MHN Interview: How $1B Will Affect Affordable Housing in New York State
New York—New York Governor Andrew Cuomo recently made an announcement that he is committing $1 billion to the House New York program, which will help develop new affordable housing across the state. MHN speaks to Donald Capoccia, president, New York State Association for Affordable Housing (NYSAFAH), about what this government investment will mean for the future of affordable housing in New York.
MHN: Governor Cuomo just made a big statement committing a billion dollars to affordable housing in New York. What’s your take on this?
Capoccia: It will significantly increase new production, and nearly 10,000 existing units are going to be preserved that otherwise would not have but for this billion dollar commitment.
Another issue is that NYSAFAH retained HR&A a year or so ago to do a study on the HR&A Economic Impact Report over a five-year period, and what we found was even surprising to those of us who have been in this business for a long time. Over a five-year period we’ve averaged a $3 billion impact of the state’s economy just through the work that the city, state and federal government do in affordable housing production. Potentially a billion dollars in government support leverages $2 billion in private support, and in light of the difficult economic conditions we’ve been facing since 2008, it was important for us to point out to the administration that this industry really does provide huge employment generation and retention opportunities across the state, and as such, it really deserves the kind of commitment that the governor made in this recent budget message.
MHN: What are some of the challenges facing affordable housing today?
Capoccia: One of the programs that NYSAFAH introduced to the governor’s housing policy people is something called the Urban Communities Fund, which addresses challenges that we’ve been facing over a number of years as we try to do affordable housing in distressed or emerging neighborhoods where there’s a dearth of neighborhood retail, in particular food, dry cleaning, community facilities. Community development is the key to the longevity of these neighborhoods. So the Urban Communities Fund, which the governor allocated $61 million to, is a program that is designed to address this issue by providing a financing source for affordable housing projects that are in areas where it is desirable to see first-floor commercial community facilities or retail. Prior to the establishment of this Urban Communities Fund, there was really no way to finance an affordable housing job with a retail component in a neighborhood where a retail demand was not significant—$10 and $15 a square foot for retail space in some of these neighborhoods is simply inadequate to fund the capital costs of building the retail. Consequently, builders were left in a position where they had to build residential from first floor and above, and it’s not great for how those streets ultimately will be used.
MHN: Do you think we’ll start seeing more retail space in affordable housing across the country?
Capoccia: In New York this is a century-and-a-half-old urban development component. We in New York have lived with retail and mixed-use housing for a long time. It’s key to the economic health of the city. In other cities where neighborhood retail is critical, such as walking cities or larger cities, I think it will be viewed as a key component of community development.
MHN: What are some other key components?
Capoccia: A mixed-income approach, where you’re able to not only deal with and address the needs of households making less than 60 percent of AMI, when you can utilize federal low-income housing tax credits. In New York State we have a housing tax credit program that gets us up to 80 percent of AMI, and it’s quite possible that in this Urban Communities Fund we may attempt to broaden that income band to include more middle-income households. Economic diversity, and the development of affordable housing, has been an aspect of what my company and many of our members have been doing in New York for 20 and 30 years. We think it’s critically important.
MHN: Is there anything you’d like to add?
Capoccia: I think it’s important to point out the companion program we proposed, which is the Rural Communities Fund. Because New York is such a diverse state, the governor also proposed another program that NYSAFAH has been advocating for the last year or so, and that is the Rural Communities Fund. This would fund smaller projects largely in upstate communities in the range of 10 to 35 units. We’ve seen cuts at the federal level to the Section 515 program and the Section 538 program that would fund upstate rural rental housing. This would fill that funding gap upstate where you have an aging housing stock that needs rehab, or where affordable housing development is some of the only construction that is going on. That’s proposed to be funded at $35 million. This gives state housing people in local communities a tool that can basically allow a scalable development approach in smaller communities where it’s really appropriate.
Additionally, I’d like to mention the Mitchell-Lama portfolio, which has been a challenge for prior administrations. Quite simply, the only way that it’s going to be managed and those units preserved, is with Governor Cuomo’s very significant, multi-hundred million dollar commitment to the preservation of 870,000 units across the state of existing affordable rental housing.Tags: affordable housing, executive interviews, Financing