Getting Past “Yes”: A Q&A on the Affordability Crisis (Part 4)
This is the fourth installment in our Q & A series on what should be called City of Yes for Developer Opportunities, a massive rezoning that ostensibly addresses the city’s affordable housing crisis, but actually doesn’t. The proposal’s underlying assumption is that this crisis afflicts everyone, from the inconvenienced plutocrat who has to reach too far into his money bags to pay for a third pied-à-terre to the single-income family of four paying 60% of its income toward rent. Following this logic, City of Yes for Housing Opportunity (CoY) offers as a solution an increase in the city’s overall allowable building capacity. This would, in theory, stimulate more market-rate housing construction and then let the chips fall where they may.
In part one we demonstrated the flaws in the City’s diagnosis and cure. First, the affordability crisis most certainly does not impact households across the income spectrum. And second, far from suffering from a market-rate housing shortage, we have been seeing a boom in construction (along with a decline in population). Notwithstanding record-high housing development across the country, New York has still led all cities in this category for the third year in a row, exceeding even cities in the fastest growing regions in the nation.
Parts two and three counter the City’s Trump-like claim that “everyone” agrees that CoY’s trickle-down, market-based strategy alleviates affordability problems. Disagreement with this Reaganesque approach abounds among housing scholars and advocates.
Today, we answer further questions about the impact of upzonings on housing prices and neighborhood stability, and about the advisability of using zoning as an affordable housing strategy.
The City claims that upzonings help mitigate gentrification. Is this true?
Probably not. The impact of upzonings on gentrification has received less attention from researchers than the relation between supply and housing costs. Still, case studies of upzonings in the New York City neighborhoods of Williamsburg/Greenpoint, Chinatown, and Harlem suggest that these interventions have led to an increase in luxury housing development, an outmigration of minority households, and an influx of White ones (Angotti and Morse, 2017). These findings echo those of more comprehensive studies of rezonings throughout the city.
Liao (2022) looks at all upzonings undertaken in New York City between 2002 and 2009, and concludes that areas that underwent these changes subsequently experienced a higher likelihood of in-migration and out-migration. The former came, on average, from higher-income neighborhoods. The out-migration, which occasionally was to other municipal areas, did not differ for residents of rent stabilized housing. These findings correspond with the common observation that upzoned neighborhoods tend to see residential churn and increases in the income levels of residents. Davis (2021) examines the impact of New York City upzonings between 2002 and 2009 on the racial composition of the rezoned areas. The study finds an association between these zoning changes and subsequent increases in the rezoned areas’ proportion of non–Hispanic White residents—a common proxy for gentrification.
Angotti offers, in a City Limits op-ed, the case of Long Island City as an apt illustration of the above dynamics. That neighborhood’s 2005 rezoning was followed by the construction of 30,000 new units and the arrival of 63,000 new residents. Rather than make housing more affordable, these changes coincided with increases in the average 2-bedroom apartment from $3,400 to $5,300 a month. Notwithstanding inclusionary housing requirements, the median household income in the neighborhood increased from $52,000 to $97,000, and the percentage of non-White residents in the area declined. In other words, far from offering relief to rent-burdened residents in the neighborhood, the upzoning served as a gentrification accelerant.
We are aware of no studies that examine the impacts of neighborhood upzonings on gentrification levels across a broader geographic area.
The answers in these series show that, despite the City’s claims to the contrary, there is no academic consensus on the effect of upzonings on housing affordability. Are there any broad points of agreement?
Well, it’s hard to know what you don’t know. So there may well be some dissenting non-mainstream voices out there; but we’ve never seen anyone suggest that you can adequately address the affordability needs of very low income households (i.e., those earning less than 60% of the area median income) through land use deregulation or through market-based approaches like inclusionary zoning. First, even if upzonings led to a net increase in housing supply (and that’s an open question), there is little reason to believe that new market-rate development would, either directly or through its effect on the housing market, meet the needs of very low-income households in either the short or long term (see part 3). Second, inclusionary zoning programs seldom serve very low income households, because the market rate portion of projects can rarely cross-subsidize housing at the necessary levels of affordability. CoY, for instance, grants a 20% density bonus in exchange for making the units resulting from that bonus permanently affordable at 60% of the area median income (AMI). The problem is that, even if developers chose to build those units (another open question, as we saw in part 1), those units would still be beyond the means of most NYC renters, whose median area income is 59% of AMI (Stein and Mironova, 2024). In other words, the affordable housing component CoY, which is geared towards households at 60% of “AMI,” wouldn’t even reach median renter households in New York.
Consider that 83% of rent burdened households need apartments renting for less than $1,649/ month in order to no longer be rent burned. A $1,649/month rent would only be affordable to a median sized household earning 50% of AMI or more (see AMI levels here). Sixty-five percent of rent burdened households would need an apartment renting for less than $1,100, which would only be affordable to median-sized households earning 30% of AMI or more. (Sources: Association for Neighborhood & Housing Development and the New York City Housing Department of Preservation & Development). This means that all affordable housing generated CoY would be beyond the means 83% of the city’s rent burdened households.
Simply put, CoY is just an upzoning, and upzonings do not make for an affordable housing plan. They merely make possible construction in excess of the existing building capacity. If there is no lack of existing building capacity (and in NYC, there most certainly isn’t) then they merely allow developers more latitude in their choice of development location. None of that does anything for lower income households (except possibly displace them or increase their rent burden). Making upzonings contingent on the fulfillment of an affordable housing requirement (as CoY could do, but mostly doesn’t) would at least recapture for a public purpose a portion of the landowner windfall gains. And it would also yield some below-market (and yet still too expensive) units. But this hardly turns upzonings into a remedy for our affordable housing crisis, not the least because, as we have seen throughout this series, several of their likely impacts would undermine possible affordability gains.
If upzonings don’t target affordability problems like ours, why do public officials and groups like Open New York keep insisting that CoY would?
That is a very good question. And we’re not the only ones puzzled by the misdirected emphasis on zoning liberalization as an affordable housing solution. We noted in Part 1 the Association for Neighborhood & Housing Development’s repudiation of efforts to pass off the construction of more market rate housing as an affordable housing strategy. More recently, an op-ed piece in Crain’s New York by planning scholar Laura Wolf-Powers decried the Administration’s “zoning monomania.” Wolf-Powers laments that this insistence in delivering market opportunity to developers is diverting attention from more credible responses to the crisis at hand, such as the expansion of housing vouchers and the preservation and expansion of social housing.
It’s not hard to imagine why elected officials would prefer to see (and for the world to see) a policy tool that enriches their political benefactors as a solution to all problems. In this scenario, Open New York and their ilk play the role of useful idiots, providing elected officials with a pseudo-progressive cover for them to serve as handmaidens to real estate interests. Perhaps a more generous explanation would point instead to people’s general preference for employing familiar tools. If you were primarily experienced at wielding a hammer, and you had to squeeze juice out of an orange, you’d be tempted to still use a hammer and just overlook the differences between an orange and a nail. That’s not so different from how YIMBYs, in their upzoning fixation, seem happy to overlook the differences between exclusionary McMansion districts in Denver and some of the densest neighborhoods in the world.
But here’s the thing: even with a hammer, you might still get some juice out of an orange. If you were going to use one, however, you’d be well advised to proceed cautiously. If you bang away like a monkey, you’ll make a mess of things. And that’s precisely what CoY is threatening to do.
The City Planning Commission will vote on City of Yes on September 25. The proposal will then go to before the City Council for a final vote.
Tell City officials that you oppose the elimination of zoning protections in favor of bigger and taller luxury buildings. Go here.
References:
Angotti, T., & Morse, S. (2017). Zoned Out!: Race, Displacement, and City Planning in New York City. Terreform.
Davis, Jenna. (2021). How do upzonings impact neighborhood demographic change? Land Use Policy, 103, 105347.
Liao, Hsi-Ling. (2022). The Effect of Rezoning on Local Housing Supply and Demand. Job Market Paper.
Stein, S, Mironova, O. (2024) AMI in NYC: Visualizing Inequality and Unaffordability with Area Median Income (Report) Community Service Society.