August 5, 2018 City & State New York, By Ben Adler Rising rents are driving New York City’s latest homelessness crisis. Here’s how to fix it. On a rainy morning in May, around 30 homeless people and a handful of activists gathered on the steps of New York City Hall to call on local government to protect homeless New Yorkers trying to find permanent housing. Specifically, they opposed a proposed cut to the city’s Commission on Human Rights budget, fearing it would hamstring the already weak enforcement of laws to prevent landlords from discriminating against New Yorkers who use city vouchers to pay their rent. What the group lacked in numbers they made up for in energy, loudly cheering each speaker and chanting with gusto. They held a banner that read, “End income discrimination now,” and waved signs that declared, “We can pay rent but landlords are keeping us homeless.” One handwritten sign demanded, “DeBlasio what about the other city?” “Sixty-three thousand people are living in homeless shelters. Is that because they want to?” asked Joshua Goldfein, a staff attorney at The Legal Aid Society, through a megaphone. “No!” The crowd cried in unison. And yet many of them said they have been in shelters for a year or more. There are currently about 59,000 New Yorkers staying in homeless shelters and several thousand more sleeping on the streets, figures that fluctuate seasonally. This year’s street homeless winter population count was 3,675 people. The U.S. Department of Housing and Urban Development, which uses a different methodology, pegged the total (street and shelter) homeless population at more than 75,000 in a report released in December. Then there are the New Yorkers who lack a home of their own but are crashing on a friend or family member’s couch. “There’s people who aren’t even counted because they’re doubled or tripled up (in a bedroom), or they’re three-quarter housed – that’s extremely low-income adults who are paying the shelter allowance to rent a bunk bed in private housing,” said Paulette Soltani, housing campaign coordinator with VOCAL-NY, a statewide grass-roots advocacy organization for low-income New Yorkers. Add it all up, and New York City’s homeless rate is the highest it has been since the Great Depression, even as the national economy verges on full employment. (In between, it dipped dramatically: There were 28,083 New Yorkers in shelters in March 1988, 20,597 in June 1998 and 39,125 in September 2009, according to the Coalition for the Homeless.) Housing is so expensive and inequality so severe that many working families cannot afford a place to live. Homelessness is mainly a housing problem, and it can only be reduced through comprehensive housing policy solutions. “I am not that person on the subway who doesn’t want to go in shelter. I’m a working person who had some mishaps and just doesn’t have a place to live.” – Rhonda Jackson, formerly homeless person who lives in Brooklyn Bill de Blasio campaigned in 2013 on a platform of mitigating inequality and addressing the high cost of living. As mayor, de Blasio launched a plan to create or preserve 200,000 rent-regulated units by 2024. The target has since been raised to 300,000 by 2026, and the plan is well underway – the tally is at 109,767 so far, according to the city. The mayor’s problem isn’t lack of interest in affordable housing but lack of power to control the housing market: loophole-ridden regulations controlled by the state Legislature cause the supply of rent-stabilized apartments to decrease each year, and rents have climbed in the market-rate units where some 246,000 households making less than twice the poverty rate live. (That estimate comes from the 2014 New York City Housing and Vacancy Survey since full 2017 data are not yet available.) The city’s efforts are like pouring water into a leaky bucket, and the overall draining away of affordable apartments inevitably has led to the homelessness epidemic. Homelessness was already rising precipitously during former Mayor Michael Bloomberg’s final term, but it hardly came up during the 2013 mayoral campaign. Its subsequent crescendo has put it on the media and general public’s radar, but too often the conversation ignores the problem’s roots in the housing market. While de Blasio has been intensely scrutinized over homelessness, the dearth of press covering the May 16 City Hall rally demonstrates how little attention the most relevant policies receive. Instead, most New Yorkers seem only aware of the highly visible, but statistically atypical, street homeless. Conservative commentators on Fox News, who seem mostly concerned with the homeless being unpleasing to look at, blame de Blasio for failing to roust them from the floor of Penn Station. Average New Yorkers wonder why there are so many people living on the streets, while middle-class and rich NIMBYs from the middle of Queens to midtown Manhattan furiously combat planned shelters in their neighborhoods – a blowback so intense it helped defeat New York City Councilwoman Elizabeth Crowley. The newspapers and other elected officialshit de Blasio from all of these angles. Once the homeless are indoors and safely out of any rich person’s sight, public interest in what becomes of them evaporates. But most homeless New Yorkers are not subway panhandlers or other avatars of the stereotypical mentally ill or drug-addicted beggars and bag ladies. The major increase in homelessness is among people who simply lack a place to live and wind up in a homeless shelter. In May, there were 15,023 families, with 22,538 children, sleeping each night in New York City’s municipal shelters, according to the Coalition for the Homeless. Over the course of fiscal year 2017, about 130,000 people spent at least one night in shelters, including more than 45,000 children. According to The Wall Street Journal, about one-third of families in the shelter system have earned income. “Everybody has a misconception,” said Rhonda Jackson, a 57-year-old Queens native who lived in shelters for a year. Jackson used to work for the MTA in a token booth at Manhattan’s Fulton Street station. Traumatized by the nearby attacks of Sept. 11, 2001, she quit her job and left the city. When she returned to New York last year to be near her family, she could not afford a market-rate apartment. “I am the new homeless,” said Jackson, who now lives in an affordable unit in a new building in Williamsburg but has been able to find only sporadic retail employment. “I am not that person on the subway who doesn’t want to go in shelter. I’m not that person sleeping on the bench. I’m a working person who had some mishaps and just doesn’t have a place to live.” Unlike some other spikes in homelessness, this is primarily an economic, rather than social, predicament.“The driver of homelessness in New York City today – as opposed to earlier times … when deinstitutionalization of the mentally ill was happening – is (a) lack of affordable housing and rising housing costs,” said Oksana Mironova, housing policy analyst for the Community Service Society of New York. Even for people with other risk factors, homelessness often could be averted if they had affordable housing. “It’s not a homeless crisis; it’s a housing crisis,” said Sam J. Miller, a spokesman for Picture the Homeless. “There are plenty of mentally ill people who have housing; there are CEOs of Fortune 500 companies who have substance abuse problems. It’s still about whether you can afford housing.” The relationship between rising rents and homelessness is amply documented. In March, The DataFace, a San Francisco-based data agency, analyzed data from the U.S. Department of Housing and Urban Development’s Annual Homeless Assessment Report and found that eight of the 10 states with the highest homelessness rates have the nation’s highest median home prices, including New York. A 2017 study by the real estate website Zillow found a strong relationship between rents and homelessness in New York. It estimated that “nearly 3,000 more people would fall into homelessness with a 5 percent average rent increase.” New York City has long been expensive, but the problem has grown dramatically since the last recession. “From 2010 to 2017, New York City rents rose twice as fast as wages,” a data analysis by StreetEasy, the real estate website, found. While asking rents increased by 3.9 percent annually, median wages rose just 1.8 percent per year. This imbalance is most acute for low-income households: “The city’s lowest earners saw the least amount of wage growth, while the lowest bracket of rents increased the most (4.9 percent annually) since 2010,” StreetEasy reported. A 2017 report by the Furman Center for Real Estate and Urban Policy at New York University showed that the proportion of rental homes affordable to a household making 80 percent of the area median income declined from 53.4 percent in 2006 to 40.5 percent in 2016. The shortage of units in the market’s low end has led to intense competition for them, resulting in not just rising prices but a simple dearth of open units. Using data provided by the New York City Housing and Vacancy Survey, a study conducted once every three years by the city, CSSNY found that apartments under $800 a month have a minuscule 1.15 percent vacancy rate, compared to a 7.42 percent vacancy rate in units that cost over $2,000 a month. (The city’s overall residential vacancy rate of 3.63 percent is also quite low, and the rate in rent-stabilized apartments is just 2.06 percent.) This problem is entirely specific to housing. According to StreetEasy, the cost of other goods in New York City went up an average of 1.2 percent during the same period. CSSNY found asking rents increased from $1,443 in 2014 to $1,875 in 2017 – or a 30 percent increase. What’s amazing is not how many homeless New Yorkers there are, but how few. The city’s residents are adept at finding ways to keep a roof over their heads, often under circumstances the average suburbanite would find unacceptable: immigrant laborers sleeping four to a room, college students subletting from the elderly, and families spending half or more of their income on rent. That latter group is what social scientists refer to as “severely rent-burdened,” and it is growing – from 23.7 percent of New York City households in 2000, to 29.3 percent in 2016, according to the Furman Center report. This can mean forgoing basic necessities and limited social mobility. “When people are rent-burdened, they’re not buying food or medicine. They’re not paying for college,” said Vicki Been, a former commissioner of the New York City Department of Housing Preservation and Development and current faculty director of the Furman Center. They also are leaving the city because they cannot afford to live there: the five boroughs’ net domestic migration declined from minus 0.2 percent in 2010 to minus 1.8 percent in 2016, according to the city’s Economic Development Corp. (The population continues to grow because of foreign immigration.) The de Blasio administration has attempted to correct the imbalance between supply and demand by rezoning transit-rich areas to allow for more development that includes a share of affordable units, but that alone won’t meet all the need. In recent decades, upzoning has been consistently offset by powerful communities successfully lobbying for reductions in allowed building height, known as downzoning, elsewhere in the city. Despite his pro-market image, former Mayor Michael Bloomberg did as much downzoning as upzoning. Last year, angered by a planned 800-foot apartment tower, a group of neighborhood NIMBYs got the City Council to downzone a stretch of Midtown East. Given the high costs of land and labor in New York City, the market mostly produces luxury housing. The real estate industry also claims that costs are so prohibitive that the income bands for affordable housing have to include large allotments for middle- and upper-middle-class families – those making, in some cases, as much as 165 percent of the area median income, or AMI – because they can pay higher rents. This AMI – currently $104,300 for a family of four – is for the whole New York City region, which is far richer than the five boroughs because it includes the wealthier suburbs. As a result, the overwhelming majority of typical families in a poor, recently rezoned neighborhood like East New York in Brooklyn do not make enough to qualify for much of the “affordable” housing in the area’s new developments. The real estate industry and City Hall point out that there is also a shortage of middle-class housing. “The market hasn’t been producing for moderate and middle-income households,” said Molly Park, a deputy commissioner at the New York City Department of Housing Preservation and Development. The 421-a tax abatement program – renamed Affordable New York when it was last renewed – requires affordable housing in new apartment buildings, but allows much of it to be in these middle-income bands. Park argued that this “leverages the power of the market to serve that population, and lets us focus our dollars on the segment of the market for which there will never be enough market-rate affordable housing because the incomes are too low.” Advocates remain unconvinced. “The fundamental reason for homelessness is a lack of affordable housing. The mayor’s housing plan doesn’t match the scale of the homelessness problem,” said Shelly Nortz, deputy executive director for policy at Coalition for the Homeless. “It doesn’t target the resources to the people in greatest need,” Nortz added, referring to the large number of affordable units for households with six-figure incomes. “There’s a distribution of housing resources in the mayor’s housing plan that is skewed away from those most in need.” Nonetheless, de Blasio has actually created tens of thousands of affordable units, both through directly financing them and through the mandatory inclusionary housing amendment to the zoning resolution, which requires that new developments include some affordable housing. But the city is simultaneously losing rent-regulated apartments, thanks to a web of policies enacted in recent decades at the behest of the real estate lobby. “Vacancy decontrol” allows landlords who perform expensive renovations to increase the rent after a tenant leaves and get their apartments over the rent threshold – currently $2,733.75 – at which point a unit becomes deregulated. “Since city and state lawmakers started gutting the rent laws in 1993, the city has lost over 152,000 regulated apartments because landlords have pushed the rent too high,” The New York Times reportedin May. “At least 130,000 more have disappeared because of co-op and condo conversions, expiring tax breaks and other factors.” Thanks to de Blasio’s policies and reforms to the 421-a tax abatement program, last year marked the first time that the city enjoyed a net increase of rent-regulated apartments. It would take many more years like that to make up for the rent-stabilized units that have been lost. (The Real Estate Board of New York argues that vacancy decontrol is needed so that landlords will invest in improving the quality of the housing stock.) The conundrum of the de Blasio administration is that neither the mayor nor his appointees are unaware of the housing crisis or indifferent to it. They simply are badly constrained in their ability to address it. De Blasio was elected on a pledge to combat inequality and unaffordability. Last year, HPD financed the creation of 24,536 affordable homes, breaking the record previously set by Koch in 1989. Forty-eight percent of those homes are for people making less than $33,400 per year or $43,000 for a family of three. During de Blasio’s first term, HPD financed 87,557 affordable apartments. But this is a drop in the bucket when the city is rapidly losing affordable units for reasons that are beyond the mayor’s control, such as growing economic inequality and policies that emanate from Washington, D.C., and Albany. The mayor repeatedly has proposed raising taxes on the wealthiest New Yorkers, but the state must approve any tax hike and neither Gov. Andrew Cuomo nor the Republican-controlled state Senate is inclined to do so. GOP state senators, who overwhelmingly hail from outside the city, have clung to their razor-thin majority in part by collectinggenerousdonations from New York real estate developers and protecting their donors’ interests through a landlord-friendly approach to rent regulation. The office of state Senate Majority Leader John Flanagan did not respond to multiple requests for comment for this article. Without a significant new source of revenue, it is difficult for the city to maintain the subsidized housing it already has. Lack of funds is partly responsible for the decrepit condition of many New York City Housing Authority projects: apartments without heat or hot water in the middle of winter, broken elevators, stairs without light. Yet the need for low-income housing is so acute that, as of last year, 257,143 families were on the public housing waiting list. So the city has reacted to the homelessness crisis with homelessness policy, over which it has more control than housing. De Blasio has embarked on a shelter-building spree, which is often impeded by political and legal challenges from the neighborhoods where the buildings would be located. But building shelters is like putting a Band-Aid on gaping wound: It’s necessary in an emergency, but it will not cure the underlying ailment. To do that, the city needs more than shelters. And here is where homelessness collides with the city’s housing crisis: How can the homeless be moved to housing if they have very low incomes and there is a small and dwindling supply of low-income housing? Hence the rally at City Hall: de Blasio has created new housing vouchers for homeless people, but they can search for months or even years for an apartment that will take the vouchers. Rejecting vouchers, which is known as “source of income discrimination,” is illegal, but homeless people still encounter it constantly and they say the law is inadequately enforced. To understand why vouchers are rejected by landlords – and, therefore, why the homeless population remains stubbornly high – requires a dive into recent history. During Bloomberg’s tenure, then-New York City Department of Homeless Services Commissioner Linda Gibbs ended the policy of prioritizing homeless households for federally funded housing vouchers. Based on the dubious premise that families were voluntarily entering the shelter system to get bumped to the head of the line – those who have endured the manifold indignities of living in shelters find ludicrous the notion that anyone would give up an apartment to stay there – the city barred shelter residents in 2004 from applying for Section 8 housing vouchers. Instead, the Bloomberg administration created a program called Advantage that provided housing vouchers for families in shelters, but it abolished that program in 2011. Landlords whose tenants relied on Advantage suddenly faced the prospect that their rent would stop being paid. Ultimately, as a result of litigation, the leases were mostly paid out but not renewed. De Blasio created new vouchers to replace Advantage, a panoply of programs mostly collected under the Living in Communities umbrella, or LINC, but landlords remain leery of taking city homeless vouchers. This compounds the problem that there are hardly any apartments available in the LINC price range – $1,268 in maximum rent for a family of two – and that landlords might discriminate against the homeless for other reasons. (The city announced in mid-July that it would consolidate the programs to make enrollment simpler.) Homeless people describe a demoralizing process of searching fruitlessly for months and being stymied by source of income discrimination. “I call and say, do you take the voucher? And all of a sudden the story changes, ‘We don’t have anything right now,’ or, ‘We don’t take the voucher,’” Kemba Brown, a 43-year-old who grew up on Staten Island, said in an interview this spring. “I’ve seen ads on Craigslist that say ‘no voucher, no government.’” Brown, like Jackson, spent about a year in shelters before finding an affordable unit. The city Commission on Human Rights is charged with regulating source of income discrimination, but its resources are inadequate to track down every instance of discrimination across the city. “I talk to people every day who tell me they can’t use their voucher because no landlord will take it, but no one has ever said to me New York City CHR got that landlord to take it,” Goldfein said. So the city spends more money on keeping someone in a shelter – an average of approximately $4,500 a month – than it would cost to put them in an apartment. When people don’t move out of shelters, and more keep coming in, the numbers inevitably rise and the need grows. The city government agrees there is a problem, but believes it is being resolved. “A significant number of landlords have been good partners and enabled us to use rental assistance,” said Steven Banks, commissioner of the New York City Department of Social Services. “I’ve spoken to too many clients at town halls and in focus groups who report that there are other landlords who aren’t accepting our rental assistance programs. That’s why the mayor gave us the resources at DSS to create a source of income unit to resolve the complaints brought to us and sue landlords when necessary.” In June, that unit filed two lawsuits against the property management company of an apartment complex and a real estate broker for refusing to take the vouchers. That landlords for even the city’s cheapest apartments can afford to discriminate against voucher users reflects the enormous surplus of low-income families competing for the small supply of affordable homes. If landlords did take the vouchers, that would move people out of shelters and reduce the homeless population, so it’s hard to argue with the advocates’ contention that the law should be more vigorously enforced. In the grand scheme of things, it might help homelessness, but it wouldn’t do much to address the pressure of housing costs on low-income families. An agenda to mitigate the housing and homelessness crisis requires compromise from all sides, allowing the market to increase supply but also requiring the rich to chip in and help the poor make ends meet. First, the following policies would make the housing market function more efficiently: Upzoning. Contrary to the claims of many neighborhood activists, upzoning and allowing tall new apartment buildings does not worsen high housing costs. In centrally located neighborhoods where development is heavily restricted, such as the Upper West Side, Greenwich Village and Brooklyn Heights, prices have skyrocketed since the onset of gentrification. In the affluent Upper East Side, however, upzoning and large-scale development in the neighborhood’s eastern half has helped supply keep pace with demand. The Upper East Side east of Lexington Avenue has thus seen much lower price increases and has become one of the most affordable neighborhoods in Manhattan south of Harlem. More of the city should be upzoned, including areas currently dominated by single-family homes. Property tax reform. The city currently disincentivizes dense development by taxing rental buildings more than co-ops, condos and private houses. The much-maligned 421-a program is a kludge intended to offset that. Instead, taxes should be distributed more equally on all units, regardless of building type. Then 421-a could be repealed and the increased property tax revenue could be used to fund affordable housing development through HPD. The mayor’s property tax reform commission is currently mulling just that. Land value taxation. Economic policy wonks have long bemoaned the bizarre norm of taxing the value of buildings rather than the land they sit on. Development is in effect discouraged, as the property taxes rise with the building’s height. Taxing land value would do the reverse. Legalizing basement apartments. There are an estimated 5,000 potential apartments – some being rented out already – that could be legal housing units. The city has embarked on a pilot program to help landlords bring them up to code. But even John Banks, the president of REBNY, which advocates for these four policies, admits that the one-fifth of New Yorkers who are in poverty “would always need support” from the government to obtain housing. And so the following government interventions are also needed: Tax the rich to support the poor. The era of significant federal and state support for low-income housing is over. The city must therefore compensate. This requires approval from the state government, which means getting past the state Senate and Cuomo. But if Democrats retake the state Senate and Cuomo fears revolt on his left flank, getting some of the following ideas through is conceivable: de Blasio’s millionaire tax proposal, instead of funding the MTA, could fund affordable housing. (Congestion pricing could simultaneously support mass transit.) A pied-a-terre tax would incentivize absentee owners to rent out their apartments, or at least get some money in exchange for the privilege of investing in the world’s strongest real estate market. The funds accrued from these taxes could be used for constructing new publicly subsidized housing and increasing the value of LINC vouchers. Repeal vacancy decontrol. Members of the Assembly like Linda Rosenthal from Manhattan have proposed getting rid of the mechanism by which 71 percent of rent-regulated apartments that become deregulated are lost. Enforce the laws meant to protect tenants. The city should combat tenant harassment and other illegal efforts by landlords to push out rent-regulated tenants and strengthen the penalties for those offenses. According to a recent New York Times investigation, “The regulatory apparatus is fractionalized, divided among three city and state agencies. It is also essentially passive. … So state regulators, relying on outdated technology, do not systematically check whether a landlord found to have overcharged one tenant regularly does the same to others. City regulators do not investigate whether an owner who has illegally gutted apartments in one building might be doing the same elsewhere. And if building inspectors fail twice to get inside to investigate complaints of illegal construction, they don’t return a third time; the complaint is tossed out.” Landlords who are caught breaking these laws face fines worth only a fraction of the enhanced profit from getting apartments deregulated. Reform mandatory inclusionary housing. The city should make the area median income bands reflect the incomes of the neighborhood rather than the whole tristate area. Integrate housing and homelessness policy. New York City government treats homelessness and housing as largely separate issues. Elected officials like New York City Comptroller Scott Stringer have criticized the de Blasio administration for increasing funding for homeless services without managing to bring down the homeless population. But no amount of spending on homelessness can put people into affordable apartments that do not exist. “I’ve been, for many years, screaming as loud as I can that we keep having these conversations separately,” said New York City Councilman Jumaane Williams, who is running for lieutenant governor. “We have two different commissioners and two different deputy mayors. We have a housing plan and a homelessness plan, and it’s infuriating because we have spikes in homelessness because of housing problems and so they should be discussed in one plan.” Put homeless families first in line for NYCHA apartments. This is one example of how an integrated housing and homelessness effort might do things differently. “Less than half of the apartments NYCHA turns over go to homeless families,” Goldfein said. “They’re giving out over half the apartments without any assessment of housing need. That seems like a bad use of (a) scarce resource.” Force the suburbs to step up. New York City has more than 27,000 residentsper square mile, while the New York metropolitan region has only 2,800 people per square mile. The city is not the only expensive part of the region – especially when factoring in property taxes and transportation costs. REBNY is notably silent on the low-density development restrictions in the suburbs – such as Banks’ own Westchester County town of Pelham Manor. The state should enhance affordability and create policies to fill in the suburbs with more affordable rental housing. In a 2017 report, the Regional Plan Association noted, “Over 60 percent of municipalities close to regional rail stations have zoning codes which greatly limit as-of-right multi-family housing, and over one-quarter only allow for low-density, single-family development that keeps communities exclusively wealthy and white.” The RPA recommended that “(suburbs) allow for and encourage multifamily and mixed-use development in proximity to all train stations, to create walkable, transit-oriented communities.” Since 2010, New York City has added 447,565 residents – about as many people who live in Miami. Hundreds of thousands more are expected to come by mid-century. The city, indeed the whole region, cannot accommodate so many newcomers without people being forced onto the street unless it builds housing for all of them – rich and poor alike.