Housing for the Rest of Us: Spring Creek.

This is the first in a series of discussions of housing up and down (well, down and up) the income scale. Three projects will be discussed in detail, with posts separated by particular issues. The first project is Spring Creek Houses in East New York, the result of a public-private partnership that aims to provide home ownership to low- and moderate-income residents. Today’s discussion is about housing policy and funding, and the site. Later in the week will be a post about the proposed housing units.

The latest real estate bubble did not make New Yorkers more attuned to the significance of home ownership and value; it simply made the tone a bit more shrill. As a friend noted upon arriving, only two things are discussed in this town: where you live, and how you get there.

The recent trends indicate record home ownership in the city. Even though the prices in some areas make purchasing a seemingly irrational economic decision, the effects of this growth are being felt in the rental market, with rates being pushed (though the key indicator — ratio of income spent on housing — has grown more due to flat or falling real wages).

The latest numbers show, nonetheless, it is far better to own. And given our relatively low median wages (compared to the cost of living across the city), the percentage point changes that many of us look at as a step up or down in vacation plans are more keenly felt when trying to support a family on $36,000.

Recent data shows that the poorest neighborhoods pay the largest proportion of their monthly income for rent, even when public or Section 8 housing is available. A red-zone indicator is 50% or greater of income spent on housing. Across the board, a smaller number of homeowners spend over 50% on housing in all classes (except those is public housing and rent controlled tenants in Manhattan).

There are two reasonable conclusions: build more public housing, or get more poor residents into homeownership opportunities. Given the history of public housing, and urban ‘re-development’ (many of our most blighted neighborhoods used to be stable communities with a high proportion of resident ownership until Robert Moses decided that white people from Connecticut shouldn’t have to take the train to the city), home ownership seems far preferable.
Either one is a clear commitment to subsidy; given that unit construction is still part of any program, helping increase ownership doesn’t seem like a bad idea. But I’m not in possession of any particular knowledge to make this case. It just seems pretty rational.

The Bloomberg administration agrees, though less than the Ferrer administration planned to — Bloomberg is committed to creating 60,000 new units, whereas Ferrer was pushing for double that. Of course, in both instances, some numbers massaging upped those numbers, and regardless of real or inflated projects, Bloomberg is lagging a bit.

Are either that impressive? Well, the city has a current inventory of just over 3.2 million units, making 60,000 a 5% increase over 5 years. Overall additions to housing over the past ten years are considerably less, at 16,000 (meaning in increase, on average of one-half a percent between 1994 and 2004).

In terms of aiding the most needy, the increase is starker. Of the current inventory, just under 10% is public or Section 8 housing, meaning if Bloomberg hits his target, he will realize a 20% increase. What I couldn’t find were historic numbers, but my best recollections indicate that even this boom won’t bring the inventory back in line with numbers as recent as the early 80’s.

So how does it get made? In teensy increments, most of the time. Given the resources available (a half-dozen governmental agencies, several major research institutions, scores of NGO’s, community groups and churches, all whom have an interest in the issue), it’s amazing the more isn’t done. I’m not here to critique the will or assess the process (since I’m largely ignorant), but to talk about how a thousand homes get built.

Back in the 1980’s, a housing program grew out of the combined efforts of the Industrial Area Foundation (founded by legendary social antagonist Saul Alinsky) and local churches with the goal of building housing for ownership in Brooklyn and the Bronx. Known collectively as the Nehemiah Houses, over 3,000 houses have been built to date (part of a larger program sponsored by the city that added 13,000 units).

The current effort is bringing another 690 homes over the next several years to a former landfill in East New York. It’s a particularly brutal location. I don’t know East New York at all, so perhaps it doesn’t stand out as distinct, but relative to just about anywhere you or I have been is certainly is. Given the site prep has only begun, it’s hard to say what the final form will be. No doubt the immediate context will be just fine, but the views beyond are the issue — and they are fixed, and unfortunate. The view with the most potential — looking south to Jamaica Bay — is obscured by three immutable landmarks: the Belt Parkway, a Ratner Shopping Enterprise, and the remainder of the landfill, which rises enough in the sky to eliminate any sense that one is adjacent to water.

Working from the existing (mapped) grid — a revision would have been even more time consuming, an acute issue for a project that is over ten years in the making — a smaller scaled grid has been inserted, with a small amount of open space reserved. The best that could come of the relationship with the shopping complex would be the creation of an entrance fronting the development, but this is unlikely.

All told, it’s a solid, direct, planning exercise, marked both by a good set of principles and tempered by the strictest possible economic controls. There is little room for amenity because the public portion of this project is courtesy HPD (Housing Preservation and Development), which agreed to fund site work in exchange for the commitment to build the 700 units. The total cost will be upwards of $25 million (the expected investment is in the neighborhood of $250,000 per unit). The rather sizable figure is a result of the current condition. As a landfill, it requires topsoil remediation (digging, removal and re-grading), methane monitoring, streets and all the attendant infrastructure.

It’s this sort of investment that gets to the crux of the necessary commitment. That’s a big number for just about any governmental body. But it is also necessary to fairly measure opportunity cost for this versus other investments. As a comparator, Goldman Sachs received something on the order of 12 times this investment to retain an undisclosed number of jobs downtown (it’s questionable how many people they could have successfully relocated to Jersey City). And that cost is in line with construction costs for public housing units elsewhere (assuming nominal site prep). Considering the sad state of the lot now, the cost of bring high value real estate (owned homes bring far more stability to a blighted area, and almost always lead to overall economic expansion) makes this look like a pretty savvy investment. It has limited recurring costs and opens the possibility of spurring additional interest in an underdeveloped area (compare that to Goldman Sachs, which decided to build in horribly disadvantaged Battery Park City).

And if you were wondering about interest, well, the first stage lottery (about 120 units) resulted in twelve thousand applicants. That’s right: if the city could arrange to build infill housing in all the open lots of East New York, they would have thousands of qualified candidates ready and waiting. What’s stopping the city? Well, the obvious answer is money — but perhaps also willpower. After all, public spending is only a matter of priority. And as you try to measure that priority, bear in mind this is the largest subsidizing housing project current underway in the five boroughs.

NEXT UP: okay, everybody wants them, and they are getting built, at long last. But what do they look like?

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.
  • Archives