Winning That One in a Million
MOST New Yorkers would greet the prospect of a $51,000 two-bedroom co-op in Chelsea with slack-jawed wonder, since the average price for an apartment in the city now exceeds $1.4 million.
They might react the same way to a three-story house in Park Slope priced at $255,000 or to a one-bedroom in a brand-new Harlem condominium for $147,500.
But these types of deals do exist. They are offered through city housing programs intended to provide affordable homes to middle-income New Yorkers. The programs set income restrictions for buyers, and most of the homes can be had only by entering lotteries, which carry odds that are barely better than those for most casino jackpots.
The people getting these homes include city workers, young professionals, growing families and empty nesters. Many of the apartments are in neighborhoods like Harlem in Manhattan, Jamaica and Far Rockaway in Queens, Fort Greene and Bushwick in Brooklyn and Mott Haven in the Bronx.
As part of Mayor Michael R. Bloomberg’s 10-year housing plan, the city produced 1,676 new middle-income housing units in 14 different developments within the last two years, and there are 26 more in the pipeline. The ones that have been completed have been built by nonprofit organizations and private developers with the help of various city subsidies. Most have annual income restrictions that range from $56,700 to $124,075 for a family of four.
The city also seeks to preserve existing middle-income apartments, like the thousands in Mitchell-Lama complexes and similar affordable-housing projects that were built from the mid-1950s to the mid-1970s. These have been dwindling in number as many have been converted to market-rate apartments in recent years.
As for new construction, there seem to be as many types of housing and variations on rules and restrictions as there are projects. They range from single-family houses to 38-story glass towers where only about 20 percent of the apartments are set aside as affordable housing. Income limits may apply for several decades, which can limit resale value. Or the restrictions may run out after as little as five years, after which homeowners can sell at market rates.
Martha Nadell, an English professor at Brooklyn College, part of the City University of New York, moved into a three-story town house in Park Slope last July that cost her $460,000. It has two rental apartments, which she must let at affordable rates for at least seven years.
She entered a lottery that eventually drew 600 people after seeing an article in The Carroll Gardens Courier about four town houses being redeveloped by the Fifth Avenue Committee, a Brooklyn community-development group. She knew she would be eligible because she earns well under the project’s income limit, $88,625. “When they offered it to me, at first I could not believe it was happening,” said Professor Nadell, 40, who has lived most of her life in Brooklyn. “And then I was terrified.” She said the thought of having to be a landlord was daunting, as were “all these rules and regulations that seem completely opaque and incomprehensible to me.”
But since moving in, she has become a vocal champion for the types of city programs that made her home available to her and is even working on ways to educate other faculty members at Brooklyn College about these programs.
She learned that another house in her lottery, a single-family house priced at $255,000, went to a family of six. The father works for the Metropolitan Transportation Authority, and the mother runs a day-care center. Another house also went to a transit worker.
“We all have city or state jobs,” Professor Nadell said, “and this is sort of like the middle-class core of a city, and yet these are the people who cannot afford to live here anymore.”
Housing advocates and city officials agree that there is not nearly enough supply to satisfy the demand.
“There generally tends to be more emphasis on low-income and market-rate housing, but the population getting the least emphasis is the moderate-income people,” said Beth Berns, a vice president of the New York City Housing Partnership, a nonprofit agency that works with the city to create middle-income housing. The mayor’s housing plan calls for 165,000 new housing units between 2003 and 2013, but only a quarter of those are intended for middle-income residents.
The numbers of people who enter the lotteries for these homes tell the tale: 4,500 applications for a 60-unit project in Red Hook, Brooklyn; 8,000 applications for 120 units in a mixed-income Harlem condo; 20,000 applications for 2,000 spots on the waiting list for Penn South, a limited-equity housing complex in Chelsea. (The list is now closed.)
Neill McG. Coleman, a spokesman for the city’s Department of Housing Preservation and Development, said that about 100,000 people have signed up for e-mail alerts to every new housing lottery, adding that the number “edges up each year.”
Housing advocates said that some New Yorkers apply to every available lottery. “We encourage people to apply for as many as they are eligible for,” Mr. Coleman said. “It certainly would increase your chances.” [The accompanying box explains what to do.]
Most of the subsidized co-ops sell for $200 to $300 per square foot, which translates to as little as $80,000 for a studio to $210,000 for a two-bedroom, according to RuthAnne Visnauskas, an assistant commissioner at the housing department.
“The sales prices can be severely discounted or just slightly discounted depending on the location,” she said, “and income restrictions can range significantly, too, because it’s all very market-driven.” In other words, prices and income restrictions are determined with a close eye on how much people are willing to pay and can afford in each neighborhood.
She said the city’s middle-income projects are intended for households with incomes that range from 80 percent to 175 percent of the area’s median income. A project in the South Bronx, for example, might be restricted to people with incomes up to 80 percent of the median, which means $56,700 for a family of four. But in Fort Greene, the limit might be as high as 195 percent of the median, or $138,255, because incomes are higher in that neighborhood.
In Fort Greene, the development in question is a 38-story condo tower being built at 150 Myrtle Avenue, where 42 of 240 units will be affordable. Donald Capoccia, a principal in BFC Partners, the developer, said the prices for the affordable units would start under $300,000 and go up to $500,000, roughly half the market rate. He said the affordable units have less expensive kitchen appliances but are otherwise identical to the market-rate apartments. (The prices for these have not been set.)
BFC did not receive any direct city subsidies for the project, but the developer agreed to include affordable apartments in exchange for the right to build on city property. Mr. Capoccia said the project had received more than 10,000 applications for the 42 apartments in a lottery that closed last month. As he put it, “With odds like that, you know you’re going to be making a lot of people unhappy.”
Housing advocates say there is no trick to learning about these types of developments. They simply recommend thoroughness and persistence.
In addition to signing up for e-mail alerts from the city and checking the city’s housing Web site, Ms. Berns, at the Housing Partnership, urged potential buyers to scour daily and community newspapers for lottery ads.
“You just have to keep looking because each project has a 60-day lottery period,” she said. “And what you see today is just what’s going on right now. A month from now, another project will hit.”
Of course, applying for a project and actually being qualified are entirely different things. Depending on the project, even those with low lottery numbers might not get an apartment because of city and federal preferences that might apply. In most developments, at least 5 percent of the housing must go to city employees, 5 percent to people with disabilities, and 50 percent to people within the project’s community board district to help prevent people from getting priced out of their own neighborhoods.
In projects developed by Habitat for Humanity, the organization does not hold a lottery but has very specific requirements. For example, applicants must be “currently living in overcrowded, substandard housing conditions or have a severe rent burden,” which is defined as paying more than 50 percent of the household income for rent. Each adult also must put in at least 300 hours of sweat equity. Habitat currently has a 41-unit building in Ocean Hill/Brownsville, Brooklyn, that still has two-bedroom apartments available for families with a maximum income of $56,700.
The process of qualifying as a home buyer can also be a very long and tedious one.
At the Langston, a 179-unit condo in Hamilton Heights with 120 income-restricted apartments, the lottery closed on Nov. 11, 2005, and drew more than 8,500 applications. People started moving in last year, but applications for the last affordable unit are just now being processed.
Tony Von Meyers, an agent with Halstead Property, which marketed the project, helped people submit their applications to the city a process he likened to putting together a board package for a discerning co-op board. Despite the help, he said, in one case, the city disqualified a buyer because he lived just outside the community board district. “I would always tell people, ‘I may seem like a nightmare in the process, but I’m just the messenger, and I have learned not to argue with the City of New York,’ ” Mr. Von Meyers said.
Brokers and officials with private housing agencies say the developments tend to draw a broad cross section of people, including city workers, retirees, young couples and young professionals.
Heather Gershen, the deputy director of housing development for the Fifth Avenue Committee, said she would like to see city workers, “people who truly sacrifice their market value in the interest of something greater,” get the subsidized homes.
She added, though, that young professionals who don’t make big six-figure salaries also fit the mold for middle-income housing. People in the nonprofit sector, for example, “don’t see themselves as consumers of public benefits, but among my peers and I’m 27 I know I’ve encouraged friends of mine to apply.”
Her organization is currently working on two projects. The first, which closed its lottery in January, is a 60-unit development in Red Hook with income restrictions that range from $27,150 to $167,910 and sales prices that range from $47,136 to $598,692. The second will be an 80-unit building opposite Atlantic Yards, which will have 20 market-rate units mixed with low- and middle-income apartments. Ms. Gershen said that the lottery for them would probably be held toward the end of the year.
Aside from the limited number of newly built homes coming on the market, the city also tries to preserve existing middle-income housing through programs like Mitchell-Lama and the Housing Development Fund Corporation.
Jordi Reyes-Montblanc, president of the H.D.F.C. Council, an advocacy group that represents 1,300 low-to-middle-income co-ops that the city took over for back taxes and eventually sold to existing tenants, said about 300 more buildings will soon be converted.
Income and resale restrictions can vary, but most of the apartments can be sold at market rate, which is why properties with “H.D.F.C. income restrictions” can sometimes be found in real estate listings.
“We’ve been discovered by some real estate companies lately,” Mr. Reyes-Montblanc said, noting that co-op owners now routinely get postcards telling them that the apartments they bought from the city for $250 can now be sold for as much as $700,000. “They’ve tempted some people who were too dumb to realize that if they sell, they’re selling their livelihood, and then where are you going to live?” he said.
As for Mitchell-Lama developments, despite the city’s efforts, housing advocates estimate that more than 18,000 Mitchell-Lama apartments have left the subsidized program since 2001, and other subsidized housing complexes are now considering going the same route.
“It’s a crying shame when these kinds of units go private, because once they’re gone, they’re gone, and there’s no bringing them back,” said Brendan Keany, the general manager at Penn South, a 15-building co-op complex with income and purchase limits similar to those at Mitchell-Lama projects.
The co-op board at Penn South is committed to staying middle-income, but Mr. Keany said he knew of one East Side development with 900 units that would become market-rate within the next year. “When you lose that many units at one time, then the city’s model to build new middle-income housing falls woefully short of really solving any problem,” he said. “We’re not replacing what we lose.”
Penn South has a waiting list of 6,700. It has 2,820 apartments, but only about 150 become available in any given year.
Rose Sabangan recently came off the list after an 11-year wait. She bought a two-bedroom co-op for $51,000 and pays $699 in monthly maintenance. Under Penn South’s rules, she must sell the apartment back to the co-op. It will repay her $51,000, plus a share of the amortization on the complex’s underlying mortgage, but no interest and nothing for inflation or appreciation.
Ms. Sabangan, who works in computer support for a financial-services firm, moved into the apartment with her daughter and son in 2006. She said she vaguely remembers seeing a newspaper ad for Penn South’s waiting list in the mid-1990s, right around the time she was in the midst of a divorce. “I got on the list, and then I forgot about it,” she said. “When they called me in 2006, it was like I hit the Lotto.”
Her daughter, Julia, was only 13 when Ms. Sabangan first put their names on the waiting list. She is now 24, works as a dancer and Pilates instructor and was able to sign on as a co-owner of the co-op, which means she can stay there as long as she wants. “Her friends are all envious because they can’t afford to live in this neighborhood,” Ms. Sabangan said. “But without places like Penn South, where are all the kids going to go? You shouldn’t feel like you won the Lotto just to be able to live in this city.”Subsidized housing for the middle class? In New York City? Yes, it exists, but the odds of winning the lottery for a house or apartment are daunting.
Updated 1/5/2021 to include new lotteries in Harlem, Bushwick, Sheepshead Bay, East New York, Corona, and the Bronx.
Under the de Blasio administration, New York City has rolled out several new affordable housing initiatives (for more details, see the mayor’s latest housing plan, Housing New York 2.0). In September 2019, the city reported that 136,912 new affordable units had been built through both new construction and refurbishment of existing units, and that it was nearly halfway to the goal of 300,000 set in Housing New York 2.0.
However, the COVID-19 pandemic may keep that goal from being achieved. The State of New York deemed construction of affordable housing to be an essential function, but Bisnow reports that 34 affordable projects with a total of 6,900 units were paused by developers. Additional projects throughout the city are experiencing slowdowns owing to a diminished construction labor force and a slowdown in the supply chain.
At the same time, there is reason for optimism; Multi-Housing News cites increased demand, the stability of affordable housing as an investment, and cities’ emphasis on affordable development as a means of public safety. Indeed, building sites all over New York have reopened with new protocols in place to keep workers safe and keep construction going.
Through it all, there is a large number of programs throughout the city and state. This is good news for people seeking affordable housing, but each has its own rules and restrictions to navigate. This article focuses on New York City and New York State programs designed to assist renters.
• NYC Housing Connect Lotteries
If you’re interested in an affordable housing unit, the first thing to do is visit the NYC Housing Connect website and find out if you qualify and more specifically, find out if you qualify for any current housing lotteries (different lotteries may have different types of units available). Next, apply on the NYC Housing Connect website by opening an account. Then you just have to wait and see if your number is called. If it is, you’ll then be asked to compile hundreds of pages of paperwork,and undergo an interview. If the paperwork is too daunting, reach out to an NYC Housing Ambassador or contact a Ready to Rent Office in your borough. If your paperwork and interview check out, you may still find yourself waiting and you may never even be granted a unit. This is because NYC housing lotteries select more applicants than there are available units. While this may sound unfair, there are two reasons this is generally done: First, many people are disqualified once they submit their paperwork, and second, the process is so onerous, many New Yorkers drop out of the process before ever gaining access to a unit.
The benefits of entering a housing lottery are fairly obvious—if you “win,” you’ll end up with an affordable or reasonably affordable rent stabilized apartment in New York City. Also, many of the available units are highly desirable. Housing lottery units are often housed in swank new mixed-income buildings with appealing amenities from state-of-the-art gyms to roof-top decks to game rooms. The downside of the housing lottery system is that much is left up to chance, the paperwork is onerous, and if you’re in the top 25% percent of eligible applicants, you may still end up paying close to market rent for your unit.
More information and a list of past lotteries can be found here.Updated 1/5/2021 to include new lotteries in Harlem, Bushwick, Sheepshead Bay, East New York, Corona, and the Bronx. Under the de Blasio ]]>