Among the many inequities identified by Zohran Mamdani in his stunning mayoral campaign was housing affordability. He is certainly not the first mayoral hopeful, or indeed mayor, to identify the problem. With a few exceptions, however, most solutions have failed. Mamdani now has a plan that he says will bring success.

He and others have pointed out that New York City does not have a housing shortage—it has an affordable housing shortage. If you can afford $6,000 a month for a one-bedroom, there is plenty to choose from. If one-third of your income is far less than that, you will have a problem finding anywhere to live in the city. We either have to pay people enough money to compete in the housing market or we must subsidize the production of affordable housing. Since we don’t seem able to do either, we have a housing crisis. 

Past mayors have attempted a variety of methods to meet the demand for affordable housing. In the early 1980s, Mayor Edward Koch was able to create thousands of affordable units by refurbishing the hundreds of apartment buildings that had been abandoned during the fiscal crisis of the 1970s. The city funded the rehabilitation of the buildings and, in tandem with many housing associations, took over their renting and management; some also went into the portfolio of the New York City Housing Authority. But that resource was exhausted once the program was complete. 

Subsequent mayoral policy has attempted to prevent, or at least slow, the loss of rent-controlled apartments to privatization, either through stronger rent control law or, in the case of housing created under the New York State Mitchell-Lama program, by refinancing in a way that retains some measure of affordability.

The city also manages Section 8 vouchers that pay the difference between a fair-market rent and 30% of the income of a qualifying family. The program has some benefits in that, by being usable on a citywide basis, it gives voucher recipients the ability to choose their neighborhood. It also prevents concentrations of poverty by spreading low-income families across a broad geographic area. Section 8 also has (or did have) the benefit of broad congressional support. Section 8 works well when there is a healthy supply of apartments in the market and the market rents are reasonably within the range set by the program. This condition is seldom the case in New York City, and many Section 8 vouchers go unused. 

But the primary policy tool for creating new housing, indeed the only policy tool in the mayoral arsenal since Koch, has been the city’s Zoning Resolution. The idea goes that, by relieving some of the constraints on the size of buildings permitted on a given site, developers can be incentivized to include some subsidized units in the market-rate projects they build. This “incentive zoning” gave way more recently to “mandatory inclusion” zoning that required developers in certain districts to include a percentage (typically 20%) of new units that would be marketed as “affordable.” The city sweetened the deal by adding additional floor area for the developer, certain tax abatements, and credits to support the subsidy of 20% of the affordable units. Sometimes the city also provided construction sites, either city-owned or NYCHA-owned, for housing.

Despite some limited success, there can be little argument that Mandatory Inclusionary Housing (MIH) zoning has failed to meet the demand for genuinely affordable housing. The latest iteration of that policy, the City of Yes, also promises only limited results. Although City of Yes has some sensible measures, such as eliminating the requirement for car parking and increasing allowable density close to transit hubs, these public-private partnerships almost always disproportionally favor the private over the public. The city gives away a lot in terms of valuable air rights, but gets small change in return.

To make matters worse, the definition of “affordable” is so elastic as to miss the vast majority of those in need of housing. The definition is based on the idea that 30% of household income is a reasonable ceiling amount that should go to housing costs. That is then applied to percentages of Area Median Income (AMI), which has various low-, moderate-, and middle-income categories. But AMI is calculated by the U.S. Department of Housing and Urban Development based on the broad geographical area that includes some of the wealthiest census tracts in the country.” No wonder residents complain that the “affordable” housing being built is “not affordable to me.”

There is an argument that, if the city were to simply build masses of housing, the resulting glut of housing would cause the vacancy rate to climb, and property owners would be forced to lower prices. Eventually, the market would stabilize, and housing costs would become affordable to most. The problem with this theory, which has its parallel in the “trickle-down” theory of economics, is that it doesn’t work. Not only is it unlikely that the private sector would commit to such a building program (assuming sites were available), but the length of time for the theory to become reality extends into at least several decades.

So what is Mayor Mandani’s plan?

There are a number of obstacles to truly affordable housing production. They include financial subsidy, site availability, construction costs, as well as, in some cases, NIMBYism. There is no question that, to achieve true affordability, the city must find money, and lots of it. The Low-Income Housing Tax Credit is helpful, but it is not nearly enough. There are also some small state subsidies that help, but the shortfall is vast. MIH relies on the private developer making enough profit from market-rate sales to bridge the gap.

As I reported in a previous Common Edge piece, the average cost of apartment construction—assuming a reasonable volume in a relatively high-density development—is around $500,000.

For reasons that defy credibility, New York State continues to pass on collecting the Stock Transfer Tax that would, if collected, reap over $14 billion a year in new tax revenue. Because of heavy lobbying by Wall Street, the tax has not been collected since 1981.

For reasons that defy credibility, New York State continues to pass on collecting the Stock Transfer Tax that would, if collected, reap over $14 billion a year in new tax revenue. Because of heavy lobbying by Wall Street, the tax has not been collected since 1981. Even if only a portion of the tax was devoted to housing production, it could be a significant source of the funding needed to make housing truly affordable. The mayor will work with the state to ensure that tax revenue from the Stock Transfer Tax is reinstated, as proposed by New York State Assemblymember Phil Steck in bill A3353/S1406.

The city has made an effort to provide vacant city-owned land to developers for housing, including some underutilized NYCHA sites that were parking lots. But again, supply falls short of demand. The conversion of underutilized office buildings to residential, especially since the pandemic, when office demand collapsed, has shown promise. But the stock of easily converted offices has been exhausted. Newer, large-footprint office buildings are much more challenging and expensive to convert into apartments. 

But a study by Pratt Institute’s Housing Consortium has identified a possible alternative source of sites for housing, above existing city-owned buildings. 

Over 800 buildings that the city already owns are primarily single-story and possess unused air rights. By using lightweight mass-timber construction, the Pratt proposal could yield thousands of new apartments. Mass-timber construction is cheaper and more sustainable than traditional concrete-and-steel construction. Mass timber lends itself to a full-lifecycle approach, from sustainable forestry to end-of-life material reuse. Mass timber is strong, fire-resistant, and 40% lighter; therefore, it is well-suited to building additions and enlargements. The construction timeline can be up to 35% faster, due to prefabrication. Construction costs can be up to 30% lower, especially if materials and products are purchased at scale. By storing carbon, mass timber can help counteract the climate crisis. There would be an added benefit of new job creation in the mass-timber industry. 

Of course, not all of these buildings will turn out to be suited to this project, but a feasibility study, which had been offered but not taken up by the previous mayor, is promised by the new administration.

Mayor Mamdani has recognized the importance of a competent administration and that well-staffed and competent city agencies are necessary for effective government. Rather than depending on the failed MIH policy to create affordable housing, the mayor has taken the lead and launched the City Affordable Housing Authority (AHA). Like its counterpart, the School Construction Authority, the AHA is an authority under New York State law that gives it a measure of independence from some procurement constraints, including the use of faster delivery models such as design-build contracting. The AHA’s executive director will report directly to the mayor, and the agency will draw on the numerous housing and construction professionals in the city for its staff.

Mayor Mamdani’s plan recognizes that housing is a social need, not a financial commodity, and that a civil society should be committed to housing all its members, regardless of income.

The city has certain advantages over private development that it can deploy. These include: saving the developer’s profit included in private development; access to free city-owned sites; and borrowing costs via bond financing that are far lower than private borrowing costs.

In delivering new housing, the AHA will also recognize the need, and plan for, any ancillary neighborhood infrastructure so that neighborhoods are supported and the influx of new housing does not impose a burden on existing infrastructure and amenities. This policy will assuage much of the opposition to new housing that is based on a real fear of the consequences of additional density.

There is a prevailing sentiment among many opponents of government that government cannot be practical or efficient. We see with the policies of the current federal administration how misguided this sentiment is, and how many government services are essential to a civil society. In terms of housing, we need only to look at the history of housing production in New York City: 180,000 units, housing over 500,000 residents. Built by? The New York City Housing Authority. (The current difficulties faced by NYCHA are primarily the result of government policy and do not detract from its history of housing production.) No private developer comes even close. 

Mayor Mamdani’s Affordable Housing Authority could be the change agent in our perpetual struggle to house our citizens. He recognizes the power of good government. The funds are there—if we only choose to take them. The city has done this in the past. It can do it again. 

Featured image via NPR.