Neighborhood investments and the benefits they offer
New York City’s Housing Authority (NYCHA) is in search of private investors for their Brooklyn and Bronx buildings. They are seeking developers to buy stakes in nearly 1,700 units, 1,000 in the Bronx and 700 in Brooklyn. These buildings need around $350 million in maintenance for necessary upgrades to elevators, boilers, kitchens, and lobbies. The repairs would simply not be possible without the help of these investors, explains vice president at the NYCHA Nicole Ferreira. The NYCHA will retain ownership of the upgraded buildings and the tenants will see little change other than the upgrades.
In return for their investments, private developers will receive modest tax credits. This thinking is similar to the New Market Tax Credit, that provides tax incentives for private investors that put money into businesses in low income areas. The practice has proven to be effective and is becoming increasingly popular. The U.S. Department of Housing and Urban Development is encouraging this type of thinking in other areas of the country where improvements are desperately needed for old and dilapidated public-housing buildings.
The Rental Assistance Demonstration (RAD) program converts buildings into rental subsidies under the Section 8 program. Under this program, private landlords receive the difference between the rental market rate and how much the tenant can afford. This benefits the private investors because the lenders receive the federal tax credit while the rehabilitation work fees are earned by the owner.
Numerous big cities have incorporated this into their neighborhoods, converting housing units under the program such as Chicago and San Francisco. The upcoming New York deal will bump the city up to 3,100 units in the program which is more along the lines of the average housing in the program in other big cities. Without private investment, some fear the housing will be unviable in the coming years. The RAD program is extremely important for the future of public housing in big cities such as New York City.