Mathew Wambua's presentation on NYC Affordable Housing

1. New York City Affordable Housing Overview
Massey Knakal Multifamily Housing Summit
November 16, 2011 1

2. Affordable Housing: Who needs it?
New York is a city of renters- 2 out of 3 households rent compared to 1 out of 3 nationwide. The need for
affordable housing remains strong, especially since the economic downturn.
Photos St. Ann’s Avenue and Eagle Avenue between 156th and 159th Streets, Bronx
• Affordable housing supply doesn’t meet demand
– Low vacancy rate (2.91%); Continuous housing emergency since 1974
– More than half of renter households pay more than 30% of income towards rent; About ¼
pay more than half of their income toward rent
• Aging housing stock
– Close to three-fifths of the housing units in the City were built before 1947
– Threatens neighborhood decline potentially impacting property values and investment
Ongoing investment in affordable multi-family housing is needed to keep pace with growing
demand for new construction and to maintain existing stock through preservation financing and
enforcement of the housing maintenance code. 2
Data Sources: U.S. Census Bureau, 2006-2008 American Community Survey and the 2008 New York City Housing and Vacancy Survey, HUD

3. Affordable Housing: The New Housing Marketplace Plan
The New Housing Marketplace Plan is the most ambitious and extensive affordable housing plan
in the nation, creating and preserving 165,000 units of affordable housing by the end of 2014.
• 124,510 Units To Date
• 67% Preservation; 33% New Construction
• 80% of the units are targeted to households earning under
80% of AMI
• 75% of units developed under the Plan will be rental
housing, 25% homeownership
• $18 B Total Development Cost to Date
• 133,700 Jobs to Date
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4. Impact of the Market Crash on the NHMP
The crash in the market in late 2008 changed the landscape of affordable housing. Where HPD
and the NHMP were previously pressured by and reliant on the strength of the market, the
crash required a paradigm shift in the policies, programs, and operations of the agency.
2004-2008 2009-Today
Challenges • Rising rents and sales prices • Financial distress in multi-
• Displacement of tenants family stock
• Increasing levels of market • Diminishing availability and
rate development increased cost of credit
• Diminishing availability of • Falling private investment
land • Rising foreclosures
• Increasing signs of physical
deterioration
Opportunities/Tools • Cross-subsidizing mixed • Reclaiming formerly assisted
income housing stock
• Inclusionary zoning • Preserving existing stock
• Rezoning under-utilized land • Investing in new communities
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5. New York City At-Risk Multifamily Housing
New York City has witnessed an increase in physical and financial distress among multifamily
rental buildings.
The decline in the economy and housing market over the past
few years has led to disinvestment and rising distress in both
neighborhoods and the multi-family housing stock across the
city.
In addition to the softening housing market, this is a result of:
– A pattern of speculative investment during the boom
years in NYC rent-stabilized multifamily
properties. Investors bought properties premised on
unrealistic assumptions related to tenant turnover and
income growth.
– Flawed appraisals were used to support these
transactions.
– Lenders accepted borrowers’ unrealistic underwriting.
HPD analysis has found that a wide range of banks – from local
community lenders to national institutions – hold non-performing
loans often backed by collateral that is suffering from deferred
maintenance and, in some cases, severe physical deterioration.
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Photos from Ocelot portfolio.

6. New York City At-Risk Multifamily Housing
In cooperation with community advocates, elected officials and other government agencies, the
City has developed a variety of tools to address the issue of at-risk multifamily housing.
• Proactive Preservation Initiative
• City-wide data-driven effort to identify and stabilize over 500 at-risk multi-family buildings per year
• New Proactive Enforcement Bureau to conduct roof-to-cellar inspections
• Updated AEP and ERP legislation to strengthen enforcement tools for uncooperative owners
• $750 million to assist responsible owners purchase notes and/or properties in addition to making
needed repairs.
• Multifamily Preservation Program Qualified Developer List- A rolling RFQ has been issued to
identify a list of qualified developers (“Qualified Developers”) who have the experience, financial
resources, and capacity required to rehabilitate, maintain, and manage multifamily housing.
• Fannie Mae Multifamily First Look- Fannie Mae will offer at-risk multifamily properties to Multifamily
Preservation Program Qualified Developers in a controlled bidding process
• At-Risk Multifamily Building Data Sharing
• Coordinated at-risk building data-sharing and disposition strategies with HDC, HCR, and HUD
• Coordination with UNHP and Building Indicator Project (BIP) data to identify at-risk buildings
• Quarterly report on housing quality data for “at-risk” multifamily buildings with the FDIC New York
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Region Office and the NY State Banking Department

7. Weathering the Budget Storm: HPD Vulnerabilities
NHMP Vulnerabilities: HPD has been able to stay on target despite City capital cuts, primarily because
of a greater contribution of HDC reserves to the Plan. The HPD Capital Budget totals $1.5B through the
end of the NHMP.
HPD Capital Budget FY12 - FY14 City Capital
Federal funding supports:
Reso A HOME
10% 421a • HOME funding supports approximately 5,000 of the remaining Plan units.
421a Reso A
HOME funds are targeted for developments with the most vulnerable
11%
residents including Supportive Housing and Low Income Rental Program
City Capital units.
48%
• Potential cuts to Section 8 funding will also impact underwriting for projects.
HOME
31%
HPD Operations Vulnerabilities: Federal funding makes up 85% of HPD’s $659 million budget; federal
cuts threaten Plan completion and core services.
HPD Budget by Source
Other
City
12%
City
State
Federal funding supports:
3%
• In FY11, over 678,000 code inspections for conditions such as lack of heat and
State CDBG
0%
Other Federal
Other hot water, lead paint, bed bugs, etc.
CDBG • Correction of almost 16,000 emergency violations, addressing immediate health
23% and safety conditions affecting tens of thousands of New Yorkers.
• About 14,000 annual court cases to prosecute landlords who fail to maintain their
Other
Federal buildings in acceptable condition. 7
62%

8. Beyond The New Housing Marketplace Plan
While HPD’s 10-year plan is bold and highly impactful, we will pursue additional opportunities over the
coming year to reach beyond the NHMP. These include:
• Expand the supply of affordable housing – beyond the 165,000
• New, creative financing for distressed portfolios
• Find new resources – additional city land; FAR/air rights
• Explore new housing models
• Define and pilot new models for small households (e.g. micro or shared housing)
• Expand housing and affordability through collaboration
• Pursue new development models with NYCHA
• Find new state/local preservation opportunities
• Better serve at-risk populations
• Expand production of supportive housing
• Find opportunities to better leverage subsidies
• Update shelter policies
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