Affordable Housing Institute : US

In New York City, whose housing authority is facing an enormous deficit brought on principally by HUD budget cuts, the authority has taken a long-overdue step.  Searching in the fiscal sofa cushions, New York has found some additional income:

 

Wonder if there’s any excess income to be found?

 

As reported in the New York Times:

 

The New York City Housing Authority announced yesterday [April 20 — Ed.] that it wants to raise the rents paid by tens of thousands of its better-off tenants. The move, the biggest change in housing authority rents since 1989, is intended to help close a budget gap that has widened as costs have shot up and federal financing has not, officials said.

 

However, these are not across-the-board rent increases; in fact, they will hit only one household in four:

 

 

The proposed rent increases, some as high as several hundred dollars a month over the next two years, would affect nearly 47,000 households with annual incomes ranging from $19,800 to as high as $100,000. They make up 27% of all authority households. The remaining 128,000 poorer households, whose rent is fixed at one third of their income [sic: 30% — Ed.], would be unaffected.

 

In Federal affordable housing (not just public housing but also older assisted forms like §221d3 and §236), residents generally pay 30% of their income for rent, subject to a maximum ‘ceiling rent’. 

 

It’s all a matter of perspective what’s a floor and what’s a ceiling.

 

Ceiling rents have two purposes:

 

1. To prevent assisted households from paying rents above market.
2. To give a rent bargain to upper-income public housing residents and persuade them to remain in public housing.

The first reason is a matter of equity and common sense; the second is good housing practice:

 

The aim of those “ceiling rents” was to encourage upwardly mobile families to remain in public housing, cultivating a socioeconomic mix that some say [I’ll say it! — Ed.] has been crucial to the authority’s success.

 

In terms of the quality of its communities, New York City has for decades been the nation’s most successful large public housing authority.  A vigorous and unswerving commitment to income diversification has been one of the reasons, for keeping some higher-income residents helps sustain healthy communities:

 

Ceiling rents help build strong housing properties four ways!

 

• They provide role models for aspirant families, especially those with adolescent children.
• Their presence increases demand for housing authority apartments, leading to a better tenant mix.
• They tend to be more demanding of services, so they keep the owner in touch with the market.
• They have greater political appeal and they strengthen public housing’s funding case.

 

So there are sound reasons for ceiling rents.  But the amount of rent bargain they represent needs to be periodically recalibrated, lest it grant a slow windfall that is neither deserved by the residents nor helpful for the property.

 

“No, I don’t think the ceiling’s too low, do you?”

 

Why did I say this rise was long overdue?  Because the ceiling rents had not risen in 17 years:

 

The authority, the largest in the country with more than 400,000 tenants, last fixed rent ceilings, beyond which no tenant’s rent could climb, in 1989.

 

Victor Bach, a senior housing policy analyst for the Community Service Society, a nonprofit group that works against poverty, said in an interview: “There is clearly a reason to increase the ceiling rents since they haven’t been increased in 20 years, at a time when maintenance and operating costs have gone up.

 

The levels to which these ‘ceiling’ rents will rise are themselves quite affordable:

 

Their new rents would be based on apartment size and household income. The increases, over two years, would range from 10% to 40%.

 

Households making less than 60% of the area’s median income, or an average of $29,119, would see their rents rise by 10% to $557 from $505. Those making between 60 and 80% of the median, or an average of $41,137, would see theirs rise to $624 from $515.

 

In fact, the ceiling renters should be thankful.

 

“Dancin’ on the ceiling.”

 

I think it’s obvious the increases were pegged not by the ultimate affordability but by the amount of increase (10%, 20%, and 40%). 

 

 

One of my Rules Of Property Management is, “every resident gets a rent increase every year, even if small.”  Now New York is paying the penalty for not having boosted ceiling rents periodically.  By all rights the boost should have been bigger, for these ceiling rent increases aren’t enough to close NYC’s $168 million shortfall:

 

The new rent increase proposal [is] expected to generate $60.8 million by the 2009 fiscal year.

 

About 35% of today’s funding problem.  It’s only one of seven points in the city’s plan.

 

Sunia Zaterman, executive director of the Council of Large [Public] Housing Authorities in Washington, described the New York authority’s proposal as “sound and well thought out.”

She said: “Those are difficult challenges given the history of the funding levels for housing authorities. I think they’ve presented a balanced plan.”

 

Despite the overwhelming logic of NYCHA’s action, some who currently benefit from bargain rents have convinced themselves they are entitled to extra affordability:

 

Members of Community Voices Heard, who are residents of public housing, protested higher fees Thursday near City Hall. Dayshawn Smith, 7, performed a skit aimed to show New Yorkers “living in boxes.”

 

Young master Smith, that’s not living in boxes; this is.

 

Homeless in New York

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