Real Estate

Developers Back NYC's City of Yes, Seek Changes to Affordability Rules

Developers support City of Yes but seek changes to 20% density bonus and 60% AMI requirement.

By Tal Alexander

7/11, 08:03 EDT

Key Takeaway

  • Developers support the City of Yes for Housing Opportunity but express concerns over replacing the Voluntary Inclusionary Housing Program, which allowed off-site affordable units.
  • The new Universal Affordability Preference offers a 20% density bonus for permanently affordable housing but requires units to be set aside for tenants earning 60% AMI, down from 80%.
  • The proposal aims to address NYC's housing crisis by eliminating parking mandates, legalizing accessory dwelling units, and allowing office-to-residential conversions.

A New Housing Paradigm in New York City

The City of Yes for Housing Opportunity Text Amendment, spearheaded by the Adams administration, aims to reshape New York City's housing landscape by incentivizing the development of affordable housing. Central to this initiative is the Universal Affordability Preference (UAP), which offers developers a 20 percent density bonus if the additional floor area is dedicated to permanently affordable housing. This proposal, however, has sparked concerns among developers who fear it may replace the existing Voluntary Inclusionary Housing Program (VIH), which allowed for off-site affordable units and required a higher average area median income (AMI) threshold of 80 percent, compared to UAP's 60 percent.

Balancing Incentives and Costs

The UAP's requirement for affordable units to be set aside for tenants earning an average of 60 percent of the AMI, down from the 80 percent under VIH, presents a significant shift. Projects in high-density R10 districts, primarily in Manhattan, could previously be built to a floor area ratio (FAR) of 12 under VIH, but UAP changes this to a one-to-one bonus ratio. This adjustment may deter developers from including affordable units due to the high costs of land and construction, especially when seeking property tax breaks like 485x, which now includes new construction wage requirements. The Real Estate Board of New York (REBNY) has flagged this as a "significant risk," advocating for the retention of VIH or allowing developers to sell development rights generated from VIH for a minimum of 15 years.

Broader Implications for Housing Policy

The proposed text amendment aims to address the city's housing crisis by eliminating parking mandates in new residential projects, legalizing accessory dwelling units (ADUs), and allowing more office-to-residential conversions. It also seeks to create new residential districts with FARs of 15 or 18, though these changes would still require rezoning and land use review processes. The amendment's goal is to build "a little more housing in every neighborhood," a necessity underscored by the city's vacancy rate plunging to 1.4 percent last year. However, community opposition, particularly in suburban areas of the outer boroughs, has focused on parking, legalizing ADUs, and the potential bypassing of the city's lengthy land use review process.

A Comparative Perspective: Vancouver's Housing Strategy

Drawing parallels to Vancouver's recent housing policy changes provides additional context. Vancouver's city council voted to eliminate and narrow "view cones" that restricted development, allowing for higher towers and increased density. This move, part of Mayor Ken Sim's strategy to address the city's housing shortage, aims to add as many as 75,000 housing units over 30 years. The decision, while controversial, highlights the tough choices cities must make to balance development with preserving quality of life. Vancouver's approach, which includes state-backed loans and expanding the use of mass timber in taller buildings, underscores the multifaceted strategies required to tackle housing crises.

Navigating the Complexities of Housing Reform

The City of Yes for Housing Opportunity Text Amendment represents a bold step towards addressing New York City's housing shortage. However, the transition from VIH to UAP must be carefully managed to avoid disrupting the existing housing pipeline. REBNY and other stakeholders have called for a phased implementation to ensure the proposal produces more housing rather than less. The amendment's success will depend on balancing incentives for developers with the need for affordable housing, navigating community concerns, and ensuring transparency in the development process.