No One Buying New Housing Marketplace

East Coast, Other
Tuesday, January 6, 2009
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Courtesy HPD

(Courtesy HPD)

There has been a lot of talk lately about how it is now up to the government to spend stimulate our way out of the current economic doldrums, and how much of that will come through infrastructure spending. One place where such investment is critically important is affordable housing, especially in light of all the foreclosures. While New York has fared better than other areas on that front, it is still unwelcome news that the city has rolled back the timeline for its New Housing Marketplace Plan.

Back on December 14, Mayor Michael Bloomberg gave one of his weekly radio addresses, which focused on the rising foreclosure rate and how his administration was coping with the challenges that presented (text). In addition to mentioning expanded mortgage advice and anti-abandonment measures, the mayor highlighted the New Housing Marketplace Plan, which is run by the city’s Department of Housing and Preservation:

“The New Housing Marketplace – our Administration’s affordable housing initiative, and the most ambitious such effort ever made by an American city. Our ten-year goal is to fund development and preservation of 165,000 homes – enough to house the entire population of Atlanta.”

But, the mayor continued:

“Now, with the economy stalling and even the most qualified developers having a hard time getting credit, we know we can’t keep that pace up. So we’re stretching out our schedule for completing the second half of our housing program to six years instead of the five years we’d planned for at first.” [Emphasis added.]

As the Times pointed out today, “Mr. Bloomberg announced the extension in December during a speech and in one of his weekly radio addresses, neither of which received much attention beyond housing advocates.”

Whether it was impacted by the news the day before that HPD head Shaun Donovan would be taking over HUD for the Obama administration, we’re also not sure (the HPD press office has yet to return our call). But according to the Times, a spokesman for the mayor said the extension was tied to Bloomberg’s announcement in May that he would stretch a four-year construction plan for the city to five years amid signs of a declining economy.

Still, this isn’t exactly news. In September, when the mayor was trumpeting the successes of the program at its halfway mark, the Observer was already calling them into question. Eliot Brown reported that the administration was already shifting gears:

[A]s the financial industry hits major turbulence and the city’s once lush climate for development turns dry, the Bloomberg administration is struggling to meet its goals for new construction (currently targeted at 91,637 units) and will likely need to shift the balance more toward preservation (73,395 units)…. Although city officials say the original plan emphasized preservation in its early years, the reality of an inclement market has caused reevaluation, and the administration says it will likely need to lower its goals for creating new units, and increase its goals for preserving current ones.

There are other factors at play, such as the impact of changes to the 421-a tax program, which, along with inclusionary housing bonuses–like those in many recent rezonings–encourage for-profit developers to include low and moderate income housing in their projects through tax breaks. But still, with the paucity of credit having dragged the city’s construction sector to a halt and many predictions of a new recession, what the administration can do to continue to stimulate affordable housing remains an open question. This is especially bad news for out-of-work architects given all the affordable housing work they’ve had of late.

Perhaps the mayor should try giving Secretary Donovan a call.

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