NYC Housing Partnership Launches New Unit to Address Rising Costs, Distress
The nonprofit’s new team will target some of this market’s thorniest challenges.
The New York City Housing Partnership Corp. has launched an Asset Management/Housing Stability Unit to help New York City’s affordable housing stakeholders impacted by increasing risk and distress in the rent-regulated market.
The move comes as New York City, like many municipalities around the U.S., has been grappling with rising rents and affordability issues. During the recent race for New York City mayor, affordable housing became a top issue and helped propel Democrat Zohran Mamdani into office.
The new unit will focus on the rent-regulated affordable housing market and will be led by Malcolm McGregor, who has joined the nonprofit as the newly created chief asset management officer. A senior housing finance and policy leader, McGregor has more than 15 years of experience at the intersection of the real estate capital markets and affordable housing, according to Jamie Smarr, president & CEO of the Housing Partnership.
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McGregor most recently served as senior policy analyst in the Office of Multifamily Analytics and Policy at the Federal Housing Finance Agency. A former property manager in the private sector, McGregor also worked as director of policy and analytics at the NYC Department of Housing Development Corp. and senior project manager at the NYC Department of Housing Preservation and Development.
Smarr said in prepared remarks that the new unit is an important strategic expansion of the Housing Partnership’s longtime mission. Working with private sector developers, financial institutions, city, state and federal agencies, the Housing Partnership has created and preserved about 100,000 low- and moderate-income housing units across New York City over more than 40 years. The partnership has leveraged more than $11.1 billion in private financing and utilized more than $550 million in affordable housing subsidies.
Aiming for innovation
McGregor told Multi-Housing News that the Housing Partnership’s “alignment with the agencies and the affordable housing ecosystem makes us uniquely positioned to take on the rent-regulated housing stock.”
Many of the properties have been funded by Low-Income Housing Tax Credits, but McGregor noted the rent-regulated affordable stock includes assets built over the years with numerous tax abatement and incentive programs including 420-c, Article 11 and J-51.
He said property managers, owners, developers, portfolio managers, LIHTC syndicators, lenders, loan servicers and housing development fund corporations need innovative solutions to meet the challenge of converting distressed multifamily affordable properties into stable, performing assets.
The new unit will provide special servicing asset management infrastructure to help them resolve their troubled assets by partnering with public agencies like HPD, HDC and New York State Homes and Community Renewal. Plans include providing earlier identification of emerging risk, tighter coordination among stakeholders and stronger follow-through, so issues are addressed before they become crises.
A changing interest rate and operating expense climate
Smarr noted that low interest rates masked significant problems across the city’s rent-stabilized and rent-regulated affordable housing stock. While thin margins and deferred maintenance could be managed when money was cheap and refinancing was easier, both Smarr and McGregor agree that era has ended.
“The world’s changed dramatically since a lot of these deals were underwritten,” McGregor told MHN. “Property insurance is going through the roof. Utilities are going up. Literally everything’s going up. We look at what the inflation headlines were for those few years in the middle of COVID. Certainly, it’s abated, but costs haven’t gone down, and we see that in operating budgets.”
A recent report from two major LIHTC syndicators in New York, Enterprise Community Partners and National Equity Fund, found there have been increasing indicators of distress in the rent-regulated affordable housing sector since the onset of the COVID-19 pandemic.
The report found that since 2017, total operating expenses increased by around 40 percent, driven most sharply by increases in insurance, administration costs like staffing, health insurance and payroll taxes, and repairs and maintenance. More than 50 percent of the properties analyzed were operating with negative cash flow. The majority of the assets, about 76 percent, are in New York City.
McGregor pointed to the importance of collecting information from sources like the Enterprise/NEF report as well as the city’s resources. But it will also be using its own rich history and database going back more than 40 years in the affordable housing sector.
“We know we have our own book and our own portfolio that we can look at,” he noted, “but we also have a broader window into the ecosystem.”
