Brooklyn continues to be one of the least affordable markets in the country. According to Yardy Matrix data, the median home price increased rapidly in 2017, reaching $753,886, second only to Manhattan. Average rent takes up approximately 60 percent of the area’s median income, while the monthly rate for working-class assets reached $1,992 as of March. Consequently, many renters are being priced out of Kings County.
Despite new supply in the affordable sector, occupancy exceeded 99 percent as of February, highlighting the strong demand in the segment. In an effort to ease the crisis, local authorities have come up with several solutions. Mayor de Blasio’s ambitious Housing New York 2.0 plan—aiming to create at least 25,000 affordable homes per year during the next decade—is one of the most well-known.
Also, Governor Andrew Cuomo started the Vital Brooklyn plan, serving the same purpose. Last month, Cuomo launched the second phase of the $4 billion initiative and announced five requests for proposals to build roughly 2,000 affordable homes (out of the total 3,000 units planned) on land owned by the state or by Brookdale University Hospital and the Brooklyn Developmental Center.
In an interview with Multi-Housing News, Robert Nelson, president of New York-based Nelson Management Group, weighs in on how the strategies impact the Brooklyn market. Nelson has been in the business for three decades and serves on the board of directors for Rent Stabilization Association and the New York State Association for Affordable Housing.
How serious is the affordable housing crisis in Brooklyn?
Nelson: While the affordable housing crisis in Brooklyn is obviously quite serious, I don’t consider it being any different than the crisis in Manhattan, the Bronx, Queens or even San Francisco for that matter.
How do you think Governor Cuomo’s Vital Brooklyn initiative will impact the borough in the next few years?
Nelson: Growing up in Brooklyn and with property in the Ocean Hill area, I’m hopeful Governor Cuomo’s Vital Brooklyn initiative will positively impact Central Brooklyn. These types of programs are put in place to help create a better atmosphere for residents and have an influence on future generations to come. With Vital Brooklyn’s targeted approach and use of resources, Central Brooklyn is expected to experience improvements in numerous areas including housing, education, health care and sustainability.
What are the initiative’s main focus areas?
Nelson: “Healthy food” and “open space and recreation” are excellent focus areas. Both promote healthy, revitalized environments and lifestyles which are valuable for any community. I’m looking forward to seeing how, with the promise of more green space, improved recreation facilities, mobile markets and farmer markets, the initiative benefits those in Central Brooklyn.What other local initiatives support the construction of new affordable housing options?
Nelson: Initiatives supporting the construction of new affordable housing options come from New York City’s Department of Housing Preservation and Development (HPD), the U.S. Department of Housing and Urban Development, the State of New York Mortgage Agency and the New York State Division of Housing and Community Renewal. For many years, they have put programs in place supporting the development of affordable housing in New York.
What kind of incentives do developers of below-market-rate housing get from authorities?
Nelson: Developers receive low-interest loans with more favorable repayment terms, tax abatements, subsidy money from the governor and subsidy money from HPD. The federal government also provides a low-income tax credit program, further providing developers the incentives they may need.
The gap between income and rent in New York City is ever-widening. How much of their income are New Yorkers paying for rent in 2018?
Nelson: The percentage of income being spent on rent is growing significantly and I’ve heard figures ranging from 30 percent to even 50 percent.
Please tell us more about Nelson Management Group’s most notable affordable housing projects.
Nelson: In Central Brooklyn’s Ocean Hill neighborhood, we have Atlantic Plaza Towers, two recently renovated 24-story buildings. We’re also currently building 435 units of affordable housing at 1520 and 1530 Story Ave. in the Bronx. Additional properties include Lafayette Boynton, located near the new Story Avenue project, Morningside Housing on the Upper West Side of Manhattan, 275 South Street in the vibrant Lower East Side/Two Bridges neighborhood and Promenade Apartments in the historic Marble Hill. Most of these apartments are stabilized at below market rates.
Image courtesy of Nelson Management Group