Giving Compass' Take:

· Writing for City Journal, Howard Husock talks about New York’s new rent-regulation law, how it affects housing rules, and why it will discourage investment in building construction and affordable housing. 

· How can donors work with cities to expand access to affordable housing? 

· Read about creating affordable housing opportunities through equity.

New York State’s new rent-regulation law makes dramatic changes to housing rules—limiting rent increases after owners make major improvements and even after units become vacant and the rents have not been raised for years. The law will likely lead to lower values for buildings with rent-stabilized units, potentially weakening the city’s tax base. Ironically, it may discourage development of new, so-called affordable housing, the type that Mayor Bill de Blasio sees as a central goal of his mayoralty.

De Blasio is betting that he can reach a signature goal of “building or preserving” 300,000 affordable units, in part through “inclusionary zoning.” In exchange for generous tax abatements and the easing of height and density restrictions on their buildings, developers set aside 30 percent of units in new buildings and subsidize them as “affordable” for lower-income tenants. Those units become rent-stabilized; the rest can be priced at market rates, though the new legislation could be interpreted to mean that those market-rate apartments fall under rent regulation, too.

Developers who specialized in affordable-housing deals had been managing to build through a combination of incentives and the possibility that rent-stabilized units might not remain that way forever. Higher-rent subsidized units could be deregulated when they became vacant, and developers assumed that market-rate units would never be rent-regulated.

Read the full article about New York's new rent-regulation law by Howard Husock at City Journal.