Bracing for Federal Cuts to NYC Housing

Brian Lehrer: Brian Lehrer on WNYC. We'll talk to our WNYC and Gothamist housing reporter David Brand. Now, one of his most recent stories ties Trump administration actions to New York's affordable housing shortage. The headline is, uncertainty over federal cuts to New York City housing forges unlikely allies. We'll explain. Another David Brand's story, New York tries to contain rising threat to affordable housing, skyrocketing insurance costs, and this one, recovering a security deposit in New York City's small claims court could take more than a year. How many heads are bobbing, yes, hearing that one? David Brand is on it when it comes to housing, and in addition to his short reports on our newscasts, we have him here from time to time to stretch out a little. David, always good of you to come on with us. Welcome back to the show.

David Brand: Thanks. Thanks a lot, Brian.

Brian Lehrer: Uncertainty over federal cuts to New York City housing forges unlikely allies. The article says, policy signals from the Trump administration and its allies indicate that drastic spending cuts are forthcoming. What kinds of drastic spending cuts as they could pertain to housing in New York?

David Brand: I was reporting on a convening of various city agencies, Department of Housing Preservation and Development, Department of State Social Services, New York City Housing Authority, along with a number of policy experts, trade groups, tenants rights groups, developer lobbyists, all coming together to consider what are the risks in New York City housing.

Some of the things that they discussed at this convening were reduced spending for the Section 8 housing program, so vouchers for low-income families, block grants that the federal government provides to states, or in this case, New York City for a variety of services, whether that's housing inspectors through the city's housing agency or grants for affordable housing development. They're predicting those are going to decrease. They're trying to come up with ways to fight back against that or try to warn, "Don't do that. This will have broader impacts." It's really bringing together a range of people in the housing landscape here.

Brian Lehrer: Who are they? Who are these unlikely allies that the headline refers to?

David Brand: Yes, the two I focused on there were the Legal Aid Society, which represents the interests of tenants, and the Real Estate Board of New York, which represents the city's biggest developers and landlords. Those two sides are usually at odds when it comes to policy. You think about rent regulations, most famously in 2019 when the state legislature changed the rent laws to be friendlier to tenants. That was after years of fighting on both sides, and now shows the urgency that a lot of people in New York who deal with housing are feeling, where it's uniting developers, tenants rights groups, tenants attorneys and many other groups.

Brian Lehrer: Their strategy, you reported, is that the most effective way to fend off those federal cuts wasn't to focus solely on their effects on low-income residents who directly benefit from housing programs, but on how housing instability, canceled development deals, and market uncertainty could affect business and the broader national economy. Do you have any basics of how they would tie that assistance to low-income renters to a broader economic impact, a trickle up economic hit?

David Brand: The uncertainty here is what people in the housing world say is the biggest problem, lenders don't want to make loans if they're not sure financing is also going to be coming from the federal government, or if a landlord depends on money from Section 8 rental vouchers and maybe that money is reduced or tenants are losing those vouchers, people might not want to invest in those properties or make loans on those properties.

I have a pretty interesting example, because I talked to a developer who's working on a senior housing project in New York City right now. He's about to close, a few weeks away from closing, couple of hundred low-income senior units. The financing for this project includes a multimillion dollar loan from the federal government. That money was allocated, it's currently sitting in a bank account, but it's frozen. He's stressed because he says without that money, it changes his ability to close on the project, and worst-case scenario, doesn't get that money made up. He's got this multimillion dollar hole and can't close on the deal and build this project, that could cost jobs.

You talk about the trickle or the ripple effect. Housing projects need materials, so where are we buying the materials? In New York State, throughout the country. Supplies, jobs, it runs the gamut of business across the country. Maybe another scenario, the city chips in more for financing for this project, but then that's potentially less money for other housing projects elsewhere in the city, so another series of ripple effects. That's the message that they're focusing on, that this doesn't just affect individual low-income renters and maybe their landlords, it has this broader economic impact.

Brian Lehrer: Yes, really interesting examples there, but do you know why there's a rationale in the first place from the administration's point of view or their supporters for why to cut assistance to low-income renters in the first place during a housing crisis? Is this just the perennial undeserving poor bias, "If they worked harder, they wouldn't need our vouchers," or whatever?

David Brand: Well, spending reductions are definitely typical, especially under a Republican administration or Republican Congress. When it comes to Section 8 funding, I think we should take a step back that it's not like this program is going to end.

In fact, in the most recent Congressional budget proposals, there is a modest increase in funding for the Section 8 program, but it's not enough to cover the need or to continue services as they currently are, and so that could lead to cities that are distributing these vouchers might be more aggressive if someone isn't paying their share of the rent to try to cut them off and reclaim that voucher because there's fewer to go around, or if there are extra vouchers, like we see in New York City right now, there's a few thousand extra Section 8 subsidies that could be allocated that might not happen at all because there's not enough funding to cover those.

I think a lot of this is typical of a conservative administration, Republican administration. This is coupled with that desire to target waste and make things more efficient, whatever that means right now, I guess. There's also the difference here that they're cutting staff at agencies. That's leading to uncertainty and making programs work, probably worse, already short staffing, in many cases. You have fewer people who are administering these vouchers or administering these grants or reviewing these applications, just going to make things less efficient and work worse.

Brian Lehrer: A related story you posted on Gothamist on Monday, and if you're just joining us, our guest is our housing reporter David Brand, was called New York City reps blame federal chaos after New York City Housing officials delay rental assistance payments. Are those the delays you were just talking about?

In our previous segment with Paul Krugman, we were talking about the keystone downsizers who are going in there with a chainsaw and other blunt instruments and cutting things before they realize the effects. Then they've had to uncut in a number of cases already because they didn't realize what the effects were going to be of their work. Is that what we're seeing with respect to delayed rental assistance payments in New York City?

David Brand: Yes. This is new and I think really does relate to that. The New York City Housing Authority, NYCHA, runs public housing here in New York City, but also runs the majority of the Section 8 program, so providing these vouchers for close to 100,000 households in the city, paying the landlords directly on their behalf. About two months ago, you might remember, the federal government issued that memo budget office about freezing federal payments. That was later reversed by a judge or blocked by a judge, but I think was a wake up call for NYCHA that, "Oh, maybe we can't count on this money coming in as immediately as it used to."

They used to pre-schedule payments to landlords at the beginning of the month knowing the money was coming in from the federal government. Now the past two months, and this was a surprise to a lot of landlords who contacted me and let me know this was happening, NYCHA is now saying, "We need to wait until that money actually arrives and then we can process these payments." The delays are a day or two, but it's just creating a little more uncertainty and a little more angst.

Brian Lehrer: How about your story, New York tries to contain rising threat to affordable housing, skyrocketing insurance costs? What's happening with insurance?

David Brand: Yes, that's something I've been covering pretty closely the past couple of years, that insurance costs, especially for affordable housing, and especially in lower income neighborhoods like much of the Bronx, is just out of control, and so landlords are, first of all, or property owners, finding it hard to find an insurance carrier that's willing to cover them at all. There's only a few still operating in the market, and because of that, their rates are skyrocketing.

It has a lot to do with what's happening across the country with natural disasters leading to much higher claims. They say there are some regulations specific to New York City when it comes to scaffold law, that also leads to higher prices. There's the issue of insurance discrimination, which I covered because of a caller to this show who contacted me, actually, and let me know about this issue. These companies just don't want to write claims to buildings with low-income tenants.

All of that is combining to make these premiums go through the roof. They've doubled in just the past few years. Meanwhile, in a lot of these buildings, they're rent stabilized or subject to regulations from the city or state. The owners can't raise rents and they're dealing with this higher price from insurance. They're trying to get that price under control. That way they can use that money, redirect it to either their own profits or ideally improving the conditions of their building and making renovations and repairs.

Brian Lehrer: Interesting mix of inputs to the insurance problem, but is part of what you said, that if there are wildfires in California or floods in Kentucky, that that's affecting insurance rates on a property on Fordham Road?

David Brand: Possibly, yes. We're seeing that all across the country, that these insurance companies are raising rates everywhere, and that's in large part because of natural disasters and higher claims throughout the country.

Brian Lehrer: All right. Last thing for today, David, some breaking housing politics news this morning. New York Times headline from the mayoral race break, Brad Lander would declare housing emergency if elected New York City mayor. It says Mr. Lander wants 500,000 homes to be built in the city. It says he will declare a state of emergency because of New York City's housing crisis, build 50,000 homes on public golf courses, triple subsidies for affordable housing and more.

David, Lander just released that this morning. I don't know if you've gotten a good look yet, but do you have a general take on how different candidates are approaching the affordable housing crisis, or emergency, in Lander's word? Maybe he's taking a cue politically from Trump, who came in and declared a border emergency, declared an energy emergency, which gives him more power to do things. I think it's a label that most of the candidates would use or agree with when it comes to housing in New York City.

David Brand: That's right. All of the candidates, and we have a lot of them now, have released housing plans that have really robust housing production numbers. You mentioned Lander has planned for 500,000 new homes. Zellnor Myrie, he's state senator, has a plan for a million. Zohran Mamdani, state assemblymember, who's the Democratic socialist candidate, has a plan to build 200,000 city financed homes. This would be putting the public sector to work and public dollars to build housing. Similar to, you mentioned Lander's plan, tripling subsidies for affordable housing.

Then, of course, you have the mayor who's-- that's a bright spot of his mayor mayoralty, is his focus on housing. I think a lot of people would celebrate what he's done when it comes to the City of Yes Housing plan to change some zoning rules to make way for more housing or some of the neighborhood-level housing plans that he's proposed. This is really one of, maybe, the issue, and maybe for me a good time to be a housing reporter, because this is such a key issue in the mayoral race here.

Brian Lehrer: David Brand, WNYC and Gothamist crack housing reporter. I love that story you told of how a caller to the show, when you were on a previous time, gave you a tip that resulted in a productive investigation. I love that that happens, and that not only do we have great callers who don't only offer opinions, but help us report stories, but then you're willing to take a little morsel from a caller and run with it. Keep it up and keep coming on with us, David. Thanks a lot.

David Brand: Thank you, Brian. Thank you to all the callers who give those tips. Thank you to everybody, all the listeners.

Brian Lehrer: Brian Lehrer on WNYC. Much more to come.

 

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