Cestero Addresses Progress, Goals and Future Plans to Help Create a More Affordable, More Sustainable and More Viable NYC 

New York, NY – New York City Department of Housing Preservation and Development (HPD) Commissioner Rafael E. Cestero delivered remarks this morning at The New York State Association for Affordable Housing (NYSAFAH) Networking Breakfast, regarding HPD’s progress on Mayor Bloomberg’s New Housing Marketplace Plan and the future course of the plan. The event which was held at the Yale Club in Manhattan was Commissioner Cestero’s first NYSAFAH meeting since returning to HPD as Commissioner earlier this year. The Bloomberg Administration’s New Housing Marketplace Plan (NHMP), an ambitious $7.5 billion initiative to create and preserve 165,000 units of affordable housing for half a million New Yorkers. Michael Skrebutenas, Deputy Secretary for Economic Development of New York State, was also a guest speaker at the event.

“The way forward begins with a recognition that New York City is a city of neighborhoods and without continued investment in affordable, sustainable neighborhoods, we cannot achieve this larger vision,” said Commissioner Cestero.  “To this end, the entire team at HPD and HDC are committed to applying a neighborhood lens to everything we do, connecting our work to the investments in education, transportation, public housing and health that are happening right next to us. And by doing so, putting New York forward as the model for what ‘Choice Neighborhoods’ means.”

During his address, Commissioner Cestero discussed the ambitious goals of the NHMP and stressed that the City is on track to fulfill that promise. While the economic climate in the country has changed drastically, the four tenets of the NHMP take on even greater relevance as the City continues to create and preserve affordable housing using the planks of that broad platform. Those tenets are: finding new land for affordable housing; creating incentives to develop housing for new populations; harnessing the private market to create affordable housing and preserving government-assisted affordable housing. The Commissioner also stressed that, in facing current economic realities, the City and HPD are examining every element of the plan and every new, market-driven innovation to continue to adapt and meet the goals that have been set. Building and preserving affordable housing in New York City neighborhoods is a central component of the Bloomberg Administration’s Five Borough Economic Opportunity Plan to create jobs for New Yorkers today, implementing a vision for long-term economic growth while strengthening New York City’s diverse neighborhoods.

A copy of HPD Commissioner Cestero’s prepared remarks are attached - 

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A more affordable, more sustainable and more viable NYC

I am very pleased to be here in front of the greatest affordable housing industry in the country.  

THE RECORD

This is my first NYSAFAH meeting since I returned to HPD as Commissioner. It is an honor to be here in my new capacity and talk to you about our progress on the Mayor’s New Housing Marketplace Plan and our current thinking about the future course of the plan.

I think that everyone here is familiar with, and has opinions on, our goal to create and preserve affordable housing for half a million New Yorkers by 2014. Half a million people – 165, 000 units.   Its is truly remarkable plan, matched only in scale and vision by the plan put forth by Mayor Koch in the 80’s, which in my humble opinion, literally saved our city.   The vision of the New Housing Marketplace plan is equally grandiose and important – to create and preserve enough affordable housing for 500,000 New Yorkers. 

We are going to reach that goal.  In fact, in the midst of this economic downturn and the precipitous drop in housing starts nationally, New York City continues to forge ahead to create quality, safe and affordable housing for all New Yorkers. 

Over the last fiscal year, despite the worst real estate market in decades, HPD and NYC Housing Development Corporation (HDC) put nearly one billion dollars in bonds and $460 million in subsidy to work, financing 12,500 units of affordable housing for New Yorkers.   Nowhere else in the country is this possible today.  Many people thought we would miss the ambitious target that we set for ourselves as well, but we were able to reach this milestone because we saw opportunities where others only saw roadblocks.

We have a strong tradition of innovation in New York City and we are putting it to the test to make sure that we meet our goals:

We were the first to use recycled bonds—we are still the only housing entity in the nation to have put this recycled cap to work—and we were the first to get the federal Tax Credit Assistance Program (TCAP) out on the streets and working for us. The funding packages for these two projects alone topped $300 million. You would be hard-pressed to find any other city or state that is doing more than we are in creating affordable housing for its residents.

This achievement speaks to the power of the partnership between HPD and HDC – whose contribution to this city is too often taken for granted.  It should be clear that without HDC, we would be able to a fraction of what we do today. Since the 2003 fiscal year, when the NHMP plan debuted, they have issued over $8.45 billion in bonds and committed more than $840 Million in corporate reserves to help us create or preserve nearly 94,000 units under the NHMP to date.

Even more impressive – at a time when many HFAs in other states across the country are seeing their reserves diminish and their bond rating lowered, HDC’s rating – in a letter just issued by Standard & Poors – remains AA.

To my friend and colleague, Marc Jahr, a resounding THANK YOU, for all you and your team do. 

Our collective accomplishments are unparalleled.

THE FUTURE

One year ago, HPD and HDC reached the halfway mark in the plan – with 82,500 units funded. Everyone in this business recognized what a great accomplishment that was. It was momentous occasion.

One year ago something else momentous occurred. Bear Sterns? Lehman Brothers, anyone? AIG? Yes, the financial giants began folding like proverbial houses of cards, collapsed by unsustainable risk and unsupportable debt.

I have a hard time believing that only a year has passed and the landscape has changed so dramatically.

Yet we continue to reach for our goals. The original New Housing Marketplace Plan, announced in another September – in 2002 – was half the size of the current plan and was created in response to a strong real estate market.

It remains a great plan—we continue to create and preserve affordable housing using the planks of that broad platform, from our inclusionary and rezoning initiatives to large-scale new construction to our work to preserve HUD assisted units —but faced with current economic realities we must and are examining every element of the plan, every new, market-driven innovation in front of us and looking at the way forward through a different lens and with a different focus.

I don’t have all the answers but I know one thing for sure:  THE BEST IS YET TO COME.

Why am I so sure?  Because of our collective history.  Faced with abandoned neighborhoods and unprecedented population decline in the 70’s we created a set of programs to rebuild our city; faced with economic crisis after 9/11 and increasing demand for affordable housing we created the NHMP plan; faced in 2005 with the hottest real estate market in recent memory, we doubled down on the plan and set forth with the largest municipal housing plan in history. 

The promise of today’s crisis, in my view, is the realization of a bigger dream that I know we all share:  A more affordable, sustainable and viable New York City.  The innovation that helps us get there will take many forms but our focus will be on neighborhoods and families. 

Any good neighborhood strategy begins with an unwavering commitment to expanding the supply of affordable housing.  Broadly, we will:

• Preserve existing stock at a time when taking assisted housing projects to market seems a million miles away.
• Reclaim units that were taken from affordable stock during heat of market with unsustainable financing
• Reposition failed luxury developments into affordable housing
• Invest in new construction that creates sustainable neighborhoods and leverages investment in education, transportation, and healthy neighborhoods.

The way forward begins with recognition that New York City is a city of neighborhoods and without continued investment in affordable, sustainable neighborhoods, we cannot achieve this larger vision. To this end, the entire team at HPD and HDC are committed to applying a neighborhood lens to everything we do, connecting our work to the investments in education, transportation, public housing and health that are happening right next to us.  And by doing so, putting New York forward as the model for what “Choice Neighborhoods” means. 

We cannot succeed in our goal of making New York more affordable without focusing attention and resources on ensuring that the housing stock we have is sustainable and high quality.  We are lucky – the financial strain of today’s market has not yet led to widespread decline in housing quality.  But there is reason to worry.  We have seen this movie before and know that too often financial distress leads to physical distress.  For these reasons we will marry in new ways our proactive code enforcement efforts with our efforts to employ sustainable and energy efficient retro-fit techniques to more of our existing stock.

At the end of the day, we have an underlying commitment to stabilizing families.  In New York today, we have more families than ever who are facing hardship as a result of the economic crisis.  We cannot and will not let these families go unsupported.  By expanding our efforts at preventing the scourge of foreclosure and working with our sister agencies around the city to seek new ways to expand housing options for families facing housing dislocation during this crisis, we will increase HPD’s emphasis on connecting our tools to families most in need.

In doing all of these things and more, we will not only create enough affordable housing for 500,000 people but we will make New York City’s neighborhoods more affordable and sustainable for the long term.

Conclusion

Clearly we have a great deal of work to do—but having fielded the largest municipal housing program in the country not once, but twice, and having, in effect, shown the rest of the nation how to do it right, we are not about to squander the opportunities we have before us now. In all, the City of New York, with its partners—all of you—is on course to reaching the Mayor’s goal of preserving or building 165,000 units by 2014. We will do this by confronting the challenges and capitalizing on the opportunities presented by current market conditions.

We share credit for the successes of the past and we must work together to be deserving of such credit in the future. We have unprecedented power and the resources to exploit this market, make it work for us and for the neighborhoods and families of this city.  Our legacy will be making New York City a more affordable, sustainable and viable City for current residents and those who will call New York home in the future. 

The best is yet to come. 

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NYC Department of Housing Preservation and Development (HPD)

HPD is the agency responsible for carrying out Mayor Michael R. Bloomberg’s NHMP and its mission is to promote quality housing and viable neighborhoods for New Yorkers. It is the nation’s largest municipal housing preservation and development agency. Responsible for implementing Mayor Bloomberg’s New Housing Marketplace Plan to build and preserve 165,000 units of affordable housing. HPD also actively promotes the preservation of affordable housing through education, outreach, loan programs and enforcement of housing quality standards. For more information, visit www.nyc.gov/hpd.

New York State Association for Affordable Housing (NYSAFAH)

The New York State Association for Affordable Housing, formed in 1998, is a trade association for private sector organizations throughout New York State that are involved in affordable housing, with the goal to increase housing programs and subsidies, to be a voice for professionals in the field, and to inform members of new opportunities and developments. Membership includes developers, general contractors, attorneys, architects, lenders, equity investors, and other housing professionals. For more information visit www.nysafah.org.