Updated Plan Includes Infusion of Additional $1 Billion Largely from NYC Housing Development Corporation Reserves – Not Taxpayer Dollars – Which Rose Even as Other Housing Finance Agencies across the Nation Faltered

The Mayor's Remarks as Prepared for Delivery at NYU’s Furman Center for Real Estate and Urban Policy for the Inaugural Event of its New Institute for Affordable Housing Policy Follow:

“Thank you, Ellen, and good morning, everyone. I’m delighted to be here for many reasons. NYU has always had a special place in my heart, because of the role it’s played for important women in my life. My mother graduated from here, and my youngest daughter also recently completed her work at NYU’s Gallatin School, for graduation in May. The Gallatin School actually allows you to create your own major. If they’d done that when I was going to college, I probably would have tried to major in Home Brewing.

“I want to thank the co-directors of the Furman Center for Real Estate and Urban Policy, Vicki Been and Ingrid Ellen, for their great work and for inviting me here today. I want to congratulate everyone associated with the Furman Center on today’s launch of your new Institute for Affordable Housing Policy. And I want to thank Ron Moelis, the CEO of L&M Development Partners, for providing the seed money that will grow this institute.

“Let me repeat what is something of a mantra for us at City Hall: Our policies – on public safety, education, reducing poverty, improving public health, and creating affordable housing, too – are all data-driven. So we’re looking forward to very productive input from this new research institute, to help shape New York City’s affordable housing policies and programs over the next four years.

“That makes this the perfect place to talk about the next four years, and to present an update of our administration’s affordable housing plan: The New Housing Marketplace Plan, which we originally announced in 2002, and which we expanded in 2006.

“To begin, let’s talk about the housing environment we now find ourselves in. Even in the best of financial times, creating and preserving affordable housing in New York City is a challenge. And these are, as we all know too well, far from the best of times. The collapse of the housing market – the dramatic trigger for the worldwide financial meltdown of 2008 – has, thankfully, not been as disastrous here as in many other parts of the U.S. But it’s certainly been bad enough. The private market financing so many of your organizations rely on to fund low-income housing development has dried up. Despite signs of hope in the economy, here and nationally, foreclosure activity, particularly in Southeast Queens, Central Brooklyn, and other communities, is on the rise. Many apartment buildings bought at steeply inflated, speculative prices are now in financial distress and at risk of landlord neglect – jeopardizing the well-being of tens of thousands of tenants. And unemployment, depleted savings, and rising debts have combined in a perfect storm, threatening many New Yorkers who’ve worked hard to be part of the great American dream of homeownership with the loss of their homes.

“Those are grim realities – and we have to face them squarely and address them boldly. But we also have to recognize that they don’t compose the entire picture.  Not by a long shot. The housing ‘glass’ in our city isn’t empty – or even half-empty. Because the reality is that our Administration’s affordable housing plan – the New Housing Marketplace Plan – continues to profoundly transform New York’s housing environment – for the better.

“Just consider these facts. Since 2002, we’ve funded the creation and preservation of nearly 100,000 units of affordable housing throughout the five boroughs. That’s enough to shelter the entire population of Pittsburgh. In no small part because of those efforts, the most recent independent housing survey mandated by our City Charter rates our housing stock in better condition than at any time on record. And the supply of housing has also reached record levels, outpacing the rate of our population growth. During 2009 – one of the worst years in housing in a very long time – New York City still created and preserved 12,500 units of affordable housing – almost as many as the entire State of California accomplished during that same period.

“But of course, many people, including many of you here today, have asked yourselves, and asked us, too: With all the difficulties in the market, and with the hard budget choices government faces, can New York keep it up? Or like cities across the nation, will we have to scale back? Will we have to compromise the goals of our New Housing Marketplace Plan: Building and preserving 165,000 units of housing – enough for half a million New Yorkers – by the year 2014?

“I’m here today to give you a one-word answer: Fuhgeddaboudit. We’re not cutting back.  We’re not turning back. We’re still on course to hit our affordable housing targets on time.

“As you all well know, during the boom years, the costs of construction really rose, and we’re also now operating in an environment with decreased private market equity. To meet our aggressive goals in spite of these conditions, we are pumping $1 billion more into the New Housing Marketplace Plan, raising the total investment to $8.5 billion.

“Today, I’m going to explain where that money is coming from, and also spell out the four parts of our strategy that will help us meet our goals – and protect our invaluable public housing stock, too – even in these hard financial times.

“The four elements of our strategy are:

• Creatively exploiting private market forces;
• Vigorously combating residential foreclosures;
• Employing innovative – and fiscally responsible – financial management;
• And capitalizing on the combined talents and resources of government agencies and our private and non-profit partners.

“Now let me address each element of that strategy, starting with the first: Our creative use of private market forces for the public good. That’s an idea that’s at the heart of the New Housing Marketplace Plan. For example, the conventional wisdom has always been that a hot housing market is the deadly foe of affordable housing. But when our housing market heated up, we made it our ally, not our enemy. Our policy of inclusionary zoning used market incentives to encourage construction of affordable units in new developments.

“Now, with the downturn in the housing market, we’re pivoting to make that our ally, too. Even as we keep pushing ahead on housing production – in Hunters Point South, in Coney Island, and all across the Bronx – today’s slower market lets us employ policy tools that make preserving affordable housing attractive, too.

“When the housing market was hot, we had a hard time persuading developers to make long-term contractual commitments to affordability. With the sky seemingly the limit on where rents were headed, there wasn’t much incentive to do that. Today, conditions are quite different and that makes our property tax incentives, our low-interest refinancing and rehabilitation loans, and other City subsidies that come with making long-term affordability commitments, a lot more attractive than they were at the height of the market.

“We’re going to use those strategies to lock in affordability in housing – for terms of at least 30 years, and in some cases longer – throughout the city, for more and more New Yorkers. We are, for example, seizing this moment to make owners of Mitchell-Lama developments in our city an offer we hope they won’t refuse: the offer of low-cost financing, in return for guarantees to keep their stock of housing affordable for middle-class New Yorkers.

“Our goal is to ensure that every existing Mitchell-Lama development – all of which seemed imperiled just a few years ago – remains safely in the affordable housing fold. And to address a similar problem – the number of stalled condo projects in our city – along with Council Speaker Christine Quinn, we’ve developed a ‘housing asset renewal program.’

“It uses an array of City incentives to convert those projects into affordable apartments. And, yes, the acronym of this program is ‘HARP.’ That was a stipulation from Christine Callahan Quinn, who is just a little bit Irish, in case you were wondering.

“The second element of our strategy focuses on preserving affordable housing by combating foreclosures. As we announced in last month’s State of the City, we are mounting the most robust anti-foreclosure effort of any city in the nation. And we’re attacking that problem on every front. Commissioner Rafael Cestero and his team at the Department of Housing Preservation and Development are launching a $10 million program to help at-risk homeowners refinance mortgages at reasonable rates.

“The Department of Environmental Protection is throwing out a lifeline to nearly 2,000 homeowners in the early stages of foreclosure by temporarily freezing their water debts to the City. The Center for New York City Neighborhoods, which our Administration and the City Council founded to help head off foreclosures, has assisted some 6,300 homeowners across the city.

“The Department of Consumer Affairs is out knocking on doors across our city, telling New Yorkers how they can keep home loan scammers at bay, and protect their own homes. And their Office of Financial Empowerment, working in partnership with the non-profit ‘Neighbor-Works America,’ is stepping up foreclosure-prevention efforts in targeted areas of Manhattan, the Bronx, and in Queens. But all that is just the beginning.

“We’re also taking steps to prevent foreclosures looming over some large developments – foreclosures that would hurt innocent tenants and whole communities. I firmly believe that the private housing market should determine the ultimate outcome in such foreclosures. But at the same time, tenants shouldn’t bear the brunt of bad business decisions that were not of their making. So our Administration will keep a close eye on the resolutions of these cases.

“We want to ensure that they’re done fairly, promptly, and that there’s rational provision for reinvestment, not abandonment. And in cases where buildings are suffering disinvestment and neglect, and the health and safety of the tenants is put in jeopardy, we’re also taking immediate action. As we announced in the State of the City, we’re creating a $750 million fund for the rescue of such distressed apartment buildings.

The City’s housing finance agency, the Housing Development Corporation, is providing $550 million – the lion’s share of those funds. It’s a dividend for our city resulting from HDC’s very prudent and productive management of its assets – a subject I’ll have more to say about in a few minutes. The other monies for this purpose are coming from the Housing Acquisition Fund that we established in 2005, in cooperation with the nation’s largest non-profit and philanthropic underwriters of affordable housing.

“Low-interest loans from the fund will be used to rehabilitate the homes of some 10,000 New Yorkers – and in the process, safeguard the safety and quality of life for many thousands of their neighbors, which would otherwise be seriously undermined by housing neglect and foreclosures on such a large scale. And while we’re on the subject of preserving our city’s large private apartment complexes:

“Let me speak for a moment about the extraordinary efforts chairman John Rhea and his team at the New York City Housing Authority are making to preserve our city’s large-scale public housing. NYCHA developments are the home of some 403,000 people.  That’s roughly one out of every 20 New Yorkers – more people than live in St. Louis or Minneapolis. Currently, John is overseeing a major upgrade and modernization of public housing, using $423 million in Federal stimulus funds. 

“Even more importantly, he has put together a public-private financing plan that will leverage Federal funds for the long-term operating needs of some 18,000 NYCHA units. They’re in developments that have never before qualified for Federal funds, because they were financed locally.  Talk about no good deed going unpunished! John’s plan would go a long way toward making NYCHA financially solvent, and ensuring good living conditions for NYCHA tenants.

“So I want to remind you all today:  There’s a March 17th deadline for enacting the necessary local and State legislation in support of this NYCHA plan. Please urge the City Council and Albany to pass those laws.  This is one of the most important steps that we can ever take to preserve affordable housing in New York City.  Let’s not pass it up!

“John’s plan for NYCHA is a gold-star example of the kind of sound fiscal management that our Administration prides itself on and employing such innovative and responsible fiscal management is, in fact, the third prong of our four-prong strategy to meet our affordable housing goals.

“New York City is fortunate to have the best public financier of affordable housing in the nation today. I’m talking about the City’s Housing Development Corporation. Last year, HDC was, in fact, the Number 2 affordable housing lender in the entire nation.  The nearly $1.5 billion it provided was only, and only barely, exceeded by the Bank of America – which operates in a national, not local, market.

“Over the past two years, the finances of other housing agencies across the nation have suffered enormously. The State of California’s housing finance agency, for example, required a $5.4 billion Federal bailout just to stay afloat. Housing agencies in Illinois, Florida, and other states are in bad shape, too.

“Now, consider this contrast: Under President Marc Jahr’s expert management, HDC’s financial resources have actually grown in value right through the recession, even as they’ve also helped us create thousands of units of affordable housing. The value of HDC’s assets has increased from $8 billion to $10 billion during the past two very difficult years.  And HDC’s bonds have retained their very strong ‘Double-A’ rating.

“Here’s the bottom line when it comes to our affordable housing. To complete the New Housing Marketplace plan we’ve had to find a way to increase funding from the original estimate of $7.5 billion to a new projected cost of $8.5 billion, as I said at the top of my remarks. Clearly, we’re in no position to use scarce tax dollars to fill this gap. In fact, falling City revenues have forced us to shrink HPD’s capital budget.  But because of HDC’s prudent and productive investments, we’ve been able to fill the holes in the New Housing Marketplace Plan budget. That includes funding our anti-foreclosure efforts too. The public’s money managers don’t often get the credit they deserve.  It’s not the most exciting, glitzy profession. But let me tell you: Today, HDC is the affordable housing cavalry riding to the rescue of New York City!

“Fourth, and finally, the New Housing Marketplace will succeed because of the strong collaboration that’s been its hallmark from the start. And in today’s perilous housing environment, collaboration among City agencies, and also with you, our partners in the private and non-profit sectors, is more important than ever. Our frontline housing agencies – HPD, HDC, and NYCHA – all work together closely in the New Housing Marketplace. But they’re not alone.

“I mentioned what many City agencies are doing to battle foreclosure. Let’s not forget what others do on other fronts, too.  The Department of City Planning has guided the rezonings that have unlocked the potential for new affordable housing from Jamaica to the South Bronx. The Department of Buildings rewrote a long-outdated Building Code, making it easier to construct new housing in our city.

“We also benefit from our strong collaborative relationships with the State Department of Housing and Community Renewal, the State’s Housing Finance Agency, and also with the federal Department of Housing and Urban Development. And the major foundations and philanthropies that have pulled together to support the New Housing Marketplace Plan have created a model now duplicated in cities and states across the nation.  

“Our affordable housing allies also include the people in this room: The leaders of our city’s affordable housing community.  New Yorkers are fortunate to have you.  Your experience and sophistication – your policy savvy and your street smarts – can’t be matched in any other city in the nation.

“We’ve been through quite a lot together.  We launched the New Housing Marketplace Plan in the teeth of the post-9/11 recession. It was a time when many thought that New York City was finally down for the count. We showed them wrong.  Our city came roaring back.

“We’ve been partners through good times and bad since then. And now, in the face of the worst recession in more than 60 years, we’ve worked especially hard to save this city and the neighborhoods we love. Some of us are old enough to remember what New York was like when the city seemed to hit bottom in the 70s. We saw what decades of housing abandonment and neglect did to our communities. And we’re not about to let it happen again. Not now.  Not ever.

“During the past eight years, we’ve made so many of the right choices for this city. Crime is at an all-time low. Our public schools have improved dramatically. We’ve added significantly to the best system of municipal parks and playgrounds in the nation. And we’re creating the affordable housing that working and middle-class New York families need.

“For all those reasons, we’re poised to come out of the recession in better shape than any other city that I can think of.  The short term will test us – no question about it. I’ve never sugar-coated the challenges we face – and I’m not going to start now. We will have to be even smarter, more efficient, and harder-working than we’ve been in the past.

“But we’ve known tough times before. And if we work together, and remain confident and strong during the difficult days ahead, we’ll see all our hard work for this city be rewarded. And we’ll have the satisfaction of knowing that the best days for New York are still to come.  Thank you all, and God bless.”

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