Make Downtown Housing Affordable, Panel Urges

by Ronald Drenger

Following the destruction of the World Trade Center, many people interested in Downtown's development have agreed on a least one thing: more housing should be built in Lower Manhattan.

Invariably the discussions are laced with the same call for a "mixed-use neighborhood," a"24-7 comunity," a "vibrant residential area." But what kind of housing? Who would live there?

On Nov. 10, a dozen civic-group leaders, city officials, developers and bankers came together to talk about the possibility of creating a mix of housing, where city workers and corporate executives, teachers and lawyers, firefighters and financiers can all live Downtown.

The challenge, the panelists agreed, is finding the money and political will.

"It's much easier to come to consensus behind a vision of a mixed-use Downtown than a mixed-income Downtown," said Brad Lander, director of the Pratt Institute Center for Community and Environmental Development (PICCED), one of the event's sponsors.

The main organizer of the panel, Rebuild Downtown Our Town (R.Dot), will use the discussion, together with surveys it conducted recently of Lower Manhattan residents, to form recommendations that it plans to present to Mayor Bloomberg in the coming weeks.

Panelists recommended a range of steps, including government subsidies, specific types of tax credits for developers, and zoning restrictions to encourage the creation of housing for low- and middle-income tenants. They also called for variations on an existing program that provides tax breaks to developers in exchange for capping rents on 20 percent of new apartments that are designated for low-income tenants.

"If we're putting in all this federal money, in creating the transit networks, creating the infrastructure around parks and open space in Lower Manhattan, why can't we come up with the same kind of creativity to make sure we have a balanced, 24-hour, mixed-income community in Lower Manhattan?" asked Ron Shiffman, Lander's predecessor as director of PICCED, who moderated the discussion. "Why don't we recognize finally that we desperately need a range of housing choices for people and we need to pay for that as well?"

"I think it's really going to be sad, if we had an area that we created by public policy, that could only be able to house people who are very wealthy, and primarily single," said Karen Phillips, a member of the City Planning Commission.

Several panelists argued that since public investments Downtown will increase the value of private property, building owners and developers should be pressed to share some of that benefit through the creation of affordable housing.

And the government could use additional tax revenue generated by higher property values to finance housing production, said Carol Lambert, executive director of the Settlement Housing Fund, builds affordable housing in New York City.

The city wants to create more below-market housing Downtown, said Lisa Gomez, senior vice president of the city's Housing Development Corporation (HDC). But high real estate costs stand in the way.

"Land costs are about $75 to $100 a square foot, which is not cheap and makes the economics of development very challenging," she said, estimating that it costs about $350,000 to construct one apartment Downtown on private land with union labor.

But Jonathan Rose, president of Jonathan Rose Companies, a development firm that has built affordable housing in cities around the country, said that the economic activity in Lower Manhattan can actually make it easier to produce mixed-income housing.

"It's easier to create diversity in a high economic environment, because there are more resources, there's more dynamism," he said. "There's more economic energy to work with."

Gomez touted the city's plan to create 300 units of middle-income housing. The city will use $50 million in federal funds channeled through the Lower Manhattan Development Corporation, to develop the apartments, which will be geared to households making up to 65% of median income, or about $85,000 for a family of four. Details of the plan have yet to be.

Frank Braconi, executive director of the Citizens Housing Planning Council, praised the plan for targeting middle-income families, who don't qualify for low-income housing programs, but said it fell far short.

"Fifty million dollars, 300 units out of some 16,000 that are planned, it's really kind of tokenism. If you're really going to create a diverse, mixed-income community, I think it's got to be on a much larger scale."

Most of the panelists agreed that most of the money to create affordable housing will have to come from the federal government. Specifically, the experts called for the expansion of the federal Section 8 housing subsidy program.

"I would recommend that the entire national affordable housing community lobby for one thing, and that is a dramatic increase in Section 8's," said Rose.

But the Bush administration is shrinking that program, and considering putting it into the hands of individual states, which critics fear would lead to further funding reductions.

And affordable housing is competing with many other issues for declining government funding, said Joe Weisbord, director of Housing First!

"It's going to very very hard to make choices about who gets the limited pot of resources," he said.

Developers have lined up to take advantage of the federally funded Liberty Bond program, created to encourage development in Lower Manhattan following the terrorist attacks. But they are all luxury housing projects with barely any requirements for below market rents.

Gomez and Rose agreed that the Liberty Bond program needs a type of tax credit that would make it easier to create mixed-income buildings. A proposal before Congress would expand the Liberty Bond residential program, including a provision to include those credits, Gomez said.

"All this is in discussion," she said. "I'm sure there will be lot of horsetrading on it."

Shaun Donovan, managing director of Prudential Mortgage Capital Company, suggested that the city use zoning policies to encourage construction of affordable housing, by allowing developers to build bigger buildings in exchange for including apartments with below-market rents.

"That is something we're looking at," said Vishaan Chakrabarti, director of the Department of City Planning's Manhattan office. The city wants to remove a cap on the size of residential developments in the Financial District, a change that could include some kind of affordable housing provision but would require approval by the state legislature.

Panelists also spoke about the need to preserve the low- and middle-income housing, such as Independence Plaza in Tribeca, that is being converted by owners to market rate as government subsidy programs expire.

"We've got well over 10,000 units of affordable housing below 14th Street, much of it affordable to the very lowest income," said Donovan "There's no way we can build units fast enough to replace that."

"The cheapest affordable housing unit is the preserved affordable housing unit," said Rose.