Illegal Homes Thrive as de Blasio Tackles Housing Shortage

NEW YORK (Bloomberg) -

Around the side or back doors and down 10 steps of the single-family homes in the Ozone Park section of Queens lies a subterranean world of illegal basement dwellings — a byproduct of New York’s chronic housing shortage.

“Some are even better than those that are above,” said Seema Agnani, an urban planner pushing for a law to add the units to New York’s legally protected housing stock.

To Mayor-elect Bill de Blasio, the subterranean apartments in neighborhoods mostly outside Manhattan symbolize government’s failure to provide affordable housing for residents of the biggest U.S. city. He takes office Jan. 1 having pledged to build or preserve 200,000 low- and middle-income units in the next decade.

De Blasio, a 52-year-old Democrat, won election this month on a platform pledging to close the growing gap between rich and poor. Unless something is done, he said near the start of his campaign, New York is in danger of becoming a place only for the rich, “where mixed-income neighborhoods will be a thing of the past.”

More New Yorkers are spending higher shares of their paychecks on housing than ever before, with a third paying at least half of their income on rent. Having vexed mayors for decades, the housing emergency may only grow worse as city officials project the population to swell about 10 percent to 9.1 million by 2030. For de Blasio to meet his goal, he’ll have to contend with the city’s real estate industry, limited resources and geography.

“Most cities sprawl their way out of their housing crises — they build wide — but New York is a series of islands, so we can’t build out; we have to build denser and smarter and up,” said Benjamin Dulchin, executive director of the Association for Neighborhood and Housing Development, a coalition of nonprofits. “What you generally see built here over the last 20 years is market-rate or luxury housing, which doesn’t help the great majority of New Yorkers.”

The benchmark de Blasio has set for himself over the next 10 years — two more than the maximum he’s allowed to serve — would eclipse that of his recent predecessors. The subsidized housing plan of the late Edward Koch, a Democrat who led New York for three terms in the 1970s and 1980s, produced more than 156,000 new and renovated units. Rudolph Giuliani, a Republican who served two terms through 2001, added 44,000 to Koch’s plan.

De Blasio’s plan calls for the construction of 50,000 affordable units through a policy called mandatory inclusionary zoning. Real estate developers would be required to create permanently affordable and rent-regulated housing for low- and middle-income families in order to build in neighborhoods rezoned for higher density.

Backers of the program say it would encourage more developers to build in more neighborhoods, be a better use of public subsidies and would help preserve rent-regulated apartments in rezoned areas.

De Blasio also wants to direct $1 billion of the $144 billion in city pension assets toward preserving 11,000 units. That would compare with the majority of the city’s $2 billion Economically Targeted Investments program invested in affordable housing since the 1980s.

New York has long played a game of catch-up on affordable housing. From 1994 to 2011, the regulated housing stock added about 137,000 units while losing about 240,000 for reasons such as rent decontrol, subsidy expiration and co-op and condo conversion. More than 45,000 units will expire from rent restrictions and require new subsidies during de Blasio’s first term.

In New York, the mayor isn’t completely in charge of city housing. The state legislature in Albany oversees rent regulations, and the federal government helps out with funding subsidies. Unless Congress reverses the sequestration cuts that took effect March 1, as many as 185,000 low-income households could lose their housing vouchers, including as many as 19,000 in New York, the second-largest total of any state after California.

City law forbids homeowners from renting units that are more than one-half their height below curb level. In practice, it’s flouted so frequently that some residents are hard-pressed to identify homes on their blocks without a basement apartment. In interviews last week, homeowners recounted how the units, which they rent for about $900 a month, are routinely built by construction companies and marketed by real estate agents off the books.

Some are firetraps lacking windows or quick exits. Others, with full kitchens, bathrooms and bedrooms, are distinguishable from legal units only by their lower ceilings and minimal amount of sunlight, which peeks in from windows big enough for only the slimmest of residents to slide through.

In his housing plan, de Blasio pledges to “end the practice of pretending these homes and their families don’t exist.” That would be done through legislation creating an “accessory dwelling unit” pilot program to begin bringing the illegal units out of the shadows.