Talking Heads: Eric Enderlin, New York City Housing Development Corporation 44,000 Workforce Units

10 min read

New York City is undergoing the most audacious expansion of affordable housing in a generation, planning to add 200,000 units of new affordable housing over ten years. The idea came from Mayor Bill de Blasio, who announced his Housing New York plan after winning the election in 2014.

Multiple city agencies are now partnering behind the scenes to ensure its successful implementation, including the New York City Housing Development Corporation led by its president, Eric Enderlin. Enderlin has worked in various public policy and affordable housing development roles over a span of 20 years, most recently serving as HDC’s president since his appointment by Mayor de Blasio in October 2016.

What distinguishes Housing New York from other affordable housing initiatives is that 22 percent, or 44,000, of the new units created are aimed at moderate and middle-income families. This means that a family of three making anywhere from $62,251 to $134,640 could qualify for an affordable home.

“We have stretched city investment to provide affordable housing to a wider range of New Yorkers, from those with very little income to the social workers, teachers, nurses, and first responders who are so vital to our neighborhoods and workforce,” said Mayor de Blasio in a recently published update, New York Housing: Three Years of Progress.

Tax Credit Advisor sat down with Enderlin to learn more about the city’s workforce housing programs and the opportunities they create for developers.

Tax Credit Advisor: What progress have you made meeting your workforce housing objectives? What challenges have you encountered and what steps have you taken to overcome them?

Eric Enderlin: During the first three years of the housing plan we secured financing on over 63,000 starts, both new construction and preservation. The development plan called for 60 percent preservation and 40 percent new construction. In terms of middle- and moderate-income households, we are currently tracking at about 20 percent completion compared to our goal of 22 percent. We exceeded our housing production goals for extremely low-income, very low-income and low-income households, but we are a little off on the middle- and moderate-income units that you’re talking about. Oftentimes, middle- and moderate-income housing units come through new construction, which takes longer than preservation. We are pivoting now though to focus more on new construction, so we hope to see the middle-moderate production levels improve. We are basically on track. We’re a little bit ahead on overall counts, a little off on mix, but ahead of target and underbudget for the plan overall.

TCA: What guidelines have been established to qualify families for these units? 

EE: Anyone can qualify as long as their incomes fall within the parameters. The middle and moderate units are often described as “workforce housing” because the income thresholds relate to certain occupations – police, healthcare, nursing, service industry workers. But the actual lottery that was established to select tenants is based on rents and incomes. We set rents, we look at incomes and then we target based on that. A small preference is given to municipal employees, such as policemen and firefighters, as part of the lottery selection process.

TCA: Two funding sources were created to develop workforce housing. One is called “Mixed-Middle Income” and the other “Mix and Match.” Briefly describe how these programs work. What other sources of funding are being used in these projects?  

EE: When we looked at prior plans, some have had 50/30/20 models, where half of the project had market rents, 30 percent was targeted to middle-income and 20 percent to low-income. The City’s current plan seeks to broaden the range of affordability. Develop more of the very low-income and extremely low-income, but also more of this middle-moderate workforce range by designing projects that are entirely affordable up to either 130 percent of AMI (Area Median Income) or 165. We no longer have that market-rate cross-subsidy. We have the option to incorporate true market-rate units, but we created programs, like Mixed-Middle Income and Mix and Match, because we wanted to invest in the extremely low- and very low-income housing and also address the need for more of the middle-moderate range. Mix and Match combines half low-income and half up to 130 AMI. The Mixed-Middle program is a modified 50/30/20 design. Instead of reserving 20 percent for low- and very low-income households, 30 percent for middle and 50 percent for market, we capped that last 50 percent at 130 to 165 AMI. We realized, in terms of the market needs, we needed to create a range of programs so that wherever you wanted to develop affordable housing the sponsor (developer) could find a program that would respond to a given market condition. That meant we needed to be thoughtfully calibrating exactly how the mix of incomes and rents would work with the range of subsidies. That’s what these programs were designed to do, and what I think is pretty innovative. We created a sliding scale of subsidy based on the blend of affordability. We did this across these two programs and they have been very successful. There has been a great deal of participation in these programs and if we look at the numbers produced so far we are pretty close to our targets. One of the challenges of doing workforce housing is that you don’t have a federal tax credit. You’re often subsidizing at a local level, which we do by putting city capital into the housing plan. So, while it has cost a little more, it has been a good investment for the city. We found creating well-calibrated rents and incomes with a range of subsidies across these programs to be an effective way to get at this nice range of affordability. This enables us to serve affordable housing needs of everyone from our low-income to more moderate income work force households who are all finding it increasingly difficult to stay in New York City.

TCA: What type of developer partners are you looking for?

EE: New York can be a challenging market to work in. We often engage with experienced developers who are able to navigate the system and get things done. We have always had strong participation from both the profit and nonprofit segments, but we are trying to broaden our base even more. To build 200,000 units, we not only have to deal with the constraints associated particularly with new construction, such as land, subsidies and financing resources, but we also have to find enough sponsors who are able to build that much housing year after year. We are focused on increasing the pool of for-profit and nonprofit developers to join our effort to produce as much affordable housing as we can. We have encouraged developers from other major cities, like Boston, Philadelphia and Chicago, to come talk to us, and we have reached out to national non-profits who may not have previously been very active in New York City. We have also been much more aggressive on fostering more MWBE (Minority and Women Business Enterprises) participation and have encouraged this broadly through various programs.

TCA: Is Housing New York fully-funded for the next decade, or could the Trump administration’s proposed budget cuts hinder these efforts?

EE: We are, like most industry participants, analyzing the potential impact on tax credit pricing. There is a lot of uncertainty which has resulted in declines in equity pricing that will impact our efforts. Such declines create a financing gap and to fill that gap we will have to secure more capital resources. There is also uncertainty surrounding other things in the tax code. The situation with private activity bonds is not entirely clear. We are navigating as we go right now. Presently, we are not encountering any significant problems. We are able to adjust to these immediate issues. But as we get further down the line, depending on how budget cuts pan out, things will become more problematic, especially if we can’t find other sources to make the plan whole.

TCA: While your housing plan accomplishes a lot, you can’t help everyone. Are there other longer-term initiatives that the administration is contemplating to help families that are struggling to pay for housing?

EE: We are always working with the state to strengthen our rent regulations to provide for rent stabilization in the City of New York. We have had a rent freeze in place for two years, which has helped control costs. We do a lot of work with a state program called Mitchell-Lama, which was created in 1955 for the purpose of building affordable housing for moderate- and middle-income residents. We regularly look for creative ways to take advantage of low interest rates and refinance the debt on these properties to maintain rent stability. Other improvements that we would like to put forward and discuss revolve around the private activity bond volume cap and reallocating any unused cap nationally toward producing more HUD-assisted housing. This can be an important tool to produce more affordable housing efficiently. We are also monitoring the Cantwell-Hatch bill in the Senate, and its companion in the House, which permits income averaging for purposes of qualifying for Low Income Housing Tax Credits. This allows for a mix of incomes blended up and down, so long as they average to 60 percent AMI. It is difficult to fund units above the 60 percent AMI cap imposed by LIHTC.  The income averaging proposal is critical to broadening the affordability we are able to reach, while still effectively serving our low-income needs. We feel strongly that anything that enables us to reach a broader band of affordability helps our efforts.

TCA: Please describe the lottery process that you use to fill these new housing units.

EE: Every single project has its own lottery and we have been through a lot of them with very high response rates. It’s not uncommon to have a new project lottery for 100 affordable units that receives 40,000 to 80,000 applications. We have an electronic lottery system, called Housing Connect, which simplifies the application process on an online platform and completely randomizes the selection process. We have made the process more transparent and more accessible. We have recently changed the qualifying standards and no longer permit developers and leasing agents to reject applicants solely on the basis of credit score or housing court history. We streamlined the interview process to reduce applicant no-shows and improved access for people with disabilities.  We also received funding from the City Council to enhance the Housing Ambassador program, which is a network of community-based service providers that help people navigate the lottery system and both the online and paper application process. And we of course recognize that as much as we want to shift to more efficient technologies, there are still people with significant need who may not have that same access to technology.

TCA: I can imagine other cities across the country are watching these efforts closely. Do you believe Housing New York can and will be replicated in other high-cost cities who are facing the same shortage of affordable housing?

EE: We are always looking to and learning from other cities and vice versa. There is a forum called the High Cost Cities Forum where housing leadership from the most expensive U.S. cities come together regularly to discuss shared problems, ideas and successes. For example, in New York we created the Acquisition Loan Fund, which the city has used to acquire land, distressed buildings and distressed debt and allowed us to better assist low-income families but also mixed- and moderate-income households. Its success has spawned similar programs in these other cities, so we do influence one another’s approach to affordable housing solutions in real and positive ways.

Darryl Hicks is vice president, communications for the National Reverse Mortgage Lenders Association and a 24-year veteran of associations managed by Dworbell, Inc., the management company of NH&RA.