Decade-old East Village rezoning did not deliver on affordable housing projections

The number of affordable apartments spurred by a partial rezoning of the East Village and Lower East Side in 2008 fell short of the city’s projections, creating only 55 percent of the below-market-rate apartments estimated, according to a new study by the Cooper Square Committee.

To preserve the neighborhoods’ scale and character, then-mayor Michael Bloomberg’s administration contextually rezoned the area bounded by East 13th and Grand streets, and Avenue D and East Houston Street. Height caps were imposed east of Third Avenue and the Bowery up to the western side of Avenue D, and a Voluntary Inclusionary Housing (VIH) zone was created to incentive new below-market-rate housing but not mandate it. The rezoning worked to curb wildly out of character construction in the area, but fell short of its housing development goals, according to the report.

“There is no question that the rezoning has been successful in preventing out of scale development in the 114 block area, but it has been less successful in promoting affordable housing development,” the report states.

As a reasonable worst-case development scenario (RSCDS) projection, the Department of City Planning estimated that the changes could result in some 1,383 new residential units—348 were predicted to be below market rate, according to the rezoning’s final Environmental Impact Statement. But housing advocates with the Cooper Square Committee found that construction permits were filed for just 190 affordable units in the decade since the rezoning due to “insufficient incentive” for developers to create affordable apartments, the report states.

The City Council approved the Mandatory Inclusionary Housing (MIH) zoning amendment in 2016, which requires developers set aside certain percentages of apartments in a given building at specific income bands. But the Cooper Square Committee notes that since a swath of the area has already undergone those zoning changes, MIH is a “non-starter for many East Village residents” who revile the thought of a neighborhood upzoning.

“I felt the zoning bonus was not sufficient to get what we needed, but ultimately that was the best we could do at the time,” said Steve Herrick, the executive director of the Cooper Square Committee. “So I really feel like the solution or the remedies that can be applied is to try to preserve the existing affordable housing we have.”

In 2014, Mayor Bill de Blasio unveiled a housing plan to create or preserve 200,000 below-market-rate apartments in 10 years. That pledge was expanded in 2017 to 300,000 by 2026, and his administration says it’s on track to meet, and possibly exceed, that goal. As part of that effort, the de Blasio administration has worked to ramp up requirements for the creation of affordable housing spurred by city-led neighborhood rezonings.

“Under this administration, the City has built on Voluntary Inclusionary Housing by now requiring permanently affordable homes whenever we zone for increased housing capacity,” said Joe Marvilli, a spokesperson for DCP.

DCP’s projections during the environmental review process for major land use actions are based on data and knowledge available at the time, the agency says. Recessions or economic booms can shift those projections in ways the city can’t anticipate—sometimes in dramatic ways. In the case of the 2008 East Village and Lower East Side rezoning, affordable housing production fell short of the city’s projections, but so did the creation of market-rate housing.

The Cooper Square Committee examined the residential and mixed use developments for which new construction or gut rehabilitation permits were filed at vacant buildings after January 2009 through December 2018 and found 25 permits for such projects were filed, creating 1,004 residential units. Of those, 814 were market-rate rentals and the remaining 190 were low- or middle-income apartments, the report shows.

Many of those units were earmarked at less than 30 percent of the Area Median Income (AMI) for extremely low-income tenants. More still fell in the bracket of 60-80 percent AMI, and 45 units were listed at 130-165 percent AMI, according to the report. To put this into perspective, the median household income for the Lower East Side area in 2017 was just over $40,000—about 35 percent less than the city-wide median household income of $62,040, according to the NYU Furman Center.

Nonprofit developers accounted for 54 percent of all the affordable housing units built since the rezoning, the study also found. Another remedy to the city’s dire affordable housing crisis could be for the city to look to nonprofits who own land in the area and work with those groups to incentivize low-income housing, said Herrick.

One such organization, the Archdiocese of New York, owns decommissioned churches it is looking to redevelop in the neighborhoods, but has been hesitant to commit those parcels to affordable housing. Advocates and locals have pushed for whatever is build on those lots to include affordable housing.