Gotham Gazette

The Place for New York Policy and politics


Bonds, Vouchers, Tax Credits, & More: Mayor Adams' Federal Housing Agenda

Mayor Adams and Chief Housing Officer Katz unveil housing plans (photo: Ed Reed/Mayor's Office)

Facing an affordable housing and homelessness crisis, Mayor Eric Adams has set an ambitious goal to build 500,000 new homes, rehabilitate a collapsing public housing system, and transform social service delivery.

While most attention is paid to policies at the city and state levels, Adams is relying in part on action from Washington, D.C. that could bring in billions of dollars in subsidies and make it easier for New Yorkers to access housing benefits. That includes enough tenant protection vouchers to then borrow $5.5 billion through bonding, which officials say is needed to upgrade 25,000 NYCHA apartments under the Public Housing Preservation Trust, a major financing tool created last year by state lawmakers at the city’s urging.

New York City Chief Housing Officer Jessica Katz was in Washington, D.C. in January, pushing the administration's agenda with federal officials.

"All the easy stuff we've tried already in housing," Katz said on a recent episode of The Housing Problem podcast, hosted by two long-time New York housing players. "Now we're trying to push the boulder up the mountain to some more difficult things. And the collaboration between the federal and state and city government is going to be the whole ballgame," Katz said.

According to the mayor’s office, the administration’s federal agenda includes passing legislation to expand key affordable housing financing mechanisms, reducing administrative hurdles to access Section 8 and other federal low-income housing programs, and the additional voucher funding that will make the NYCHA Preservation Trust work.

The $5.5 billion that could be raised from voucher-backed bonds accounts for only a fraction of NYCHA's $40 billion capital and operational shortfall. The city has been looking for billions in direct aid from the federal government for NYCHA repairs for many years, but no such funding has been forthcoming, even under full Democratic control in Washington in 2021 and 2022 and the passage of several major spending packages, including the trillion-dollar infrastructure bill. Members of the city's congressional delegation continue to push for tens of billions of dollars in direct public housing capital funding, but in the absence of that, other strategies are being pursued.

A number of the administration's federal proposals were in Adams' first housing plan, "Housing Our Neighbors," released last June, including funding for NYCHA and easing administrative hurdles to securing benefits. Several others, like doubling the Low-Income Housing Tax Credit, the strongest available federal resource for financing affordable housing development, are more recent goals, according to a City Hall spokesperson, who provided the full federal agenda to Gotham Gazette upon inquiry (though no comment for this article).

Governor Kathy Hochul has also made housing production a major priority of her first term, promising to create or preserve 100,000 units of affordable housing over five years and build 800,000 new homes overall in the next decade. She is prioritizing some of the same measures in Washington as Adams, including capital funding for NYCHA and extending the Low-Income Housing Tax Credit, according to a spokesperson. 

Hochul met with members of New York's congressional delegation in Washington in February where she "highlighted ways State and federal leaders can work together to address the housing crisis," the spokesperson, Justin Henry, wrote by email.

"[T]he Governor looks forward to continuing to work with our federal partners to bring her vision for a more affordable New York to fruition," he wrote. Hochul is also seeking a new federal tax credit to build or renovate 1-4 family housing in distressed parts of the state and greater monetary rewards for state and local governments that reform discriminatory zoning policies.

Many of the provisions Adams and Hochul are seeking have failed to gain traction in recent years, despite their inclusion in early drafts of major pandemic-era legislation. Now, in a divided Congress, advocates see an even steeper uphill battle to achieve their goals.

"Every branch of government has a really important role to play in addressing the housing crisis," said Annemarie Gray, a former city housing official and now executive director of Open New York, a housing advocacy organization.

"And frankly for too long politicians at all levels of government sat on the sidelines and haven't actually done what they need to do to address the housing shortage," she added.

Housing Supply Legislation
The Adams administration is also seeking the passage of three bills through Congress that would finance affordable housing construction by expanding the reach of private activity bonds, the Low-Income Housing Tax Credit, and low-cost loans to housing financing agencies. New York City's Department of Housing Preservation and Development and the Housing Development Corporation use these types of tools in conjunction with private developers, including for- and not-for-profit entities.

The New York City capital budget includes $5 billion for affordable housing over five years. That includes $3.6 billion for the Department of Housing Preservation and Development and $1.2 billion for NYCHA's PACT program (a separate rehabilitation program outside of the Preservation Trust), and another $200 million for NYCHA developments in Brooklyn.

The state budget includes $5.7 billion in capital spending for affordable housing production, part of a five-year, $25 billion plan to help finance the building or preservation of 100,000 units across the state, 10,000 of which will be supportive housing.

Another $8.8 billion will come from state and federal tax credits and other federal funding. And $11 billion will go toward rental subsidies and operating shelters and supportive housing.

A handful of federal bills could add billions in capital dollars to help boost New York's affordable housing supply.

Affordable Housing Credit Improvement Act and SAVE Act
The Low-Income Housing Tax Credit (LIHTC) is the most valuable available federal mechanism to facilitate affordable housing construction. The Affordable Housing Credit Improvement Act would extend an increase on the "9% tax credit," a form of LIHTC that is used to finance new construction and expires in 2024. It also increases tax credits for extremely low-income households.

Critically, according to housing advocates, it would reduce the "50% test" on affordable housing projects financed through the sale of private activity bonds, a type of bond that can create tax-exempt interest when used for affordable rental housing, among other non-housing-related categories. Affordable housing projects that use private activity bonds to pay for half or more of the total costs (hence, "50%") are able to generate LIHTCs, which incentivize production.

The federal government limits the number of private activity bonds a state can issue and thus the number of projects that can reach the 50% threshold. The Affordable Housing Credit Improvement Act would lower the threshold to 25%, increasing the number of developments eligible to receive LIHTCs. The bill would also allow states to reuse previous bond allocations, a practice known as bond recycling.

The Adams administration estimates the measures could generate an annual $1.3 billion in new funding to finance affordable housing.

"It would really unlock affordable housing supply in New York. We would have the ability to finance double what we're financing now," said Rachel Fee, executive director of New York Housing Conference and former federal policy lead at the city Department of Housing Preservation and Development.

"Right now we use all of our federal resources for affordable housing and we're at the limit," Fee said.

In February 2021, Fee and U.S. Rep. Hakeem Jeffries, a Brooklyn Democrat and now the House Minority Leader, penned an op-ed calling for LIHTC increases and the bond cap exemption, along with fully funding Section 8 to create a form of universal rental assistance. None of those proposals made it across the finish line last year.

The limits on LIHTCs make it difficult for the city to finance affordable housing directly. That was part of why Mayor Bill de Blasio focused on private production and the implementation of Mandatory Inclusionary Housing – which permits greater density in exchange for affordable housing – and tax incentives like the now-defunct 421-a. Fee said more LIHTCs would allow the city and state to build more 100% below-market-rate rental buildings.

Another bill – the Support Allowing Volume Expansion Federally-Assisted Housing Act, or SAVE Act – would go further, exempting affordable housing projects from volume caps on private activity bonds, meaning more would become eligible for LIHTCs.

"We hope [changes to LIHTC] will be enough of a bipartisan issue that can get a little traction even despite the challenges of the political landscape in D.C. right now," Katz, the city’s chief housing officer, said on the podcast.

Henry, Hochul's spokesperson, said changes to the 50% test and the bond cap are among the measures the governor is pushing in Washington this session.

Federal-Financing Bank Risk-Sharing Act 
The city is also seeking an extension of the Housing Finance Agency Multifamily Loan Risk-Sharing Program. The program provides low-cost capital to build and maintain multi-family affordable rentals. Advocates from New York City pushed for its temporary reinstatement in 2021, after it sunset in 2018. The program will expire again in 2024 without the passage of the Federal-Financing Bank Risk-Sharing Act.

Adams had previously included the SAVE Act in his "Housing Our Neighbors" plan, while the other bills are newer sights for the administration.

Biden’s Budget
In his budget plan, released last week, Democratic President Joe Biden included a reduction in the 50% test for LIHTCs to 25%, in line with the Adams administration agenda. According to an analysis from the audit and tax services organization Novogradac, lowering that threshold could create 1.48 million new affordable rental units nationwide from private activity bonds issued between 2023 and 2032. Biden also wants to extend the "9% tax credit" in 2025.

The proposed federal budget, which will inform spending and policy negotiations with Congress, also includes $51 billion in Low-Income Housing Tax Credits and other subsidies used to develop affordable rental and owner-occupied units. Congress will pass its budget resolutions and formally approve appropriations over the coming months.

Biden also included over $8.9 billion in total discretionary spending on public housing nationally, including $5.1 billion in operating funding and $3.2 billion for capital. That funding also includes $535 million specifically earmarked for environmental upgrades, lead remediation, and other improvements. Given NYCHA is the largest public housing authority in the country, by far, it would likely receive a significant portion of any public housing funding.

The budget also places $7.5 billion in mandatory capital funding for the public housing properties with the most dire needs. By including that funding in the mandatory side of the budget, Biden signaled support for making public housing an entitlement that would be shielded from fights over discretionary spending. But that inclusion is being viewed by advocates as a symbolic gesture given its near impossible chances of being passed by a divided Congress. House Republicans are proposing drastic cuts to HUD including reducing housing programs by up to 43%, according to a report from the National Low Income Housing Coalition.

Administrative Burdens
Most publicly-funded affordable housing is subject to federal eligibility requirements that can be onerous for individuals and families to access, leaving available units vacant. Applicants for public assistance, rental subsidy vouchers, and affordable units are often asked to provide excessive and duplicative paperwork, and attend in-person appointments – all while facing the trials of housing instability.

Experts, including Katz, argue these regulations are unnecessary and counter to the purpose of public assistance – while having the effect of keeping shelter populations artificially high.

"Housing Our Neighbors" outlined a number of administrative shifts in the processing of Section 8 rental assistance and other state and federal housing placement programs.

A spokesperson for Mayor Adams said changes to HUD and IRS standards, both administratively and through statute, would have a serious impact on housing access in New York City. For example, aligning HUD regulations with Treasury Department and IRS rules around tax-credits and tax-exempt bonds would limit the administrative overlap of various programs.

A recent HUD rule change allowed government housing agencies, like New York City's Department of Housing Preservation and Development (HPD) to use income information held by other programs and agencies to determine an applicant's eligibility.

"I think the timing is good for that because money is tight so where they can help us with regulation and not cash, I think people are more than interested in stepping up and helping," Katz said of her recent trip to Washington.

"We actually got a surprising number of administrative burdens nerds to talk to us up there and we're hoping to make some real progress both on the regulatory and the legislative sides with administrative burdens," she said.

But for Fee, the political environment is less favorable to administrative fixes than when Democrats controlled both chambers of Congress and the White House.

"It just seems so dysfunctional and I think for Republicans controlling the House, housing is not going to be a top priority for them," she said. "Nothing is easy in Washington," she added. "Like, nothing is easy."

NYCHA and the Public Housing Preservation Trust
NYCHA is America's largest public housing authority and the city's largest affordable housing provider. With over 177,000 apartments, it is home to an official count of roughly 370,000 residents, though in reality it is likely far more.

Most of NYCHA's 335 developments are in need of serious repair, with failing elevators and boilers, mold, vermin, lead paint, and a host of other building and apartment deficiencies. The authority estimates the total price tag for capital repairs is around $40 billion, having ballooned over decades of scant support from city, state, and federal leaders. (NYCHA projects an additional operational shortfall of $35 million this calendar year, in part due to growing rent arrears.)

Housing experts warn that if officials don't act soon, it may no longer be cost effective to repair the existing public housing stock.

NYCHA's five-year spending plan includes just $8.6 billion of the $40 billion capital needs, of which $3.7 billion is available this year. From 2023 to 2027, federal capital dollars are expected to total nearly $4.3 billion, with another $3.5 billion from the city, and $538 million from the state, according to a presentation from NYCHA's chief financial officer in December.

To pay for some of the costs, state lawmakers created the Public Housing Preservation Trust, a publicly-controlled entity that leases NYCHA property in order to secure Tenant Protection Vouchers. The vouchers and rent revenues support the issuance of bonds, which can be used to rehabilitate apartments at twice the value of NYCHA's current federal subsidies, according to NYCHA. The law creating the trust authorizes funding for an initial swath of 25,000 units, with officials hopeful to significantly expand that number eventually.

"We worked very hard last session with the state government to pass the Public Housing Preservation Trust but all of that is incumbent upon this federal government now to come to us with the tenant protection vouchers that we need," Katz said on The Housing Problem podcast.

NYCHA estimates the 25,000 eligible units – to be selected by development based on a tenant-approval process – will cost $225,000 per unit in repairs, on average, for a total of $5.5 billion.

Washington lawmakers have apparently heard the call. In the current fiscal year, Congress appropriated $337 million for tenant protection vouchers, more than three times the previous year. According to NYCHA spokesperson Barbara Brancaccio, the 25,000 unit conversions are unlikely to fall in the same year and the current federal funding "provides ample levels for initial tranches."

Experts say that a higher level of investment must be sustained in order to meet and eventually expand the goal of the Preservation Trust. The city's Independent Budget Office estimates NYCHA will need $500 million in vouchers to leverage to rehabilitate the 25,000 units under the Trust.

Biden's spending plan, which will help shape negotiations with Congress, includes $385 million for tenant protection vouchers, a $48 million increase from the current enacted budget. 

"This is really a proof of concept," said Iziah Thompson, a senior policy analyst at Community Service Society, a nonprofit focused on economic mobility. "They are only targeting the 25,000 units first…if they can get these votes and developments to go for the trust then maybe they can reset 25,000."

Thompson warned that leaders at all levels of government must not lose sight of NYCHA's mammoth overall needs, including the thousands of units that will remain under NYCHA management. "Those units can't be forgotten and there is still a great need to provide capital for those from the state, city, and the federal governments," he said.

Assembly Member Linda Rosenthal, a Manhattan Democrat and the Assembly's housing committee chair, said NYCHA needs federal help to cover unpaid rents, many of which were not covered by the state's Emergency Rental Assistance Program. "A lot of us with NYCHA developments [in our districts] are very concerned that NYCHA is already dipping into its reserves and that's not a good thing," she told Gotham Gazette.

A group of state lawmakers, NYCHA tenants, and housing advocates is pushing for an additional $389 million for ERAP to be included in the state budget this year to cover eligible tenants who applied for assistance but were denied because they live in public or subsidized housing.

by Ethan Geringer-Sameth, reporter, Gotham Gazette

Read more by this writer.

Print Friendly and PDF

Editor's Choice

Gotham Gazette: New York Voters Approve $4.2 Billion Environmental Bond Act
New York Voters Approve $4.2 Billion Environmental Bond Act
Gotham Gazette: 
New York City Voters Approve Racial Justice Ballot Measures
New York City Voters Approve Racial Justice Ballot Measures
Gotham Gazette: Max Politics Podcast: A Winning Formula for Democrats in Tough New York Races
Max Politics Podcast: A Winning Formula for Democrats in Tough New York Races
Gotham Gazette: Max Politics Podcast Max Politics Podcast