Stung perhaps by criticism that the New York State legislature has done nothing in the face of an ongoing housing-supply crisis in New York City and its suburbs, two Brooklyn members, Senator Andrew Gounardes and Assembly Member Brian Cunningham, recently introduced the Faith Based Affordable Housing Act (FBAHA). The proposed law would override restrictive local zoning and allow the construction of new housing on properties owned by religious organizations. Writing in the New York Daily News, Cunningham and Rev. C. Hugh Wilson, a pastor at Ebenezer Urban Ministry Center, state, “The potential impact of this bill would be life-changing for New Yorkers struggling to find affordable homes.”
Would it? Not nearly as much as the bill’s sponsors and some housing advocates claim. The premise behind the bill might seem sensible. Many congregations own splendid, large old buildings that they can no longer afford to maintain. Selling the land to develop a new apartment building and then using the proceeds to find a more modest space somewhere else might be appealing. In the suburbs and outlying areas of the city, congregations may own parking lots or other vacant land. They could use the proceeds from selling this surplus land to renovate their worship spaces, build new ancillary facilities, or set up endowments to support future good works.
Financially strapped religious organizations looking to realize the economic value of their legacy land and buildings, however, are not FBAHA’s targets. That’s because FBAHA requires that any new housing built in New York City meet the affordability requirements of the city’s Mandatory Inclusionary Housing (MIH) program. MIH generally requires that 25 percent or 30 percent of units meet an affordability standard. In the suburbs, new housing would be subject to a requirement that 20 percent of units meet a similar benchmark.
The New York City affordability requirement effectively means that new housing facilitated by FBAHA will be 100 percent affordable, probably developed using federal low-income housing tax credits (LIHTC) and other subsidies. This type of housing won’t realize a land profit for the religious organization because the city’s Department of Housing Preservation and Development won’t pay for such a profit. At one time, new MIH rental buildings with a mix of market-rent and affordable units were financially feasible in the city’s strongest housing-market neighborhoods. That required long-term tax exemptions under a now-lapsed state law known as Section 421a. FBAHA doesn’t reinstate Section 421a, thus eliminating the chance that new housing development could result in a land-sale profit for the religious organization. One hundred percent affordable buildings qualify for tax exemptions under other provisions of law that do not lapse.
In the suburbs, local Industrial Development Agencies have the authority to provide tax incentives to new multifamily housing developments in exchange for the provision of a small percentage of affordable units—but these agreements typically do not achieve FBAHA’s required threshold of 20 percent affordable units. Absent a viable tax incentive for mixed-income housing, it’s likely that any new housing under FBAHA in the suburbs would also need to be 100 percent affordable and subsidized heavily. That would likely be housing for low-income seniors, also utilizing LIHTC.
In mandating ministerial (as-of-right) approval of 100-percent-affordable projects on religious land, FBAHA is not so different from the California legislation that is perhaps its model, popularly known as the “Yes in God’s Backyard” bill. That law also applies to land owned by independent (nonpublic) colleges and universities, a category that is much more significant in New York. The California law includes prevailing-wage requirements, while the New York bill does not; but since the latter effectively requires 100 percent affordability, the likely use of the LIHTC subsidy ensures that prevailing-wage requirements will nonetheless apply.
As a benefit targeting a small number of 100-percent-affordable developments, FBAHA is fine as far as it goes but hardly the game-changer touted by the Daily News. The legislation permits housing applicants to avoid process costs such as public hearings and state-mandated environmental reviews. That can save money that can go into providing additional affordable units, or higher levels of subsidy per unit. The bill also lets legislators claim they’re being “pro-housing” without courting what they really fear: a primary challenge from the socialist Left.
New Yorkers who care about housing policy should understand that FBAHA represents a very small fraction of what the state legislature needs to do. Once we acknowledge that the views of local zoning boards should not be accorded unconditional deference, we need to ask where else the state interest in an abundant housing supply justifies further zoning overrides. Similarly, when we see that state-mandated environmental review adds no useful value in this special case, we should wonder whether it ever adds value—or merely cost and time—to new housing proposals. Religious organizations are meritorious applicants for new housing approvals, but so are private developers who want to invest millions in badly needed housing in New York State. Slicing off tiny pieces of the housing universe for special favors because we all can agree on their merits won’t get us very far.
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