urban planning

In Terms of Affordable Housing, Queens Is de Blasio’s Last Best Hope

East River Plaza, sans 40-story rooftop towers.

Another tower, another fight. This time, the action takes place in East Harlem, where the East River Plaza (you know: Costco) could one day sprout a trio of 40-story apartment buildings from its roof. We’ve memorized the script. A developer promises a handful of low-cost homes, paid for partly by the city and largely by the buildings’ more affluent residents. The community parries with indignant cries of luxury! and gentrification! Welcome to the debased debate over how to house New York’s 99 percent. We’re going to need a better conversation.

Let’s start with some realism. Bill de Blasio has staked his mayoralty on the reasonable principle that you shouldn’t have to hock your eldest child to pay the rent. But his vows mean little in a city so inflamed with money. In order to live up to his rhetoric, he would have to tame a rampaging real-estate market over which he has little control. All signs are that by the time he’s asking for another term, a New York address will have become an even greater luxury than it is now. He can’t de-gentrify hot zones or house all those who need help. What he can do is pump city money into middle-class safe zones in Queens, Staten Island, and the Bronx, and hope they don’t catch on with the artisanal-pickle crowd. It might help if the mayor copped to his conundrum. Come the next election, de Blasio will cite the numbers of affordable homes built, preserved, or in the offing. The real measure of his success, though, is not whether more New Yorkers live in subsidized housing but whether more people can afford to live in New York. Those two goals may be at odds. Welcome to the affordability paradox: The more affordable housing you build in a hot area, the less affordable that neighborhood becomes. Consider the choices in East Harlem.

1) The developers opt in to the much-reviled 80/20 program. They get to erect bigger buildings than the zoning would allow, and in exchange provide one low-cost apartment for every four market-rate units. The new towers attract more affluent residents, driving up rents in the surrounding blocks and encouraging other developers to join in the gold rush.

2) The city demands a higher proportion of regulated apartments—50 percent, say—and sweetens the incentives. The developers bet that the East Harlem market is strong enough to generate profits anyway. The remaining half of the towers quickly fills up with affluent residents, signaling that the market hasn’t maxed out yet. Rents in the neighborhood rise.

3) The project gets scrapped, pleasing neighborhood activists who want the planned towers to go away. But the pressure on East Harlem doesn’t dry up. Not building the towers means crimping the supply of both affordable and unregulated housing, and does nothing to quell demand. Restaurants open, rents skyrocket, longtime residents are forced out.

(There are two more options, both extreme, neither realistic: regulate prices across the entire city, or, as the economist Edward Glaeser advocates, remove almost all regulations that tie up new development.)

De Blasio generally embraces the best of the bad options: No. 2, squeezing as much affordable housing out of each deal as he can, and trusting that a strong real-estate market will keep the construction business buzzing. Although the population has reached an all-time high, New York functions like a brim-full bathtub: Rich people flow in from one faucet, poor immigrants from the other, and the working and middle classes spill over the sides. De Blasio is hoping that he can build a bigger tub. As progressive as he is, though, the mayor knows that you can’t just subsidize your way out of a housing crisis—especially not when NYCHA faces a rocketing budget deficit and a waiting list of 250,000. Instead, he plans to use $8 billion in public funds to unstopper another $30 billion in private investment. Affordable housing only works if someone stands to make money.

But the mayor has been downplaying the downsides of his decisions. Like every mayor, he works to make New York an ever-more desirable place to live, which means he’s trying to pull prices down and push them up at the same time. That’s the conundrum. Whatever you do to make a neighborhood more pleasant for those who live there also titillates the desires of those who don’t. He’s determined to boost public education, which is a worthy and universal goal. But at the same time, the single most powerful force of gentrification is surely the local school: Improve that, and new families will converge on the neighborhood like hippos to a watering hole.

De Blasio is stuck relying on a strong market and at the same time ruing its steroidal power. Developers don’t just build wherever they can make a profit; they build wherever their margin is highest—that is, where the market reaches its most outlandish extremes. Scott Resnick, the scion of a New York development clan, is putting up a hyperluxury tower designed by Norman Foster at 551 West 21st Street. He estimates that if he were starting the project today, the cost of land, construction, lawyers, financing, and marketing would set his break-even point at a fantastical $2,500 per square foot. With nearly 60 percent of the building sold, he’s listed the 6,200-square-foot penthouse for $50 million, or roughly $8,000 per square foot (plus private pool). Even if that’s wishful thinking, he’s still getting a rate of return that has his fellow developers salivating. The sky above West Chelsea is filled with dancing cranes, although the total number of apartments under construction isn’t even enough to satisfy all the circling gazillionaires. “I wouldn’t call it a bubble,” Resnick says. “More like a frenzy.” A progressive mayor might want to skim some more tax revenue off the priciest transactions, but he wouldn’t want to chill the craze. New York runs on money and no mayor wants to turn it away.

You don’t even have to be a Chinese oligarch to pump up prices from afar. Middle-class families all over the country are helping to push other families just like them out of New York. How? By sending their kids checks. The city’s creative industries (like magazine publishing, fashion, and performing arts) couldn’t exist without a renewable supply of the young and the underpaid whose salaries (if any) are supplemented by remittances from home. It’s a form of tribute, really. Someone has to pay for the hipness of Brooklyn, and so money flows in from Shaker Heights and Merion and Menlo Park, supporting tattoo salons, craft-beer bars, and real-estate brokers.

Meanwhile, roughly a third of New ­Yorkers—nearly 3 million people—live in quarters that suck up more than half of the household’s income. (It’s small comfort to know that the housing burden is worse in eight other cities, including San Jose and Detroit.) De Blasio has cast himself as a champion of the poor, but their struggles are part of larger pressures. Almost everyone in New York is being nudged out of somewhere, migrating from neighborhood to neighborhood, from doorman building to walk-up, from two-bedroom to studio, or leaving the city with a mixture of regret and relief. The surreal cost of housing has propelled teachers out beyond tolerable commuting distances, signaled to young college graduates who lack parental subsidies that they might want to think about Pittsburgh, and ratcheted up the pressure on affordable housing so high that nearly 60,000 people applied for the 105 subsidized apartments in a new building in Greenpoint.

So what’s a well-meaning mayor to do? Does New York’s only hope of affordability lie in a summer of spectacular crime or a well-placed riot? Are we faced with a choice between choking on affluence and old-fashioned urban decay? Surely not.

Part of the answer may lie in deeply un-chic neighborhoods like southeastern Queens. To Manhattanites, commuters, and tourists, Jamaica is where the LIRR, the subway, and the AirTrain meet. It’s also an area that is encouragingly incomplete. It has underused buildings, vacant lots, and a dearth of shopping. Andrew Manshel, an executive with the nonprofit Greater Jamaica Development Corporation, estimates that his organization could find land for 5,000 apartments without breaking a sweat, and 7,500 with a little more effort.

And yet even Jamaica is too expensive for the people most likely to live there. Enter de Blasio’s affordable-housing program. Here, where developers need to be coaxed into taking a risk, where profits are low and the market wobbly, the city can pump in subsidies and pile up an inventory of affordable housing without worrying about stoking a real-estate wildfire. It’s happening: The developer BRP will soon start construction on two towers with some 500 total units in southeast Queens that could turn the neighborhood into a permanently affordable haven. That doesn’t come close to solving the problem. For one thing, de Blasio is hoping to build 80,000 new affordable units; for another, it would be nice to alleviate New York’s economic segregation rather than increase it. But Jamaica is one of the few remaining counterweights to the commodity culture of housing. Well connected but far from cool, the area is a natural habitat for cops and teachers, not slumming financiers. “People aren’t paying a premium to live in Jamaica,” Manshel says. We can only hope that they never do.            

*This article appears in the September 8, 2014 issue of New York Magazine.

Queens Is the Best Hope for Affordable Housing