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NYC Land Use Bulletin- NYC Announces Proposal for Mandatory Inclusionary Housing

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This week, the New York City Department of City Planning released an overview of its proposal for Mandatory Inclusionary Housing, a key component in Mayor de Blasio’s Housing New York plan to create or preserve 200,000 affordable housing units. For the first time, New York City would mandate the inclusion of affordable housing in residential developments built within rezoned areas and pursuant to certain other discretionary actions adding value to residential projects.

The new mandatory affordable housing requirement is a significant departure from the current inclusionary housing program, which incentivizes affordable housing by offering floor area bonuses.  This new mandatory program is intended to work together with City housing subsidies, other zoning changes and 421a reforms reached in Albany last month.

While many details remain to be released, we have insight on the most recent developments of the City’s housing and zoning proposals and will update you on how these changes may affect your developments and projects.

Applicability of the Mandatory Inclusionary Program

  • Affordable Housing would be mandated in areas zoned and designated as Mandatory Inclusionary Housing Areas, either as part of City-initiated neighborhood plans or through private rezoning applications. City Planning’s East New York rezoning, for example, would incorporate the Mandatory Inclusionary Program. Provision of affordable housing would be a condition of development in these areas.
  • It is critical to note:
    • In areas where the inclusionary housing program exists today, the current rules would continue to apply and the program would remain optional in these areas (Inclusionary Housing Designated Areas).
    • In other areas, development would continue to be allowed subject to current zoning rules. Mandatory affordable housing would not be a condition of development unless the area were to be rezoned and designated for mandatory inclusionary housing.”

Amount and Levels of Affordability

  • Unlike the current inclusionary program, which requires that 20 percent of the residential floor area be affordable to households at 80 percent of the Area Median Income (AMI) in exchange for the floor area bonus, the new mandatory program would require two options:
    • 25 percent of the total floor area would have to be affordable for households with incomes averaging 60 percent of AMI; or
    • 30 percent of the floor area would have to be affordable for household with incomes averaging 80 percent of AMI
  • A third option may be applied by the City Council allowing for some level of moderate-income households as long as any other direct public subsidies are prohibited.

Affordable Housing under the program would be permanent

Both the existing incentive-based inclusionary housing program as well as the proposed Mandatory Inclusionary Housing program require that the affordable housing be permanent. Affordable housing built under the 421a rules must remain affordable for a term of 25 to 35 years, depending on the area.

Mandatory Inclusionary Housing, 421a, and Other Subsidy Programs

As described by the Department, the new Mandatory Inclusionary Housing Program is designed to work in conjunction with 421a and other HPD affordable housing programs. The Mandatory Program would allow developers to continue to utilize 421a benefits as allowed by State Legislation and in areas where deeper levels of affordability are sought, the Department states that HPD programs could be used. For insight on 421a, read our blog post NYC Land Use Bulletin: Major Changes Enacted to 421-a Tax Exemption Program

Further Details to be Provided

Capalino+Company will continue to have insight on Mandatory Inclusionary Housing proposal as more details are released. For example, the proposal overview does not address such items as the allowed floor area (FAR) in each zoning district in mandatory inclusionary areas,  how small developments would be treated under the program, whether certain size developments could pay into a fund as an alternative to providing the affordable housing directly, whether conversions would be subject to the mandatory requirement, the treatment of common entrances and mixing of affordable and market rate units, and how HPD and other subsidies could be applied in different market areas.

Public Review Targeted for September 2015

The Mandatory Inclusionary Housing program would be established through a citywide zoning text amendment that is expected to begin its formal seven-month public review in September 2015. The text amendment would be referred to community boards and borough presidents, and be considered by the City Planning Commission and then the City Council.

The Department is also expected to certify at the same time in September its first rezoning — East New York —  to incorporate the new Mandatory Inclusionary Program. The Department has more than a dozen other areawide planning initiatives in the pipeline that are expected to also incorporate the mandatory affordable program, including Jerome Avenue in the Bronx, the Long Island City Core and West Flushing in Queens, East Harlem in Manhattan, and Bay Street in Staten Island. .

Finally, the Department is also expected to begin formal public review in early Fall 2015 for its citywide proposal, Zoning for Quality and Affordability, which is designed to promote better quality developments, senior and other affordable housing, and health care facilities. For our detailed analysis of Zoning for Quality and Affordability, read our blog post Land Use Bulletin 5.21.15 – Department of City Planning Releases Updates to Zoning Text Amendments

Where can I get more information?

These three zoning proposals will greatly influence the shape of the city and development in the years ahead. Capalino+Company will continue to monitor these proposals and update you on how these changes may affect your developments and projects.

For more details, visit Department of City Planning’s website here: http://www.nyc.gov/html/dcp/html/housing/mandatory-inclusionary-housing-summary.shtml

Please contact our team of experts for more details and further information.


Richard-BarthRichard Barth

Senior Advisor for Land Use and Housing Strategies

Richard@capalino.com

About Richard


Claire AltmanClaire-Altman

Director of Affordable & Supportive Housing Development Services

Claire@capalino.com 

About Claire

 


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