Op-ed
New York City Faces Housing Crisis
BY U.S. SENATOR CHARLES E. SCHUMER

New York City is in an unprecedented real estate boom: appreciation is torrid, high-rise rental buildings are sprouting, renovations are increasing and neighborhoods seem to be changing overnight. Having lived through the bad old days, I can say that this is a welcome change in direction for our city.

Yet, even with all this building, New York City faces a crisis of affordable housing. Soaring rental costs and property prices, combined with a steady stream of new residents and a scarcity of homes that middle class families can afford leave too many city residents shut out of the ability to achieve a pillar of the American Dream: owning your own home. Home ownership is the surest way yet for middle class families to find security, sustain stable neighborhoods and create wealth.

The statistics are grim. According to a new report issued by New York University, the number of affordable apartments for families making $32,000 a year has declined by 205,000 since 2002. And as the number of affordable apartments has sharply declined, rent prices have skyrocketed by up to 31 percent. Making matters worse, average household income for New Yorkers dropped to $40,000 from $42,700, with two out of every five New York City households earning $32,000 or less.

Too many of our neighbors are stuck in the "New York real estate death spiral": paying expensive, ever-increasing rents at a pace that outstrips their ability to save enough for a down payment on a home. New York can't become a city of the very rich and very poor. We must fight to ensure that firefighters, police officers, teachers, clerks and the countless other hardworking New Yorkers so vital to the existence of our city have the opportunity to one day own homes of their own. We can't risk losing them.

With affordable housing becoming an endangered species, you'd expect the federal government to rush to New York's aid. Guess again. Sadly and shortsightedly, Washington puts affordable housing, in the form of the Department of Housing and Urban Development (HUD) programs, on the butcher's block. Washington is trying to slash funding by 20 percent to the Community Development Block Grant (CDBG) programs, by 26 percent to housing for the elderly and by 50 percent to housing for the disabled. Meanwhile, New Yorkers continue to fork over $11 billion more in annual taxes than they receive in federal funding.

But New Yorkers, like all Americans, deserve the basic right of affordable housing, and while I'll tenaciously fight Washington's proposed cuts, I have my own plans to increase reasonably priced housing.

First, I'll introduce groundbreaking legislation that relieves prospective homesellers from "exit taxes" which are triggered by the recapture tax of benefits the owners received many years ago. In many cases, owners avoid "exit taxes" by refusing to sell their low-value properties even at the cost of allowing their properties to deteriorate and become neighborhood eyesores. Homeowners who choose to sell high value properties often pass on the "exit tax" to the buyer. As a result, property prices are so inflated that buyers committed to keeping the buildings affordable cannot compete with profitmotivated buyers.

My legislation will give homeowners relief from "exit taxes" as long as they agree to keep the property affordable for at least 30 years. The legislation would ensure that only owners committed to keeping properties affordable for buyers would receive "exit tax" relief.

Second, I'll introduce legislation giving states the authority to pinpoint those neighborhoods that deserve funding. Currently, HUD has the final say over which neighborhoods qualify for the special 12 percent rehabilitation tax credits. As a result, states and localities, the experts in determining which neighborhoods desperately need the tax credits, are unable to guarantee that the housing credits reach the communities most in need.

Finally, I'll promote the Low Income Housing Tax Credit, which gives investors an incentive to construct inexpensive housing developments with a dollar for-dollar reduction in their federal tax liability. This program has already created 1.6 million affordable apartments for lowincome families nationwide, and in 2003 produced more than 4,300 in New York alone. We need to double the Low Income Housing Tax Credit from $1.85 per capita to $3.70 per capita.

As a Brooklyn native, I've been blessed to witness New York's economic resurgence. Our city's distinctive charm and legendary character have long been shaped by our patchwork quilt of unique neighborhoods and historical communities. If we don't take the necessary steps to increase affordable housing, we jeopardize losing the very New Yorkers who make this city the greatest in the world.

Charles E. Schumer is one of two Senators representing all New York State in the United States Senate.