New York ‘Emergency’

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A press conference is scheduled today by something called the New York City Campaign for Inclusionary Zoning. The group, comprising, among others, the Working Families Party, the Coalition for the Homeless, and Acorn, is planning to tout its plan to make it harder and more expensive to build new housing units in New York City. Illogic never stopped those who argue that the way to encourage the creation of housing in New York is to impose costly regulations on people who own apartment buildings.


Or, it seems, public officialdom. Twentyfive City Council members have signed on to the idea. Even Mayor Bloomberg, ostensibly a Republican, is sending encouraging signals, though the language of the whole concept itself is oxymoronic. To be against “inclusionary zoning” suggests that you are against inclusion, or for exclusion. But this isn’t about inclusion. It’s about piling more burdens on New York property owners – exactly the sort of thing that ends up discouraging development and sending young families fleeing to the suburbs. George Orwell, call 311.


One politician plotting this grab is Council Member David Yassky, who represents the Greenpoint-Williamsburg section of Brooklyn, one area slated for redevelopment. He proposed last year that the Department of City Planning create “affordable housing zoning districts,” which would require all new residential development to include a percentage of low- or moderate-income housing units. Developers could market the affordable units to renters and buyers whose incomes range from 50% to 120% of the local median income. The Hell’s Kitchen/Hudson Yards Alliance is hatching a similar scheme for the West Side.


A resolution before the City Council calls on the Planning Commission to commence a public review of amendments to the New York City Zoning Resolution to create an Affordable Housing Zoning District provision. The council has yet to schedule a hearing on the resolution, according to Julie Miles, the campaign director of the inclusionary zoning group. But her organization is urging the council’s Land Use Committee to hear the resolution as soon as rezoning proposals come before the Planning Commission.


Mr. Bloomberg gave a nod to proponents of inclusionary housing in his speech Thursday to the Enterprise Foundation. New York is “engaged in the most ambitious re-zoning of the city in a generation,” he said. “And we expect it to create the conditions for developing 25,000 units of new housing for New Yorkers. To make sure a large share of these units are affordable, we are inventing new ‘inclusionary’ zoning policies that allow developers to build more apartments in exchange for keeping some affordable.”


The mayor’s version of inclusionary zoning may consist of incentive programs rather than compulsory mandates, however. The Planning Department has considered only voluntary inclusionary-zoning programs, such as extending or modifying the city’s existing inclusionary-housing bonus. Yet the director of the Pratt Institute Community Center for Community and Environmental Development, Bradford Lander, says he doubts that purely voluntary policies will be effective. “There’s reason to be concerned that developers won’t take advantage of it or will produce too few units,” he told us.


The City Council’s resolution begins, “The City is in a state of housing emergency.” Yet rent control went on the books as an emergency measure generations ago. Today the problem is not that there’s a shortage of low-income housing but that so much of New York’s housing is held outside the marketplace that the market can’t match supply to demand. Low-cost housing programs create huge incentives for New Yorkers to stay in housing units for long periods of time. The average turnover in New York public housing is 18 years, thrice the national average. New Yorkers retain their subsidized housing even when their incomes grow past the eligibility limit and when their housing needs change, if, say, their children grow up and move out.


The idea that inclusionary zoning would help solve New York’s problems looks chimerical in light of a recent study by the Reason Public Policy Institute of Los Angeles that examined the effects of inclusionary zoning in the San Francisco Bay Area. In 45 Bay Area cities where inclusionary zoning was enacted, researchers found, new housing construction fell by 31% the year following the adoption of the policies. In the 33 cities with longterm data, 10,662 fewer homes were produced during the seven-year period after the adoption of inclusionary zoning than in the seven years before. The policies also drove up the costs of new homes.


“Inclusionary zoning should only be enacted if the goal is to make housing more expensive and decrease the quantity of new housing,” said a co-author of the study, Benjamin Powell, an assistant professor of economics at San Jose State University, when his report was released in April. “Such policies hurt homebuyers and will price out most low-income families.”


Part of the problem is that mandatory affordable housing requirements penalize developers who want to build new housing, the president of the Real Estate Board of New York, Steven Spinola, told us. “If the government wants to subsidize people’s housing, they should use government money and provide housing for them,” said Mr. Spinola. “You shouldn’t be creating public policy by mandating that the private sector do for the government what the government is not doing.”


Advocates of inclusive zoning counter that the city is helping owners to profit by rezoning their land for residential use. “There should be a public gain as a result of this windfall to private landowners,” reads the council resolution. But by rezoning these properties, the city isn’t adding to their value. It’s just finally ceasing the practices that have been driving down the property’s value. The public gain will be reflected, anyway, in increased property tax revenues from the rezoning.


The future of inclusionary zoning in New York and elsewhere may ultimately be decided by the courts. “The government does not have any authority to impose rent regulations on new construction in the City of New York without the state legislature’s approval,” Mr. Spinola told us. “Using the zoning laws to create a mandatory housing requirement is an end run around the law.” In New York, control over rent regulations is reserved to the state government. In 2000, the Colorado Supreme Court struck down an inclusionary zoning program enacted by the city of Denver because limiting rent levels on private residential property is prohibited by Colorado state law. Too bad New York doesn’t have a law against irresponsible rent regulations.


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