Inclusionary housing programs crucial, but work better with 421a

The US Census Bureau announced last week that New York City’s population has grown to its largest size in recorded history – with 8,550,405 people living in the five boroughs as of last summer.  New York City’s continued population growth (coupled with record job growth) is another strong indicator of the City’s success.  However, with such successes come challenges.

How are we going to house our growing population, specifically with rents that hard working New Yorkers can afford? This is one of the greatest challenges our City faces going forward.

Last week’s City Council vote to approve Mayor de Blasio’s mandatory inclusionary housing program (MIH) is a potentially important step in the effort to develop more affordable housing in the City of New York.

The provisions of the MIH program fall under four different options (which can be viewed in detail at, and altogether represents the most aggressive affordable housing requirements in the country. Moving forward, all City-approved rezonings, both publicly and privately sponsored, that increase the amount of allowed residential development will be required to set aside a percentage for affordable housing. Relatedly the City is spearheading rezonings in the neighborhoods of: East New York, Inwood, East Harlem, Flushing West, Long Island City, Bay Street, and the Jerome Avenue corridor in the Bronx.

MIH, however, was intended to work in tandem with the now suspended 421a tax abatement program.  For example, in a recent article about  the importance of 421-a,William Neuman of The New York Times reported that City Council’s Chair of Land Use David G. Greenfield pointed out that the architects of the MIH proposal had considered 421-a so integral that it was “mentioned 438 times, by my count,” in the City’s Housing New York plan.

Assuming an as-of-right tax abatement program is put back in place, MIH is a sensible tool in the belt of the mayor to promote the construction of new affordable housing. When developers conduct their financial analyses as to whether or not to move forward with the construction of a residential building, the density benefits and the affordability requirements in areas that are upzoned in the future will be crucial data points in determining a project’s viability.

Developers will factor the new requirements along with the costs of land, property taxes, and labor when making the decision to build new rental housing.

It will take quite some time to evaluate the effects this plan will have on development in the city.

The changes will not take effect until neighborhood rezonings take place or there are private applications to upzone properties, at which time it would become possible to observe the levels that result from MIH of new construction that result.

Mandatory Inclusionary Housing is a bold experiment and an attempt to address the City’s affordable housing crisis. When a new tax abatement program is finally put in place, it is hoped that MIH, along with tax abatement program and sensible rezonings, will help pave the way for more below-market, or affordable, housing production for our growing population and our rent burdened residents.