The corona virus has certainly been a fiscal blow to New York City. First in the line of fire to get hit is the affordable housing program. Mayor Bill de Blasio is preparing to cut more than $1B from his signature affordable housing program because of the pandemic crisis. He will also cut $583M from the program this current fiscal year, which concludes at the end of June. There are also plans to cut $456M from the budget next year.
The mayor’s original goal of creating 300,000 affordable housing units by 2026, now seems impossible to reach. The housing plan, while exceedingly controversial, is also one of de Blasio’s most sweeping accomplishments and one he was building his legacy on before Covid-19 shattered the city's booming economy.
Affordable housing developers and others in the field say this action will make it difficult to continue producing homes for low and middle-income New Yorkers at the current pace, and some are already bracing for financing delays on projects in the development pipeline. The crisis was already expected to slow down affordable housing construction, even though it is considered essential work, as the virus affects the workforce and impedes supply chains.
“All of our government partners have certainly been preparing us for a slowdown in the production pipeline just given the massive amount of resources the city and state have had to devote to crisis response,” said Scott Short, CEO of Riseboro Community Partnership. “There’s been a general message out there that this June closing season will not look like Junes of recent years. So, I think we’re all kind of preparing ourselves for some fallout.”
Until now things were going well for De Blasio’s affordable housing program. The 12-year housing plan, which has benefited from a booming city economy, was going so well that he decided in 2017 to roughly double its capital budget to $16.9 billion and expand the goal from its original 200,000 homes to 300,000. The total price tag of the plan with private investment is $82.6 billion. The city spent about $1.7 billion in 2018 to finance roughly 34,000 apartments. The cuts leave the city with about $870 million and $740 million capital funding in fiscal years 2020 and 2021, respectively.
To complicate matters, record-low interest rates in recent weeks have pushed down the value of federal housing tax credits that contribute to the vast majority of the country’s affordable housing development. The results could be a threat to make projects even more reliant on government subsidy in the wake of the pandemic.
Overall, both the city and the state are facing vast budget gaps. The mayor scaled down his proposed budget for the city by $6B in addition to tapping into the city’s savings, he said in an April 16 press conference. The city is also anticipating a $7.4B tax revenue loss this year.
As the City Council plans to hold remote budget hearings in the coming weeks, we might see some pushback.
We are also thinking about how this will affect the current homeless population. Many homeless are living in the subways now; and according to the NY Post, the City is spending $250 million to house them in hotels in order to slow the spread.
COVID-19 has affected the world. But it has affected New York City in ways that we will not even begin to understand for years.