September 19, 2024
A proposed Local Law to amend the administrative code of the city of New York, in relation to the creation of affordable homeownership opportunities

Matthew Dunbar, Habitat for Humanity New York City and Westchester County Chief Strategy Officer, submitted the following testimony to the New York City Council Committee on Land Use in support of the bill to amend the administrative code of the city of New York, in relation to the creation of affordable homeownership opportunities

Habitat NYC and Westchester knows the power and importance of affordable homeownership as we’ve spent the past 40 years building and preserving more than 2,600 homes for low- to moderate-income families in all five boroughs. Affordable homeownership as a critical part of the housing continuum. In order to build an equitable city, it is imperative to invest in solutions that build family and community equity.

We know that our partners at the City concur and we are honored to be a partner of record in many of the innovative programs and initiatives the City has established to advance affordable homeownership, including:

  • Co-founding Interboro Community Land Trust, the city’s first citywide CLT
  • Developing Sydney House Cooperative, the first new construction homeownership project financed under the Open Door program
  • Breaking ground on Habitat Net Zero and Mosaic, the first CLT partnered new construction and rehab developments financed by Open Door – that will result in 58 permanently affordable single- and multi-family homes
  • Establishing the Habitat NYC Community Fund, our federally certified CDFI that among other things provides critical financing aimed at stabilizing distressed HDFC cooperatives

With the capital resources and innovative spirit our affordable housing sector brings to the table, New York City should be the envy of the nation in how to equitably house our neighbors.

Regrettably, we continue to fail to meet this potential.

For the past decade, we have testified in front of this body, encouraging the City to increase its investment in affordable homeownership and implement strategies that would preserve these investments for future generations of lower income, first-time homebuyers. We have testified that affordable homeownership is critical to the goal of fostering diverse stable neighborhoods, pushing back against displacement due to gentrification, and building both individual and community wealth.

Unfortunately, according to public data, it is our estimation that in a city of over 8.5 million residents, the city’s affordable homeownership production is best measured in the dozens of units rather than in the hundreds or thousands required to truly make a significant impact. On average, the City has financed the creation of less than 100 units of affordable homeownership per year since 2014, (including one pre-pandemic year when that number plummeted to 12 homes). To put it another way, HPD’s new construction pipeline has overwhelmingly focused on rental apartments, with the agency’s open data showing that in most years, fewer than 2% of new units funded by HPD since 2014 have been homeownership units.

Certainly, the poor pace of production has been exacerbated by a myriad of factors including increased inflationary costs, the limiting of affordable homeownership projects to the most difficult to develop small, scattered, infill sites and rental to ownership ANCP conversions focusing on severely disinvested properties from the former Tenant Interim Lease program. These limited approaches alongside the inability to utilize Low-Income Housing Tax Credits for homeownership development makes homeownership production a capital intensive and expensive endeavor. When combined with market forces, it is thereby no surprise that over the last decade, NYC’s homeownership rate has dropped by nearly 2% to a paltry 30%…less than half the national average of 66% – even less for black and Hispanic households.

Following on the heels of a historic increase to affordable homeownership funding by allocating an additional $110 million to the Open Door homeownership program and $30M to the Neighborhood Pillars program over the next two years, the bill considered today would further push the City in the direction of a more equitable housing strategy. The Speaker’s bill, Intro. 0958, would require HPD to double the affordable homeownership opportunity units created to equal or exceed 6 percent of all affordable units financed on a five-year average, with a 2% minimum achieved each fiscal year.

Habitat NYC and Westchester wholeheartedly supports this bill and these goals and request the Council pass the legislation.

We do however recommend that the floor for counted and financed units be amended to 50% AMI and not be set at 70% AMI as currently written. If Habitat or another not-for-profit housing organization is able to build or convert a property in a way that provides affordable homeownership to lower-income families in partnership with the City, there should not be an incentive to require the units be less affordable and leave out lower-income households from achieving the American dream.

Furthermore, we recommend that the approaches to meeting these creation goals be adequately flexible between new construction and rental conversions in order to allow HPD the ability to appropriately invest in various strategies in accordance with available resources.

The Administration emphasizes the capital intensive costs for current homeownership strategies, but it is because of this fact that this legislation must be passed. Without ambitious goals we run the risk of limiting our strategies to those currently used rather than creatively expanding our approach to affordable homeownership creation. In order to meet the goals laid out in this bill, the City needs to take innovative and ambitious steps to expand how affordable homeownership opportunities are created.

Therefore, we urge for the City Council and Administration to help establish a comprehensive affordable homeownership strategy and support the funding, and flexibility HPD will need to meet these targets. This strategy will need to include:

  • Growing Tenant Opportunity to Purchase approaches that can realize the conversion of stable, well maintained rental buildings and units to limited-equity cooperative ownership
  • Funding technical assistance for tenants and landlords for homeownership conversions, such as Habitat’s Tenant Opportunity to Purchase Program
  • Increasing funding for Neighborhood Pillars for non-profits to acquire buildings appropriate for tenant to ownership conversions
  • Passing a resolution in support of the NYS Martin Act Amendment (S3566/A6921) that would create a pathway for expiring 421a and inclusionary units to become permanently affordable homeownership opportunities
  • Re-establishing a low-interest HDFC permanent loan product that would reduce purchase prices for low-income shareholders
  • Utilize Low-Income Housing Tax Credits to create permanently affordable homeownership by building new projects with homeownership-minded developers and implementing a Year 15 and Year 30 homeownership conversion strategy – maximizing LIHTC usage for new rental creation and converting expiring units to homeownership
  • Establishing a density bonus for multifamily affordable homeownership properties

Current housing strategies focus on the critical yet most expensive and challenging approaches to creating affordable homeownership, but there are a number of more cost effective and scalable ways we can move the needle on NYC’s declining homeownership rate. As it stands, the sad truth is that the state of our city’s homeownership landscape is weaker than it has been in decades. However, Intro. 0958 paired with the recently increased funding for Open Door and Neighborhood Pillars is a downpayment on a more equitable foundation for a more impactful homeownership strategy.

Time and again, we talk of building a more equitable and affordable New York – how can we speak of equity without delivering on the promises made for working New Yorkers to step into homeownership. Thank you for this opportunity to support this bill and request that the City commit to partnering with us in seeing this goal advanced through creative, innovative, and impactful strategies that will establish a more equitable New York.