Submitted Testimony of the Real Estate Board of New York for the New York City Council Committee on Housing and Buildings on Housing Lottery Legislation and Homeless Set Aside

INTRODUCTION

The Real Estate Board of New York, Inc. (REBNY) is a broadly-based trade association representing owners, developers, brokers, managers and real estate professionals active throughout New York City.  REBNY shares the conviction that government has a significant role to play in combatting the city’s homeless crisis. Any policy solution must represent a multi-prong approach to address the reality that the city’s homelessness crisis today is a result of numerous intertwined challenges.

At the Council’s previous tenant harassment hearing in December 2018, REBNY advocated for coordinated, targeted enforcement efforts against the small percentage of bad actors. However, such efforts would only address one component of the escalating homeless crisis the city faces today. We simply do not have enough housing. The last time homeless rates were this high was the Great Depression, a period in which there was no housing construction. Today, we would need an average of approximately 20,000 new units a year just to keep up with population growth.[i]

Today’s crisis has also been exacerbated by wage stagnation, a growing share of new jobs being created in the low-wage sector of the city’s economy, federal and state funding cuts to voucher and public housing programs, continued hurdles in accessing medical and mental health care, and a rise in domestic violence instances. Surveys of homeless families have identified the following major immediate, triggering causes of homelessness: eviction; doubled-up or severely overcrowded housing; domestic violence; job loss and hazardous housing conditions. The result is that over the course of the City fiscal year in 2017, 129,803 different homeless men, women and children slept in the NYC municipal shelter system. This annual count includes over 45,000 homeless children. The number of homeless New Yorkers sleeping in shelters is 75 percent higher than it was ten years ago.

The homeless population is diverse and their needs, equally so. Fifty-eight percent of NYC homeless shelter residents are African-American, 31 percent are Latino, seven percent white, less than one percent are Asian-American, and three percent are of unknown race/ethnicity. Of the 12,698 families with children living in shelters in NYC[ii], 34 percent have earned income – thousands more single adults and adult families in the system also have paying jobs. For homeless single adults, around one-third who are sleeping in shelters are mentally ill, while two-thirds who sleep in the street or in other public spaces are mentally ill. On a single night in January 2017, 16 percent of the overall homeless population, 87,329 people, reported having experienced domestic violence at some point. Research from a study in NYC indicated that one in five families experienced domestic violence in the five years before entering shelters. Among families that reported domestic violence in the prior five years, 88 percent reported that it contributed to their homelessness “a lot.”[iii]

INTRO. NO. 1211 

REBNY understands and supports the compassionate desire behind Intro No. 1211’s requirement for a 15 percent set aside for homeless individuals and families. The homeless count overall, and the high number of children, is heartbreaking. However, our compassion must lead to sound policy decisions. We must set up these fellow New Yorkers for success and consider for each case the trigger or multiple factors that led to homelessness. Quite frankly the provision alone of additional units in one-off projects will be insufficient to address underlying causes for homelessness. The referral process also has several challenges. This bill requires changes.

Building owners have a legal responsibility to their tenants to maintain the mandate of habitability. That responsibility can be severely compromised and put other tenants at risk when referrals are not properly screened through the lottery process and the appropriate, individual level of care and support is not provided. This bill as drafted appears to circumvent the lottery process and continue the current term sheet practice with HPD, which presently calls for a ten percent set aside of the affordable units. Members shared that one shelter referral included an individual who brandished knives at the other residents and terrorized children as they left the lobby. Another individual overdosed in the hall. One man took to wandering the floors naked and appearing in the gym, also unclothed, to stand and leer over female tenants. A unit occupied by another referral client required forced entry after complaints of noxious odors and screaming – feces were smeared over the walls and the floor was covered with needles.

The social contract of our city only works when the rights of one group do not impede or infringe on the rights of another. These examples demonstrate a serious flaw with the referral system in that it elevates the housing needs of one group over the safety and wellness of others. This system also bumps candidates such as families and individuals like seniors on fixed incomes who have gone through the lottery system. As drafted, this bill would expand these problems to apply to 15 percent of an entire building, regardless of whether all units were affordable and using subsidy. This raises legal concerns and undercuts the ability of the market rate units to subsidize the affordable ones at lower AMIs. Buildings can receive city financial assistance for retail, for cleaning a brownfield site, for receiving land from the city that is problematic to develop due to below grade conditions or as part of a broader project plan. As drafted, even sites and units with no relationship or nexus to affordable housing provision would fall under this set aside requirement.

Lastly, these challenges and the desire to work with landlords to abate homelessness are not unique to New York City. New Orleans has an initiative with Unity of Greater New Orleans to provide subsidized housing for the homeless, including supportive and integrated housing. However, homeless shelters can't keep up with demand. In March 2018, 13 percent more homeless people died than in 2016, mostly due to addiction since the shelters that are built have no access to substance abuse and mental health services in or near the location. In Utah, their Housing First initiative failed to track whether the program was even working and did not require social services, even though the chief creator of the Housing First model, Dr. Tsemberis, stated that housing the homeless with addiction problems was problematic in a non-supportive, independent living environment. Like Utah, this bill doesn’t even a have a reporting or tracking method for success.

We ask that the City Council consider these challenges and undertake a more holistic approach such as that taken by New York City to address the needs of homeless veterans.

A CASE STUDY IN TACKLIN HOMELESSNESS; "MISSION HOME" 

New York City has taken the lead on reducing homeless veterans with its “Mission Home” program.[iv] From 2016-2017 the number of homeless veterans decreased 4 percent in NYC compared to a 2 percent increase nationwide in the same period. In the years of the program, from 2011 to 2016, the population of homeless veterans in NYC decreased from 4,677 to 599, according to HUD PIT counts.

NYC Department of Veterans Services employs peer support, after care, and landlord coordination to reduce homelessness in their “Mission Home” Initiative. Treating the service care component on equal footing with landlord coordination has been key to the success of the program. It is an explicit acknowledgement of the human needs of the veteran and the legal and fiduciary responsibility of the housing provider. The Housing Coordination Center – a one-stop placement service for affordable housing owners – ensures quality placements and expedited rent-ups. Additionally, the following incentives are offered:

• 15 percent Broker Bonus (15 percent of the annual rent) for brokers who connect homeless veterans with LINC apartments or units that can be subsidized using HUD VASH, HPD Section 8, and MRT vouchers.

• $1,000 Landlord Incentive for every apartment and commercial SRO with a one-year lease signed by a homeless veteran.

• $500 Room Rental Incentive to landlords renting rooms through the LINC program for every one-year lease signed by a homeless veteran.

• $1,000 Bonus to Supportive Housing (SH) Providers for each community unit rented to a veteran with a HUD VASH, HPD Section 8, or MRT voucher.

• $2,000 Bonus to Supportive Housing Providers for each community unit rented to a veteran with a LINC voucher.

• Access to a Special Supplemental Assistance Fund of up to $3,000 per year for landlords who house veterans, to cover potential damage to the apartment, as well as to assist with the payment of rental arrears, if needed.

This targeted program is worth emulating as we consider policy solutions for reducing homeless rates within the different needs groups. It is our understanding that there are other successful, population targeted programs in Canada such as Housing First and At Home that may be of value and study for our city as well.

IN CONCLUSION

Providing housing is the first step to stability but it is not the only step. Funds must be allocated for accompanying services, job training and a robust assistance fund to cover hard costs for property owners. The combination of housing and dedicated funds to support the homeless and the landlords housing them is equally critical to the provision of units to break the cycle of homelessness.

The Real Estate Board of New York is ready and willing to work with the Council and appropriate City agencies to design a system that balances the needs of the homeless individual or family, the obligations of the landlord, and that of the other tenants.

comments on proposed bills

REBNY has the following specific comments to offer on each of the proposed bills:

INTRO NO:1211

SUBJECT: A Local Law to amend the administrative code of the city of New York, in relation to requiring developers who receive city financial assistance for housing development projects to set aside a certain of created or preserved dwelling units for homeless individuals and families.

SPONSORS:    Salamanca, Levin, Cornegy, Brannan, Lander, Reynoso, Torres, Barron, Williams, Ayala, Diaz, Gibson, Levine, Cabrera, Lancman, Espinal, Adams, Moya, Rivera, Kallos, Rosenthal, Rodriguez, King, Ampry-Samuel, Eugene, Menchaca and Chin

This bill would require developers who receive City financial assistance for housing development projects to set aside 15 percent of created or preserved dwelling units for homeless individuals and families. The set aside will apply to any residential development, rehabilitation or preservation project, or enlargement that creates or preserves at least 15 dwelling unit and is funded in whole or part by city financial assistance other than 421-a or 489 of the New York state real property tax law or other similar programs benefits.

There is a homelessness and affordability crisis that requires a multi-pronged approach to solving. However, there are serious concerns with the efficacy of this policy, the lack of supportive services included in the bill, and the broad swath of projects that would be captured with the open-ended definition of City financial assistance.

HPD mix and match term sheets currently require a ten percent set aside and include a social services component. It is unclear from the bill drafting whether the 15 percent set aside would be in addition to requirements already set forth in term sheets, whether it would only apply to the affordable units, and whether this would only apply to future projects. As defined in the bill language, “City financial assistance” covers any loans, grants, tax credits, tax exemptions, discretionary tax abatements, subsidies, mortgages, debt forgiveness, land conveyances, for less than appraised value, land values, or other thing of value allocated, conveyed or expended by the City. At minimum, this language should be revised to reflect direct, discretionary capital assistance beyond $10 million directly related to the provision of affordable housing. As an example, financial streams related to retail components would not have the requisite nexus for this requirement. The phrase “receives by” should be changed to reflect the finalization of a regulatory agreement after the local law is passed as it is feasible for monies to be promised in one fiscal year and disbursed in another. It would be disruptive to any project that fell into this universe and could jeopardize the financing altogether.

The language should also clarify that the 15 percent set aside is meant to be consistent with other required preferences and would exist as a subset of the affordable housing component of a project. To count the set aside as a percent of the total building, when market rate apartments are not receiving subsidy and exist to offset the costs of the affordable units, would raise serious legal and financial concerns. Lastly, the threshold that triggers the provision of the set aside should be re-examined to consider efficient service provision and critical mass of units necessary to achieve that efficiency. As it stands and if consistent with existing set asides in affordable housing, a 15-unit building would be required to provide 25 percent of its units under MIH Option 1 to lower incomes, or 3.75 units. 15 percent of that is ½ a unit.

INTRO NO: 249

SUBJECT: A Local Law to amend the administrative code of the city of New York, in relation to the marketing of affordable units.

SPONSORS: Reynoso, Brannan

This bill would require developers who receive City financial assistance and are subject to a regulatory agreement mandating the creation of affordable housing units to complete various marketing tasks. This includes pre-marketing seminars, notification to the local community board, allowing for paper applications, and multi-language advertisements.

REBNY supports efforts to streamline and standardize marketing requirements and make it easier for potential tenants to apply. However, this bill appears to be redundant with some current HPD guidelines and to conflict with others. At minimum, the requirements should be consistent if memorializing them into statute. Language that is technology specific should be made broader to allow for changes in the housing lottery process and recognize that people consume news today in digital form, not on paper. The requirement in Section 26-1403(d) for multiple languages is a good one, but it should not be left to a developer agent to figure out a demographic analysis. The City should just provide that information.

INTRO NO: 357

SUBJECT: A Local Law to amend the administrative code of the city of New York, in relation to construction conditions in housing development projects.

SPONSORS: Rosenthal

This bill would create the role of HPD ombudsperson who will monitor and record construction condition complaints in housing development projects. This entity would also have the power to investigate claims and take appropriate action. The legislation would also create a list of preferred contractors.

The ombudsperson role and complaint procedure would create duplication with existing City processes and conduits for complaints, and as a result may sow confusion and inhibit the effectiveness of City programs. Right now, the City has multiple entities devoted to the mission outlined by the proposed HPD Ombudsperson, including the Office of Tenant Advocate at the Department of Buildings, the recently created Mayor’s Office of Tenant Protection, and in HPD’s participation in the Tenant Harassment Prevention Task Force. The addition of an ombudsperson at HPD would add additional layers of bureaucracy without necessarily improving the effectiveness of City programs.

An additional process for the public to make complaints to City government is of limited value. There is already a process for submitting comments and complaints about construction conditions in housing development projects (i.e. 311) that is well understood by the public. Furthermore, it is unclear how the creation of a new HPD ombudsperson would impact how 311 would route complaints going forward as it could go to either the people who can inspect, issue violations, and order corrections or to the ombudsperson. Finally, there are also multiple other avenues for the public to voice concerns about projects, including their local community board, council member, the Public Advocate, and 311. Indeed, the issue for the public is not that they have no means to voice comments and complaints about projects; the issue is the lack of coordinated data, action and accountability from City agencies.

The ombudsperson has the authority to investigate complaints and take appropriate action. Appropriate action is undefined and absent a cognizant definition it raises the potential for disagreement within the agency about the appropriate steps a building owner/manager should take to address problems. Lastly, as brought up during the tenant harassment hearings, agency coordination is critical. This bill is silent to whether ombudsperson staff would have the knowledge and training of HPD’s inspectors, and what coordination would look like with HPD and DOB. This raises a serious resource question and whether it would be better to hire more inspectors for the agencies already tasked with inspections.  

Regarding the second part of this bill, the creation of a preferred contractors list, we have concerns whether this creates liabilities if a bad contractor is accidently placed on the list, whether the process to be placed on the list is exclusionary to MWBE firms or newer firms without the work history, and the broad universe of complaints taken into consideration for placement on the list without differentiation in degrees of behavior. Notably, there is no indication in the legislation that HPD is supposed to do anything with this list once created and HPD already has authority to not include a person on a prequalified list if they have a history of construction conditions.

The legislation requires developers to submit to the department, and the department to make publicly available, “the total number of construction conditions substantiated by the department for housing development projects that such developer, contractor or subcontractor served as a developer or contractor on.” Construction conditions include both violations issued to the developer and complaints related to construction quality made during project work or within a five-year period following completion. However, developers are already required to disclose the “total number of construction conditions, the nature of the condition, and how the conditions were remediated” in the same section of the administrative code. This provides the relevant information to the public about the project.

The addition of the construction conditions information adds work without adding value for the public. That’s the case for a number of reasons. First, the information required to be disclosed is not time constrained, so it will be a list of all violations and complaints ever issued to a developer or contractor over time. That only serves to penalize people who have been working in NYC for a long time. Second, it could double count conditions if violations issued about a condition and the complaint that lead to the violation are both counted. Indeed, the public may complain many times about a specific condition in a project, and as drafted it is unclear if every complaint will count. Third, this requirement also treats all violations equally and they are not – inadequate form filing is not the same as tenant harassment. Lastly, the requirement doesn’t recognize that developers/contractors quickly correct violations to keep projects moving forward.

A better course of action would be to simply require HPD to put the number of construction conditions that developers already disclose to the agency in the data that is included on Open Data for development projects.

INTRO NO: 550

SUBJECT: A Local Law in relation to the creation of an affordable housing lottery task force.

SPONSORS: Levine

REBNY supports the creation of this task force and the assigned scope of work described in the bill. Over the course of a year, the voluntary members will meet monthly to study lottery systems used for affordable housing and make recommendations to the mayor and council for maximizing access to such systems. The taskforce will consider the time it takes to screen applicants, the efficacy of screening requirements, and shall identify legal, regulatory and other barriers to implementing recommendations of such task force.

In terms of the task force members, in addition to a housing advocate and a member with experience in development, we recommend the inclusion of a representative familiar with the current lottery process from the property management side as well as someone familiar with the current marketing requirements and Fair Housing law.

This task force should be permitted to conduct its work prior to the adoption of Int. No. 249 and Into. No. 564 so that a holistic approach is taken to concerns with the current lottery system.

INTRO NO: 564

SUBJECT: A Local Law to amend the administrative code of the city of New York, in relation to reporting on housing lottery outcomes.

SPONSORS: Treyger

REBNY supports the Council’s efforts for greater transparency in government. We believe synthesizing information that would be subject to FOIL in a manner that is comprehensible and easily accessible is a positive action to improve government transparency and accountability. Rote items such as the number of applicants received, the number of applicants selected and subsequently rejected, the number of applicants offered affordable housing disaggregated by income band, consolidated demographic information, and the number of applications per lottery preference category fall under that category.

INTRO NO: 716

SUBJECT: A Local Law to amend the administrative code of the city of New York, in relation to a report on the waiting lists of Mitchell-Lama housing developments.

SPONSORS:    Williams, Reynoso

REBNY supports the Council’s overall efforts to improve greater transparency in government data.

CONTACT:
Reggie Thomas
Senior Vice President, Government Affairs
Real Estate Board of New York (REBNY)
(212) 616-5209
rthomas@rebny.com

 [i] Sparks, Matt. “Population Bomb, New York City” Commercial Observer, 06/11/2016 https://commercialobserver.com/2016/05/population-bomb-new-york-city/

[ii] NYC Dept. of Homeless Services, Daily Report, 1/14/2019. https://www1.nyc.gov/assets/dhs/downloads/pdf/dailyreport.pdf

[iii] Sources on homeless population and causes of homelessness:

https://www.bowery.org/homelessness/facts-homelessness/

http://www.coalitionforthehomeless.org/basic-facts-about-homelessness-new-york-city/

https://endhomelessness.org/homelessness-in-america/what-causes-homelessness/domestic-violence/

https://www.acf.hhs.gov/fysb/resource/dv-homelessness-stats-2016

https://www.osc.state.ny.us/audits/allaudits/093018/17d3.pdf

https://www.nytimes.com/2016/01/01/nyregion/homeless-veterans-becoming-scarcer-in-new-york-city.html

https://www1.nyc.gov/assets/veterans/downloads/pdf/annual_reports/2017.pdf

[iv] Sources on “Mission Home” initiative:

https://www.nytimes.com/2016/01/01/nyregion/homeless-veterans-becoming-scarcer-in-new-york-city.html

https://www1.nyc.gov/assets/veterans/downloads/pdf/annual_reports/2017.pdf