Schumer wants to lend de Blasio a hand in affordable housing development

When New York City politicians frame the affordable housing crisis narrative, it usually contains a familiar refrain about the federal government’s disinvestment in urban housing.

But if U.S. Sen. Charles Schumer has his way, an oft-ignored federal program that has long been a boon for affordable housing development could get a much-needed financial boost, and also satisfy city housing advocates banging the drum for deeper affordability in Mayor Bill de Blasio’s housing plan.

On Friday, Schumer and Washington Sen. Maria Cantwell proposed a 50 percent expansion of the Low-Income Housing Tax Credit – which would help finance roughly 400,000 units of affordable housing for the next 10 years.

In its current form, the tax credit has a hard income ceiling of just under 60 percent of the Area Median Income – roughly $54,360 for a family of four – and to reach any income level deeper than that requires additional subsidy. Schumer’s proposal would increase the income limit of the tax credit to 80 percent of Area Median Income, but allow the income of all tax credit housing units in a given development to average out to 60 percent Area Median Income.

Essentially, it builds in what’s known in real estate jargon as “cross-subsidy” into the tax credit. By increasing the ceiling for the tax credit, those 80 percent Area Median Income tenants – $86,976 for a family of four – would subsidize much lower income levels in the same building on their own at no additional cost to taxpayers. For cities like New York, where de Blasio’s housing plan was slammed by advocates and community boards for not being truly affordable to lower-income bands, this would supplement the city’s Mandatory Inclusionary Housing program in neighborhoods like East New York without spreading the city’s own subsidy programs too thin.

There’s another part to this proposal that will put a smile on the mayor’s face – a “basis boost” increase for homeless or extremely low-income housing. Under current law, certain areas and developments are eligible to receive up to a 30 percent basis boost if the state housing credit allocating agency determines the boost is needed to make development financially feasible.

For de Blasio, who wants to build 15,000 units of supportive housing for homeless individuals and families over the next 15 years, Schumer’s proposal would again limit the need for city subsidy to satisfy that goal.

Schumer wants to include the tax credit increase in the tax extenders bill by the end of the year, which of course would require the ever-elusive Congressional approval.

Now, the only question is how the state and the city will divide the subsidy among themselves, (Gov. Cuomo also plans robust investments in supportive and affordable housing) but that’s a story for another day.