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Price Choppers


Friday, May 12, 2017


Long Island Business News


David Winzelberg
Huntington Councilwomen Susan Berland and Tracey Edwards: Trying to make housing more affordable in places like Huntington Village. || Photo by Judy Walker
Huntington Councilwomen Susan Berland and Tracey Edwards: Trying to make housing more affordable in places like Huntington Village. || Photo by Judy Walker

Matthew McDonough: CEO of Babylon IDA at Copiague Commons affordable housing complex. || Photo by Judy WalkerHuntington Councilwomen Susan Berland and Tracey Edwards: Trying to make housing more affordable in places like Huntington Village. || Photo by Judy Walker

Faced with an increasingly strong demand and very weak supply of affordable rental housing, a couple of Long Island municipalities are enacting new laws to force developers to address the situation.

The movement comes at a time when Long Island is facing a rental crisis, namely that the cost for so-called affordable housing here does not reflect what many in the workforce can actually afford to pay.

The Town of Babylon Industrial Development Agency adopted a new policy this week that requires any new rental housing development that receives IDA benefits to set aside 20 percent of the apartments for residents earning up to 60 percent of the area median income (AMI). Based on current numbers, the affordable units would be available to one person earning no more than $44,600 a year; two people earning up to a total of $51,000 a year; three people earning up to $57,350 a year; or four people earning no more than a total of $63,700 annually.

Area Median Incomes for Nassau and Suffolk CountiesBabylon’s current housing policy also requires that 20 percent of new units be dedicated as affordable, but it allows prospective renters or buyers to earn up to 130 percent of the AMI. And like most towns with similar rules, Babylon lets developers avoid actually building the lower-priced units by paying into an affordability fund. The new IDA rule doesn’t allow for that option.

Specifically, the IDA’s new policy calls for rents of affordable apartments to be no greater than 70 percent of the fair market value for Nassau and Suffolk counties set by the U.S. Department of Housing and Urban Development.

Based on current numbers, that means monthly rents for a one-bedroom apartment would be capped at about $1,075 and about $1,315 for a two-bedroom unit.

The IDA policy also allows for income levels of qualifying tenants to rise to 80 percent of the AMI at the time of recertification.

Matthew McDonough, CEO of the Babylon IDA, said the new policy was needed because the lack of affordable housing options on Long Island is having a negative effect on the business community struggling to retain their workforce or attract the talent needed for growth.

“Establishing this aggressive affordability policy will create housing options that actually reflect what the average worker can afford and we hope by doing this we set the stage for all future housing developments on Long Island,” McDonough said in an IDA statement.

Kyle Strober, executive director for the Association of a Better Long Island, lauded the new housing policy and hopes it will serve as a regional model.

“The Babylon IDA continues to recognize that programs that encourage affordable housing on Long Island are key to attracting young professional workers back to Long Island and thereby reverse the brain drain,” Strober said via email.

The IDA policy was crafted in collaboration with the Long Island Housing Partnership, which has long advocated for increasing the area’s affordable housing stock. Peter Elkowitz, LIHP’s CEO, called the IDA policy commendable.

“The IDA benefits are a subsidy to create more affordable housing,” Elkowitz said. “So I think that’s a real good thing and there’s some consistency as well.”

And while developers often tout new housing as “affordable” or attach a “workforce” label to their projects, what is actually affordable depends on a variety of factors, such as location, income, rents and product.

Elkowitz points out that the affordable term is a very relative one.

“Affordable for whom? What part of the population?” he asks. “Your affordability is different from mine which is different for someone else.

We all don’t have the same affordability and that’s where this becomes convoluted and confusing.”

Elkowitz said you have to look at what incomes you are making the housing affordable for and how it affects the income the developer can expect from the project.

“And that’s really critical,” he said. “The developer is going to have someone manage the units and he has to know what the rent rolls are going to be to maintain the development.”

Theoretically, Elkowitz said that the profit from a project’s market-rate units should help subsidize the affordable portion, but acknowledges that the numbers still need to add up.

2017 Fair Market Rents for Nassau and Suffolk“If it’s not financial feasible for the developer, it’s not going to help anybody,” he said.

Even though almost all mandates that require new developments to have an affordable component come with a reciprocal density bonus, the sharp reduction in rent revenue makes it nearly impossible to build them without some kind of economic incentives.

Mitchell Pally, executive director of Long Island Builders Institute, says you need government subsidies to make it work.

“Especially at the lower numbers,” Pally said. “Or you need a significant number of additional units and in most cases that’s not possible on the site, or very difficult from a political standpoint, so you’ve got to provide government subsidies to make it work.”

Besides working with the Babylon IDA on its new rental housing policy, Pally also consulted with Town of Huntington officials on the town’s new affordable housing legislation it adopted this week.

Co-sponsored by Huntington Town Board members Tracey Edwards and Susan Berland, the measure requires that 20 percent of apartments constructed in commercial district mixed-use buildings be designated as affordable. The initiative came in response to a spate of pricey new rental units built over stores in Huntington Village, where many of the apartments fetch more than $3,000 a month.

“Huntington Village is a happening place with great restaurants and entertainment and wonderful shops,” Edwards said. “That’s where our young people want to live. But currently the market rate has priced them out.”

The monthly rents in the required reduced-rate apartments in Huntington will be capped at 80 percent of the area’s fair market rent, which would set them at about $1,225 for a one-bedroom and $1,500 for a two-bedroom unit. The Huntington legislation also keeps developers from “cheaping out” on the affordable apartments, which have to be the same square-footage and same quality of the market-rate units within the development.

To make the new affordable requirements more palatable to builders, the town won’t charge any fees for the lower-priced units and limits the required parking to one off-street spot per apartment.

Matthew McDonough: CEO of Babylon IDA at Copiague Commons affordable housing complex. || Photo by Judy Walker
Matthew McDonough: CEO of Babylon IDA at Copiague Commons affordable housing complex. || Photo by Judy Walker

Like Babylon, Huntington already has a law that forces new housing to have 20 percent of its units affordably priced, but only if the project gets a zoning change. Berland, who helped draft the town code that allowed for apartments over stores nearly a decade ago, said developers skirted the law because their mixed-use projects didn’t need a zoning change.

“It defeated the purpose,” Berland said. “It’s especially important for young people to live in a walkable community and it’s important to have an affordable component, so we had to legislate it.”

Just how big is the demand for affordable housing on Long Island? A look at the new 90-unit Copiague Commons apartment complex is a prime example. After a lottery for applicants filled the available units – with monthly rents between $1,400 and $1,800–there are still more than 850 people on a waiting list.

“We’re over-subscribed by more than six to one in applications for the number of units we built,” said Arthur Crower, senior project director for the Long Island region for Conifer Realty, which partnered with the Community Development Corporation of Long Island to build Copiague Commons.

For-profit Conifer has nearly 900 affordable apartment units completed or in the pipeline on Long Island and is awaiting approvals for 228 more in the Village of Hempstead. The company depends on federal, state and local tax credits which it sells to banks and other institutions to finance its projects. The public subsidies are essential, Crower says, in developing affordable housing.

“In the end, the gaps that will be created, because we can’t charge market rents, are so substantial that there’s no functional way to drive profit without some kind of public sector support to be able to do that job,” Crower said, which is why he strongly supports the efforts of local governments like Babylon and Huntington to mandate affordable rental units.

2017 Fair Market Rents for various cities“The bottom line is, in areas where rents have gone through the roof, you need a workforce who can’t afford $600,000 homes. In order to maintain a healthy economy you need economically diverse housing opportunities, and Long Island does not have them,” Crower said. “These legislative initiatives are critical to communities being vibrant. The irony is, for people who oppose the concept of affordable housing, affordable housing in the end is better for property values. Because in the end, you’re actually able to support the population that’s going to serve all of your local business interests. And by and large they’re going to live and work in the areas which they’re built and stronger local economies mean better property values. It’s just that simple.”

Babylon IDA
47 West Main Street - Suite 3
Babylon, NY 11702
Tel: 631-587-3679