded from wealth-building housing programs - more difficult to fulfill. A four-year residency requirement is likely to exclude earlier-displaced residents. Further, first time homebuyers face both extremely high real estate costs and competition from investor purchasers. A $300,000 value cap is likely too low for New York City's high cost market. A $25,000 grant will most help first-time buyers who have additional savings to put toward their home purchase. White families are much more likely to have significant savings, as compared to black or Latinx families.

While only Harris and Warren proposed major subsidy programs, the majority of the top Democratic candidates have called for the expansion of legal tools to prevent ongoing housing discrimination. Booker, Buttigieg, Castro, Harris, Klobuchar, Sanders, and Warren have all expressed support for strengthening Fair Housing provisions and discouraging exclusionary zoning.

The top Democratic presidential candidates have produced innovative and formidable proposals for alleviating a growing housing affordability crisis. The candidates should explore these ideas further during one of the upcoming debates. And whoever ends up getting the nomination - and whoever is ultimately elected - should consider these proposals as a basis for rethinking the federal government's role in addressing U.S.'s national housing crisis.

The Community Service Society is launching Housing the Unheard Third, a blog series that will include discussions of latest housing policy debates, original analysis, and deep-dives into the laws and programs that impact where and how low income New Yorkers live. This is the first post in that series.