Abington House, at 500 West 30th Street near the High Line in West Chelsea, is a new luxury residential building and, like a lot of new luxury developments in Manhattan, it’s extremely expensive. The cheapest two-bedroom apartment now listed there rents for $5,850 a month. That gets you only one bathroom; a two-bed, two-bath can run as high as $8,695.
But 78 apartments in the building, or 20 percent of the total, are set aside as affordable housing under New York City’s “inclusionary zoning” program. That means 19 two-bedroom apartments are priced from $687 to $873 — about a 90 percent discount to market rents. Those apartments were granted to 19 households that make from $25,612 to $42,950 a year and won a housing lottery the city held last year.
There are two appealing facts about inclusionary zoning: developers pay for it, so it has no direct fiscal cost at a time when direct subsidy dollars for affordable housing are scarce; and it produces economic integration, with high- and low-income households living on the same hallways. This is no small thing in Manhattan, where high housing costs — rents rose 19 percent from 2005 to 2012 — are turning it into an island of exclusivity. On the other hand, the affordable housing units created by inclusionary zoning are extremely expensive. The subsidy to each family getting an affordable two-bedroom unit at Abington House will be worth nearly $90,000 a year. That money could cover rent for several families in a middle-income neighborhood in boroughs outside Manhattan, like Sunnyside, Queens.
Inclusionary zoning is especially common in regions with high home prices, like the Northeast and California, and high-price enclaves like Santa Fe, N.M. But New York stands out for its extremely high rents, so the extremely high implicit subsidies are necessary to make the inclusionary units affordable.
New York’s inclusionary zoning program is voluntary: Developers agree to set aside 20 percent of the units, and, in exchange, they are permitted to build 33 percent more square feet than is otherwise permitted. But many developers, especially those building small and midsize projects, choose not to participate, partly because the implicit subsidy for the affordable units is so high. As a result, inclusionary zoning generated fewer than 3,000 new affordable units from 2005 to mid-2013, according to an analysis from Brad Lander, a New York City councilman.
Full article here (New York Times, June 7th, 2014)