In a study released in September, the Community Service Society (CSS) finds that between 1990 and 2007, 30% of the more than 119,000 subsidized units in New York City left the subsidy program or programs that made them affordable.
In Closing the Door 2008: Subsidized Housing Losses in a Weakened Market, CSS reports on the affordability status of multifamily rental properties in New York City that have received federal mortgage or rent subsidies or participated in similar city/state programs, including the Mitchell-Lama program for which New York City is well known. In 2007, almost 3,600 units left their respective subsidy programs, and most were Mitchell-Lama properties. While below the recent 4,000 unit-per-year average loss for the city, the authors note that opt-outs were occurring at a rapid rate in the first half of 2007 and slowed only after credit markets tightened.
The report states that 19% of the remaining 83,000 subsidized units in New York City are at risk of losing their affordability status. More than 3,000 Mitchell-Lama units may opt-out of the program in order to take advantage of higher market rents and thus face what the report refers to as “market threat.” Not included in this estimate is the significant stock of Project-based Section 8 units, for which there is no good indicator of opt-out risk. In addition to units facing market threat, more than 13,000 units face “distress threat” because their properties failed HUD’s most recent physical inspection.
The report makes a host of policy recommendations, including closer scrutiny of sales to private equity firms and stronger underwriting standards, rent stabilization for all units leaving the Mitchell-Lama program, and giving nonprofits the opportunity to purchase a property that is leaving the affordable stock. The full report is available at www.cssny.org/userimages/downloads/CSS_Report_ClosingTheDoor_08.pdf .