Destabilizing speculation

Habitat Net Zero: an ambitious plan to rehabilitate abandoned buildings in Queens

By Roshan AbrahamNext city

March 24, 2022

On a block of 116th Avenue in southeast Queens lined with single-family homes, a visibly abandoned two-story house has sat for years with its windows rolled up. Shrubs overflowed the front yard; vines have climbed to cover much of what were once the living room windows.

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Another house three blocks away was similarly abandoned, its address scrawled on the front panel in black spray paint. A few miles down 116th Avenue, a building had two boarded-up windows on the first floor, and the missing portion of its second-floor front wall exposed the crumbling innards of the building to the street.

These homes were part of a discontinued affordable homeownership program launched by the federal Department of Housing and Urban Development (HUD). The properties were then transferred to NYCHA, New York’s public housing authority, as rentals. But they’ve fallen down NYCHA’s priority list, and no one has occupied these homes and 10 others like them in southeast Queens for years.

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In 2018, NYCHA invited nonprofits to get rid of property. Habitat For Humanity of New York and Westchester County offered to renovate or completely rebuild the homes, make them energy efficient, and transfer them to a community land trust, where they would remain permanently affordable.

This proposal, called “Habitat Net Zero”, is being launched. The 13 abandoned homes will be demolished or rehabilitated into 16 permanently affordable homes and transferred to the ownership of Interboro Community Land Trust, which was founded in 2017. Interboro is a nonprofit coordinated by four organizations, including Habitat for NYC and Westchester County, Center for NYC Neighborhoods, Mutual Housing Association of New York and Urban Homesteading Assistance Board. Like most CLTs, they will enter into a lifetime ground lease with landlords and limit the resale value.

Habitat for Humanity International is making headlines this week as it is set to receive a $436 million donation from MacKenzie Scott. “We couldn’t be more excited to receive this gift at a time when, in some ways, the state of housing affordability is the worst it has been in modern times,” said Jonathan Reckford, CEO of Habitat for Humanity International, to The Associated Press. . Reckford said Habitat for Humanity will use Scott’s donation of unrestricted funds to increase the supply of affordable housing, especially in communities of color. His group received $25 million from Scott and her husband, Dan Jewett, with the remaining $411 million to be split among local Habitat affiliates.

In Queens, 13 of the 16 completed units will be new construction and three of the abandoned homes will be rehabilitated. “Volunteer crews will be back live and in person. It gives people the opportunity to come together, swing their brushes,” said Karen Haycox, president of Habitat for Humanity NYC and Westchester County, which oversees renovations and reconstructions. The history of each home in the program is different, but ownership records for the 116th Avenue homes show that they were transferred to NYCHA in 1969, 1970, and 1981. It is unclear when NYCHA stopped renting them.

Housing will be permanently affordable through a grant package: The city’s Housing Preservation and Development (HPD) Department will provide funding through a program that funds new construction for housing occupied by their owner and limits resale values ​​to limit speculative purchases. The New State Affordable Housing Corporation, Local Initiatives Support Corporation (LISC), and Nonprofit Finance Fund will provide additional funding for construction. Homeowners will also receive HPD tax relief for affordable housing rehabilitation.

According to Habitat, the mortgages will require a 1% down payment and will be offered with a fixed interest rate of 2% over 30 years. Matthew Dunbar, Habitat’s chief strategy officer for NYC and Westchester, says the low-interest loan was only possible because NYCHA donated the homes and all the incentives from the city and state. ‘State. Future properties offered by Interboro will likely be loans backed by Fannie or Freddie, Dunbar says.

The resale value of homes will be limited to the sale price plus 2% of that price each year. Dunbar says this rate, which will remain the same for the duration of the 99-year ground lease with the owners, was chosen based on conversations with other community land trusts across the country, including Grounded Solutions Network, which provides support to CLTs. The goal was to select an interest rate that could provide resale value to the homeowner, allowing them to build equity without destabilizing neighborhoods or opening homes to speculation.

“Having a fixed percentage is the most predictable way to calculate resale formulas, so the owner can know what the resale price is over time,” says Dunbar. While some HDFC co-ops, which also typically have covenants limiting resale value, choose to tie those values ​​to inflation, Dunbar says that can be unpredictable. While a fixed interest rate creates the risk that homes will sell for less than their purchase price due to runaway inflation, Dunbar says that’s unlikely and the program’s built-in subsidies would compensate. that.

Structural repairs made to the property will also increase the maximum resale value, and Interboro uses a chart that measures the resale value that can be added based on the type of renovation. In addition to the Article XI tax exemption available to all owners in community land trusts, prospective buyers will be eligible for down payment assistance.

Homes will be offered to qualified applicants on a housing lottery basis, with the first 25 percent of applicants drawn from current NYCHA residents and the remaining 50 percent from households that live within the local community council district. To be eligible, buyers will need to earn 60-80% of the region’s median income, or between $64,440 and $85,920 for a family of three.

The houses are designed with solar panels and heat pumps to be energy efficient, with a 75% reduction in overall energy consumption, thanks to a 90% reduction in energy consumption for heating and The air conditioning.

New owners will be able to join Interboro’s advisory board and help determine any regulatory changes or income requirements for CLT. There’s no way of knowing who the owners will be, but Haycox says most of the people buying their new affordable homes are single female householders.

According to the Habitat model, volunteers will construct some of these buildings. Homeowners will also be able to help with construction in exchange for credit on their mortgage, which Habitat calls “sweat enhancement.” The organization will do a comprehensive homeownership program with homeowners to understand their rights and responsibilities, Haycox says.

New York state has historically had low homeownership rates compared to the rest of the nation — 53% last year, compared to 64% nationally. In New York, this rate is 31.9% because most residential units are rental accommodation. This rate is lower for black and Hispanic New York residents, whose homeownership rates are 26.6% and 15.9%, respectively, compared to more than 40% for white and Asian households. Southeast Queens, where all Habitat Net Zero homes have been located for decades, is known for a civically engaged community of middle-class black homeowners, and the current mayor and city council president hail from the neighborhood.

In December, Governor Hochul signed legislation aimed at increasing homeownership among low-income families, increasing the state grant for building or preserving permanently affordable housing from $40,000 to $75. $000 per dwelling.

“We’re starting to talk more as an industry and a society about fighting decades, centuries of racially unjust housing policy,” Haycox says, “poor lending that favored white communities and denied access to communities of color. “.

Finding the balance between promoting home ownership without exacerbating the divide between tenants and landlords can be difficult. Yet social housing that puts land and homes in government or nonprofit hands and limits resale value can help build equity while limiting speculation, harming both low-income tenants and aspiring homeowners.

Several pending bills could potentially alter New York’s community land trust ecosystem. At the state level, State Senator Brian Kavanaugh introduced a bill that would create a $50 million acquisition fund for community land trusts, while the New York City Council introduced another bill called the Community Opportunity To Purchase Act (COPA) that would give nonprofits the right of first refusal when a building is offered for sale.

Dunbar says these actions together would significantly allow CLTs like Interboro to expand their portfolio. “I think it would provide an increased pipeline for the Interboro Community Land Trust and other community land trusts,” he said of COPA. “The ability to buy is one aspect, but you really have to combine that with financing.”

This article is part of Backyard, a newsletter exploring scalable solutions to make housing fairer, more affordable and more environmentally sustainable. Subscribe to our weekly Backyard newsletter.

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