de Blasio Calls $500K-Per-Unit Harlem Housing ‘Affordable’

June 10, 2014

de BlasioA day after Mayor Bill de Blasio and other high-ranking elected officials lauded the completion of a permanently affordable apartment building in Harlem’s Sugar Hill section Monday, some housing experts are raising questions about its cost.

On the plus side, the distinctive Sugar Hill Development, a 124-unit building at 404 W. 155th St., will bring a children’s museum and universal prekindergarten to the neighborhood, as well as providing permanent housing to 25 homeless families. Those benefits were touted by a bevy of elected officials on Monday’s tour of the property, including City Council Speaker Melissa Mark-Viverito, D-Manhattan, and city Comptroller Scott Stringer.

But according to data from the city’s Department of Housing Preservation and Development, the cost comes to more than $500,000 per residential unit. That puts it significantly above that of similar new affordable buildings in the city, according to affordable experts who examined the funding numbers and spoke with Crain’s on the condition of anonymity. Typically, the per apartment cost of similar affordable-housing projects ranges from about $300,000 to $400,000 per unit.

Granted, the funding of the project was conceived during the Bloomberg administration, and a spokesman for Mr. de Blasio noted that Monday’s tour was simply to celebrate a building that had been long anticipated by the community. Developer Broadway Housing Communities received 50,000 applications for the apartments, 70% of which will be affordable for households making 50% or less of area median income, which for a family of four is $42,950. A family of six making up to $79,700 can rent a three-bedroom for as low as $1,588.

“We are seeing desperately needed affordable housing come on line alongside a high-quality early-education center and a dynamic cultural space,” said Wiley Norvell, a spokesman for the mayor. “That’s something worth celebrating. We were there to recognize those achievements and how hard this community worked to bring us to this moment.”

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But affordable-housing insiders still wondered why the developers got a precious source of funding, known as 9% tax credits, at the expense of other projects that adhered to widely accepted cost norms.

In fact, when the city housing agency calculated the average cost per unit of low-income rental housing for 2012, the year the financing deal was put in place, it noted that the $401,078-per-unit number was an outlier because of the Sugar Hill Development and another pricey project called Artspace El Barrio.

The city blames the high costs of the Sugar Hill project on site conditions, such as soil contamination and the steep grade of the parcel. And if it used another financing mechanism instead of the 9% tax credits—for instance, as-of-right tax credits that come from bond financing—the city housing agency would have had to put millions more dollars into the project (source).

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