Severe Housing Problem in New York City
Instructions:
Imagine you are a state or city government policy adviser. The governor or city mayor has asked your boss to brief them on a critical problem facing your community (and therefore one of your agency’s top policy priorities). You need to develop a comprehensive policy memo that will give your boss:
(1) the critical background information he/she needs on the issue at hand;
(2) analysis of the influence of the state/city legislature, the judicial system, and other state/city government agencies on the formulation and implementation of a specific policy;
(3) an evaluation of the influence that interest groups, political parties and the media have on the policy at hand;
(4) a set of options/solutions for your boss to consider regarding a path forward with all these political players (including pro’s and con’s for each option); and,
(5) a recommended strategy that you want your boss to present to the governor or mayor to win support for your agency’s policy agenda.
To recap, your memo should:
– Clearly and concisely state the problem you are trying to tackle
– Provide a summary of the current policy context / relevant background
– Analyze the influence of the state or city legislature, the judicial system, and other agencies
– Evaluate the influence of interest groups, political parties, and the media
– Present a set of solutions to the problem for your boss to consider, including pro’s and con’s for each
– Make a realistic recommendation of one of those options and provide further justification for why you are saying that option is the best.
Formatting Guidelines:
– No cover page; put your name, student ID, and the subject line at the top with a date.
– Minimum length of 2000 words, but do not exceed 6 siFongle-spaced pages. (Most senior leaders wouldn’t have time to read anything longer than this.)
– Include citations / sources as end notes for your memo since this is an academic exercise (end notes will not count toward the 6 page limit).
– At minimum, your sources should include: one book besides the textbook, two articles from scholarly journals (i.e. Foreign Affairs, Harvard International Review), two news articles from major periodicals (i.e. Washington Post, The New York Times, The Economist), and two primary sources (public opinion polls, legislative records, speeches).
– The tighter the topic focus, the better the product
Solution
Severe Housing Problem in New York City
Introduction
It is unquestionable to argue that when a nation has strong cities, its families prosper, the economy thrives and the growth of a healthier environment is achieved. However, the United States (US) and New York City (NYC) in particular still face immense challenges which require significant actions and joint efforts to be taken immediately to strengthen the NYC, make it vibrant and sustainable. Among the challenges NYC and other cities of US face are: fragile fiscal health with spending cuts by federal, deteriorating transportation infrastructure causing traffic congestion, shrinking middle class with income falling, lack of adequate access to higher levels education, dire need for housing which is affordable, gang violence, minimal trust in the government by the public, climatic change and/or extreme weather among others (National League of Cities (NLC), 2013).
In the city of NY, housing conditions have been among issues of emergency. The city has experienced several problems related to housing. Among such problems are: housing which are unaffordable or in substandard conditions in addition to both racial and ethnic discrimination in housing. According to Schill (1999), severe housing problems can take any of the following form: tenants paying rent which is more than 50 percent of their income; more than 60 percent of the income of house owners used in paying housing expenses which include paying mortgage; either renters or owners living in buildings which are dilapidated and either renters or owners living in those units which have at least five housing maintenance deficiencies.
However, there is substantial evidence that the major problem facing the housing sector among the American household pertains affordability. Housing is in New York and elsewhere an essential facility towards human health, indiviuduals’ general well being and sociatal prosoperity. Inadeqaute housing often makes achivement of stable lives among families difficult or at times impossible. At an elementary level, absence of housing can put indivdauls’ health at risk by exposing them to conditions that are dangerous and/or disease promoting. Well housed indivaduals enjoy safe environment, increase their chances of obtaining adeqaute education and being gainfully employed. At some level, expenseive housing cosnumes great shares of househhold’s income and erode their capability of finance other necessaitie like healthcare, food etc. furthermore, excessive housing has the effect of limiting economic activities of a city since it scares away skilled manpower. Therefore this paper focuses on affordability of housing and homelessness in NY.
Factors Affecting Supply of Housing in New York and Strategies used to expand it
The housing market of New York City is shaped by many complicates factors and interrelated forces. The demand and supply of housing in New York depend on economic, social and demographic factors. Even though the supply of housing in this city is affected by many factors, expanding population is the major driver of housing demand. New York is one of the major cities of the US and attracts many individuals. This has led to its population being on the rise. As the population goes up, pressures piles on limited available housing facilities (Schill, 1999).
However, when considering influencers of supply of housing in New York, many factors come in play. New York experience relatively high construction costs. For example Schill (1999) notes that constructing an apartment in NY City costed much more than a similar construction elsewhere in the nation. In addition, the cost of capital meant for constructing residential structures is often pegged on the prime interest rate. The rate affects housing supply negatively. Comparable returns from alternative investments such as treasury bills affects negatively investments made in the housing sector.
The government also affects supply of housing by permitting construction of houses in areas reserved for different uses or through elimination of restrictions baring exceed of number of units which can be built (Schill, 1999). More so, in 2015, permits were issued for 56,528 new dwelling in NYC. This represented a 176.0 percent above that of 2014 (New York City Rent Guidelines Board, 2016). The main disadvantage leveled against this that at time land meant for other beneficial activities is sacrifice to pave way for housing.
In addition, moves to convert nonresidential structures e.g unused offices to residential houses beefs up housing supply and was much used in 1990s. A good example was experienced between 1996 and 1998 where around 2400 units of housing were converted into residential houses. The government can (and therefore has) increase housing supply through providing subsidies for construction of new or renovation of housing units. For example Mayor Ed Koch in 1986 initiated a program which costed $4.2 billion from the New York’s budget for over 10 years so as to raise housing production within the city. At the end, this move saw more than 50,000 housing units either being erected or renovated substantially (Schill, 1999). Similar strategy was also used in 2015 (New York City Rent Guidelines Board, 2016). Unfortunately this method is not long lasting; once the available units have been converted, there is rigidity in future expansion. It is however less expensive and puts to use idle housing.
New York City itself affects housing supply via tax policies. Imposition of high tax rates raises operating costs and hence housing cost to the residents also goes up or suppress the supply of this vital service. The NY law treats less favorably cooperatives and multifamily rental housing relative to single family homes through being given higher market values. Tax policies that leads to selective reduction of tax burden in addition to providing building incentives promote housing expansion. For example in late 1990s, NY had tax exemption program to those developing new residential buildings across NY City (Schill, 1999). The use of tax incentive program are still used (New York City Rent Guidelines Board, 2016). Other different strategies used to expand housing are discussed in New York City Rent Guidelines Board (2016). This tax policy often freezes the revenue collected by the city.
Housing affordability and homelessness in New York
It is worth noting that the physical conditions of the houses have undergone gradual improvement to the extent that only a small proportion of those occupied structures is unable to meet housing quality standards that are generally acceptable (Wolkoff, 1990). Unfortunately, this improvement in the housing condition has exposed homeowners and renters to higher financial burdens. Considering the currently housing market, a newly constructed house costs much more than New Yorkers can afford given their financial resources. Furthermore, the cost of already existing housing has tremendously escalated beyond what many New Yorkers can afford. Consequently, home ownership is a dream far from realization by most of New Yorkers.
By the year 1990, more than half of New Yorker’s renters were paying rent which exceeded 25 percent of their income. During that period, the Department of Housing and Urban Development had its guidelines revised which established that renters had an acceptable rent allocation rate of 30 percent of their income and the corresponding proportion for owners was 40 percent. In reality at least 20 percent of New Yorkers had more than half of their income used to settle housing costs (Wolkoff, 1990). Despite several measures since 1990s to address homeliness in New York, around two and a half decades down the line not much has changed and even the situation is getting out of hand. Some days before being sworn in as the Mayor of NY, Mayor Bill de Blasio made vows to curb the raising homelessness which had hit a record of almost 53,000 people in NY City’s main system of shelter. Surprisingly, the numbers has gone up to the present 60,000 homeless New Yorkers excluding thousands of those who live on the street and young individuals and the victims of domestic violence sheltering in specialized houses (Hodgson, 2017).
During the term of the current mayor’s predecessor, Michael Bloomberg, the population of people who were being sheltered rose by almost 20,000 within the 12 years he was in office. This increase was generally associated with the collapse of a program that was providing rental assistance. Today approximately 23 percent of the entire homeless population of the US resides in NYC. According to the Department of Housing and Urban Development, New York City has the highest proportion of people who are homeless within the country; surpassing that of Los Angeles County by nearly 30,000 people (Hodgson, 2017).
Owner Occupancy in New York
The city of New York has lagged behind in house ownership among residents from time immemorial. In 1990s for example 49.1 percent of all households residing in central cities lived in their own homes. However in 1996, only 30 percent of residents in NY owned homes (Schill, 1999). Home ownership has generally increased in the US but NY is still left behind. By the end of 2015, ownership of houses across the current was at 63.8 percent while that of NY was revolving around 25 percent (New York City Rent Guidelines Board, 2016).
Recommended Strategy to fight Housing Problem
The New Yorkers are in need of affordable and adequate housing facilities. However, no single strategy or policy can fix the entire problem. This discussion recommends for a mix of some key policies. The NYC government should work towards fostering a diverse and livable neighborhoods. Through this, the city government should identify opportunities which ensure that housing across the five NYC boroughs is affordable. The city should link with the communities to point out areas which can aid towards new development (New York City Rent Guidelines Board, 2016). Such developments ensure that investments meet the infrastructural and service needs of the neighborhood. The city should also strive towards harnessing of housing investments which are affordable in order to generate high quality jobs. People will be gainfully employed and be able to afford rents.
The city should also consider preservation of housing stock which is affordable and quality. Thus tenants should be protected from landlord who harass them and overcharged rents. This should take place in coordination several agencies across the city (New York City Rent Guidelines Board, 2016). The city also ought to introduce incentives that are simple and flexible to ensure that long term affordability is intact. Furthermore, the city need to point out neighborhoods and those portfolios at risk of being rendered unaffordable. This implies that the city need to coordinate with owners, investors and lenders to ensure proper targeting of resources.
The city should also consider building of new housing that is affordable for the entire New Yorkers. The city should focus on increasing the number of housing units which serve New Yorkers with the lowest income. The NYC has an additional option of expanding its housing units on those public and private sites that are underutilized. Under approach, it is recommended that a comprehensive survey of the entire vacant sites within the city be done (New York City Rent Guidelines Board, 2016). This tool can be used further to enhance partnership between Non- Governmental Organizations, the State, public authorities and private land owners who possess land on which affordable housing unit can be built.
Furthermore, another complimentary move can involve expanding funding meant for subsidizing housing within NYC. Through this, the City ought to revise the existing terms of its subsidy programs and also ensure better alignment of tax exemptions in addition to other incentive programs so as to ensure that NYC’s resources get maximum possible amount from alternative sources and that they do not exceed absolutely necessary level needed to provide incentives for housing production and support construction of housing units for the very needy NY families (New York City Rent Guidelines Board, 2016). The NYC has at its disposal the option of ensuring that it generates affordable and sustainable housing which is tailored to the demographic characteristics of the City’s residents.
Conclusion
Cities across US and New York in particular experience many challenges. Unaffordable housing and homeliness is one of the major challenges faced by New York City. Dangers associated with housing problems include health issues, failure to enjoy environmental, deterrent to access to quality education among others. This problem of housing in NYC has been in existence for decades and it is getting worse despite various strategies to expand housing units. These measures include but not limited to housing subsidies, converting idle offices into housing units, issues of permits to expand housing units among others.
New York City is the leading city in terms of those who are homeless and stay in rental homes. Furthermore, this situation is getting worse with time and needs urgent measure to curb it. The City this discussion recommends for use of several strategies together. These strategies are: fostering of diverse and livable neighborhood; preservation of affordable and good quality of already existing housing stock; and erecting new and relatively affordable housing for New Yorkers.
References
National League of Cities (2013, December 12). New report identifies 10 critical imperatives facing U.S. cities. Retrieved from http://www.nlc.org/article/new-report-identifies-10-critical-imperatives-facing-us-cities
Schill, M. H. (1999). Housing and community development in New York City: Facing the future. Albany, NY: State University of New York Press.
Wolkoff, M. J. (1990). Housing New York: Policy challenges and opportunities. Albany: State University of New York Press.
Hodgson, S. (2017, March 26). Adding homeless shelters is a political risk, but de blasio sees no alternative. The New York Times. Retrieved from https://www.nytimes.com/2017/03/26/nyregion/new-york-city-homeless-shelters-de-blasio.html?_r=0
New York City Rent Guidelines Board. (2016). 2016 Housing Supply Report. Retrieved from http://www.nycrgb.org/downloads/research/pdf_reports/16HSR.pdf,
