Gov. Kathy Hochul’s recent proposal, the Affordable Neighborhoods for New Yorkers (ANNY), aims to fuel much-needed construction of new housing in New York City, including the addition of numerous affordable units. However, to be set into motion, ANNY requires collaboration amongst tenant groups, real estate developers, and organized labor.
Should the program come into fruition, it has the potential to stimulate the development of thousands of market-rate and affordable housing units. Such a surge in development would also provide thousands of construction jobs, yielding favorable job market circumstances.
Many New Yorkers currently struggle to secure and sustain housing in NYC, which consistently stands at the brink of a housing emergency as defined by an apartment vacancy rate below 5%. The NYC Department of Housing Preservation and Development reported in 2021 that 50% of renter households pay over 30% of their income toward rent – a detrimental threshold for being classified as rent-burdened.
With a consistent rise in residential rents and a stark dip in new rental apartment construction since the expiration of the Affordable Housing NY Program, or 421-a, in June 2022, the city’s housing situation remains precarious. For instance, while the city issued 58,623 housing unit permits in the first half of 2022, only 10,014 were issued in the second half. These figures reveal a concerning trend similar to what happened when the prior 421-a version expired in 2016, suggesting 2023 housing production data is likely to follow suit.
Such concerns underline the urgent need for more far-reaching initiatives like Hochul’s ANNY proposal. The Real Estate Board of New York, for instance, needs to hammer out a memorandum of understanding with construction labor unions on wage requirements for the proposed legislation’s effectiveness. With a solid framework for partnership, the HPD can better determine affordability requirements with tenant needs in mind, thus crafting a program that serves all citizens.
Increased production of residential units would provide tenants with access to a greater supply of affordable units throughout the city, especially areas that typically lack such housing. This could help to reduce rents across the city and alleviate the rent burden many are currently experiencing. Without such a program, New York City risks continual construction-related spending setbacks and job losses, further impeding its post-Covid-19 recovery.
Brett J. Gottlieb and Patrick J. O’Sullivan Jr., partners at Herrick’s real estate department, emphasize the importance of programs like ANNY in addressing the housing crisis plaguing New York City, as developers continue to seek to build in lower-cost markets, particularly after the expiration of the 421-a program.
Ultimately, time is of the essence in navigating the ever-present housing crisis in NYC, the city can’t afford to waste another year in addressing this pressing issue.