State's Budget for Affordable Housing Undermines Job Creation and Federal Stimulus

NEW YORK, NY (02/20/2009)(readMedia)-- The New York State Executive Budget's plan for sweeping up to $270 million in excess revenues from the Battery Park City Authority into the State's general fund in a budget-balancing gambit pulls the sparkplugs out of the affordable housing industry's engine of job creation at the worst possible time for New Yorkers.

Affordable housing needs are getting worse. Homelessness is at record levels. The state lost 122,000 private sector jobs in 2008. And, New York City's 7.4% unemployment rate is now 45% higher than it was a year ago.

Stripping $270 million from the Authority has the effect of draining $270 million from New York City's prospective pool of capital for affordable housing. This loss can cost the City upwards of $2 billion more in financing from other sources; it can forestall production of more than 7,000 new apartments. It can stymie creation of more than 11,000 local jobs during construction. And, it can fail to secure the thirty-years of consumer spending by residents of the completed apartments that would sustain more than 100,000 jobs during the term of project financing.

These are the anticipated costs of depriving the City of funds essential to achieving its New Housing Marketplace goals and capitalizing the $400 million Affordable Housing Trust Fund that was established in the revamping of the 421a program.

And, that's not the end of the damage.

The Executive Budget also proposes cutting $111.5 million from the State's own capital programs (Housing Trust Fund, Affordable Housing Corporation, Homes for Working Families, Homeless Housing Assistance, and the Housing Finance Agency's All Affordable and Mitchell Lama Preservation). This cut sacrifices more than $400 million in financing from other sources; it foregoes production of more than 2,00 new units; and, it abdicates on creating more than 3,700 jobs during construction and on sustaining more than 34,000 jobs through residency.

Taking $381.5 million in capital away from investment in affordable housing will more than cancel out the stimulus effect the State can expect from the $245 million in federal HOME and Low Income Housing Tax Credit funds it anticipates receiving through the American Recovery and Reinvestment Act.

And, taking $381.5 million away from capital investment in affordable housing is not the way to meet the State's unenviable challenge and responsibility to balance its budget and create jobs at the same time.

Indeed, capital investment in affordable housing is now more important than ever to stimulate job creation with minimal impact on the State budget. Here's why.

? Capital investment for affordable housing is a highly cost-effective means to create jobs; the cost-per-job created compares favorably with spending on other essential infrastructure and economic development projects.

? Capital funds will be bonded. The principal amount will not depend on the State's receipts of taxes and other revenues, and it will not have a proportional impact on the state's cash-flow needs. The annual debt service costs will be offset - in part and, perhaps, in whole - by taxes and revenues the State will receive from the construction and residency of these units.

? The State's and City's housing agencies and the affordable housing community have the leadership, capacity and experience to get the job done.

? An estimated 15,000-to-20,000 affordable and supportive housing units are available for construction in New York City and across the state during the next 18 months; production of 17,500 units could generate an estimated:

? 26,400 local jobs in construction and supporting businesses during construction

? 6,600 local jobs annually, or 266,000 local jobs over the term of the financing, due to consumer spending by residents of the completed developments

? a cumulative impact of 292,400 local jobs created and sustained from construction through residency during the term of the financing.

Revving up affordable housing's engine of job creation makes much more sense than shutting it down.

Housing First! is pleased to join with our fellow advocates on the steps of City Hall today to reassert the principle that the Battery Park City Authority's excess revenues should be used to finance more affordable housing.

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