It's a NYC real estate dream to qualify for so-called "80/20" housing, and pay way below market rate for an apartment in a brand new, high-end development where 80 percent of tenants pay market rate and 20 percent pay much less for subsidized housing (developers get a tax cut in exchange for the affordable housing).
But earlier this week the Daily News pointed to one of the major downsides to the program, that may be standing in the way of lower income New Yorkers actually getting the apartments they need— and are promised: wealthy renters gaming the system to snag themselves affordable housing. To wit: the paper focuses on one recent case in which a stockbroker managed to snag a $722/month luxury two-bedroom in Chelsea despite eventually pulling in more than $400,000 a year.
According to the rules of the program, the affordable housing units in 80/20 buildings are to be reserved for households with incomes at 50% or less of the local Area Median Income (AMI), adjusted for family size (though specific AMI requirements vary by building). In Chelsea, where the stockbroker lives, that would mean an income cap of $58,903 – $76,320 for a family of four.
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(If you want to know what it really feels like to be a 20-percenter—affordable housing renter—in an 80/20 building, we suggest you read here.)
Cases like the one the Daily News reports on led state Controller Thomas DiNapoli to release an audit looking at how tenants with six-figure incomes are able to obtain “affordable” apartments subsidized by the public.
DiNapoli found that as of December 2015, 160 tenants living in low-income units in New York City were making $100,000 or more, with eight making $250,000 or more. He also found that the incomes of about one-third of the original tenants in the 68 developments his office audited exceeded income eligibilility limits.
The main reason for this may be because, as we've previously reported, once a tenant qualifies for affordable housing in an 80/20 building, they can’t be removed from the housing despite how much their income goes up over time.
"The agency can and should do more to ensure that New York's desperately needed affordable apartments are going to those who deserve them," Mr. DiNapoli said in a statement.
Now, considering that Governor Andrew Cuomo's office has passed a new version of the 421-a developer tax program, which allows for 80/20 building to be built, these types of affordable housing options aren't going anywhere.
As such, DiNapoli's office offered the following recommendations to prevent against future problems: requiring developments to verify the incomes of all prospective tenants—prior to moving in— with the IRS; working with management staff to develop sound and consistent methodologies to project applicant income when determining elibility (that could help deter people who regularly make a lot of money but apply during an income downcycle); and, finally, ensuring "adequate information be collected to enable decision markers to asses the costs and benefits of the program."
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