Above photo: John Paraskevopoulos, legislative director for New York State Assembly member Emily Gallagher, authored much of her recently-introduced social housing bill.
It’s Core To New York’s Past – And Could Be Its Future.
The policy wonk who helped pen the state housing authority bill says it’s time to revive New York’s history of social housing.
When it comes to housing people for highly affordable and highly livable homes for the long term, Vienna, Austria has no equal.
The average Viennese pays a quarter or less of their post-tax income on rent and utilities and half of the city lives in public or subsidized housing. These buildings aren’t shabby or poorly-maintained either. “It looks like the housing we can’t afford in New York,” says Samuel Stein, housing policy analyst at the Community Service Society.
Vienna prioritizes housing supply, subsidizing the construction of 7,000 subsidized units a year while maintaining over 220,000 city-owned units. As Vienna grows its social housing stock, it suppresses housing costs overall.
In 2022, a 50-person delegation from New York comprising housing activists, progressive lawmakers, policy wonks, and homeless and tenant rights advocates spent a week in Vienna seeing what the fuss was about. The delegation realized Vienna’s housing is more stable and price effective than New York’s at-risk affordable housing ecosystem. But advocates also found that most aspects of Vienna’s approach have a counterpart in New York.
“There isn’t any magic that the Viennese have divined,” says John Paraskevopoulos, legislative director for New York State Assembly member Emily Gallagher and author of much of Gallagher’s recently-introduced bill to bring social housing to New York.
New York has a long legacy of public and social housing initiatives throughout the 20th century, which includes the largest public housing system in the country, limited-equity co-ops like Mitchell Lamas, and the Urban Development Corporation, which built over 30,000 units statewide.
The difference, Paraskevopoulos says, is that America’s ambitious housing programs have regularly been undercut or abandoned outright. But he and a growing movement of housing advocates believe New York can also adopt social housing, a model that promotes permanent affordability, social equity and democratic resident control.
Now a bill to create the statewide Social Housing Development Authority (SHDA) — as designed by Paraskevopoulos and a brain trust of various housing advocates, tenant rights activists, policy wonks, labor leaders and other lawmakers — has been introduced in the New York State Legislature. The authority’s goal is to utilize a variety of tools to finance, build, convert or maintain permanently affordable, union-built housing for people throughout the state.
Paraskevopoulos’ boss and the bill’s chief sponsor, Gallagher, maintains that the bill is a top priority going forward. We spoke to Paraskevopoulos in depth about the origin of the bill, its broader vision and how his team worked with the broader affordable housing movement. This interview has been edited for length and clarity.
A System Based On Ever-Rising Property Values
Paraskevopoulos: The model of American homeownership that our country has relied on basically since the Great Depression is no longer working for people. In the absence of any federal action, cities and states and local governments are left holding the bag.
The traditional model was that everyone should be able to get a home through a mortgage insured by the federal government. That’s how you pass on intergenerational wealth; that’s how you develop equity that you can use to retire on. Rising home costs and property values have made this basically impossible for younger generations.
Increasingly, older people who bought their homes can no longer afford property taxes on homes whose values are increasing constantly. It’s good fortune to have bought a home when it was worth $80,000 and now is worth $2 million, but if you’re living on Social Security, it’s impossible to afford the property taxes.
The rises in rent are tied to a system that relies on ever increasing property values. In one fell swoop, we’re not going to redraw the nature of the American economy, but we do need measures that suppress property values because it’s not sustainable.
Wages don’t increase at that level. If wages were doubling every decade, we might be in a wage price inflation spiral. That’s tied to ever increasing costs in services. The cost of my haircut has doubled in the last few years. That’s not because barbers are being paid twice as much, not because taxes increased two-fold. It’s because the landlord of the barber shop has doubled the rent.
How To Mitigate Speculative Pressures
A lot of the services people rely on are deeply connected to the price of rent, whether commercial or residential, which goes back to property values. We live in a city and an economy that relies on speculation on real property.
This is the type of talk that would land me in a HUAC [House Committee on Un-American Activities] hearing 50 years ago. But, to the degree that we can add property to a permanent trust that mitigates or eliminates the speculative pressures, we can prevent property values from spiraling upwards constantly.
Social housing is a great way of doing this. The high costs necessitate some sort of government intervention. We’ve seen social housing used in other places around the world as a very effective way of providing affordable housing and stabilizing property markets overall.
If you look at a place like Vienna, not only has social housing been successful in providing long term affordable housing, but they’ve been able to stem the tide of speculation on property values in a more resilient fashion than other cities around the world.
That just makes life easier for everyone. It means that businesses can operate in a more cost-effective way. The neighborhood bookstores, the record stores, artists, music venues — a lot of the things that make New York a great place to live, that lend the city a lot of its character, have been forced to close because [rising] property values and rents make it impossible for them to function.
Housing In Vienna And New York
The Viennese housing system has built and supported social housing for the last 100 years through public housing that is maintained, and also through permanently affordable rentals and limited-equity cooperatives.
One of the things that struck me is that there isn’t really any secret sauce. Basically, everything that they’re doing, New York has been doing for just as long, if not longer.
Some of the first social housing experiments occurred in New York in the 19th century. Before Red Vienna ever happened, there were limited-equity coops that were being built in Brooklyn, Manhattan, in the Bronx, in the 1910s. New York pioneered the first public housing authority in the nation in the ‘30s and aggressively supported limited-equity models through the ‘50s and ‘70s, through a variety of programs, most notably Mitchell Lama.
But particularly in New York, all of these models, although successful, were sort of fitful – they were subject to the whims of changing administrations and shifting national politics. We would start a program and then it would be defunded two decades later. We aggressively expanded public housing, and then everything began to be defunded in the ‘70s and ‘80s. Limited-equity coops and [Housing Development Fund Companies] were incentivized, but really only to take over buildings that had been abandoned by landlords during the ‘70s and ‘80s.
Housing Crises, Then And Now
There is a remarkable legacy of social housing in New York that, the more we learned about, the more our office wanted to try to resurrect and build upon. One intriguing example was the Urban Development Corporation that lasted from 1968 to 1975, which I thought about as a sort of proto-Social Housing Authority.
There was concern about a persistent housing crisis in New York that goes back to the turn of the century. That’s what motivated a lot of the experiments with social housing and rent control in the first place. It started with concerns about tenements and overcrowding – not just conditions in the tenements, it was also affordability. So, in the 1910s and 1920s, rent control and a lot of tenant reforms were enacted.
These concerns about the housing crisis manifested in interesting ways, like a statewide rent control enacted after World War II that lasted through the ‘50s. The conditions then were not too dissimilar from conditions now: really high inflation right after the Korean War, and there wasn’t enough housing.
Rockefeller And The UDC
In 1968, Governor Rockefeller wanted to create a statewide housing authority that would build subsidized housing that would be mixed-income and permanently affordable.
The governor forced this proposal through the state legislature and created the Urban Development Corporation, which would be run by this guy named Edward Logue, who had a lot of experience with urban development in some other Northeastern cities. Logue wanted the Urban Development Corporation (UDC) to have all of the functions to be under one roof: financing, planning and development. He also wanted the ability to override local zoning ordinances. The UDC was given a $2 billion bonding power, as well as subsidies from the state.
In some interviews with people who work there, they say that their job was basically to just take land and build housing for poor people. They described flying around the state in a helicopter and buying thousands of acres of land that they were going to build on.
The UDC wanted to build housing for all New Yorkers and wanted to build it at an extremely fast pace. They wanted it to be mixed income, desegregated, and affordable. They wanted to build things that were innovative in terms of design, that people wanted to live in, and that were nice. Between ‘68 and ‘75, they built 33,000 units of housing across the state. A few of the projects were really ambitious. They redeveloped Roosevelt Island, which at that point was known as Welfare Island and had some old dilapidated hospitals, but was mostly barren and unused.
That said, in the ‘70s, their fortunes reversed. Interest rates kept rising. The Nixon administration declared a moratorium on a subsidy that the UDC had been heavily reliant on. Then the UDC could no longer function in a fiscally sustainable way. They had to declare bankruptcy in 1975.
In one of their annual reports from the end of 1974, the president of UDC, Ed Logue says plainly, “The tax exempt bond market has gone to hell.” That’s exactly what was putting New York City on the verge of bankruptcy.
But, instead of bailing it out, which we’ve seen happen to so many private ventures, the legislature, which was reorienting itself towards a much more neoliberal response to the fiscal conditions of the city and the state, decided to let the UDC go bankrupt.
That basically ended the seven-year experiment in having a statewide authority to acquire property and build social housing.
Lessons From The Rise And Fall Of The UDC
I think the UDC provided a lot of the useful lessons for resurrecting New York’s illustrious history with experimenting in social housing.
One, the UDC relied far too much on the leadership of one or two visionary people: Ed Logue was great to run the agency, and the patronage of the governor. Then Rockefeller left New York to be Vice President, Carey took over, and no longer was there anyone to protect the vision.
The other lesson was that the UDC was meant to be revenue neutral. It needed startup capital from the state and it needed bonding powers — the ability to issue tax exempt bonds.
I think in retrospect, to build a lot of deeply affordable housing, it can’t be revenue neutral. It’s just a fact that it’s going to need subsidies in order to maintain that ability to build below market, keep acquiring housing and property and to maintain permanent affordability.
The other lesson is that we have to be as gracious with public enterprises if they falter as we are with private ones. Whenever the private housing market is having difficulty, we decide they’re worthy of a giant tax break. But there’s a much harsher attitude when it comes to an ambitious public enterprise like this, no matter how valuable the service it offers — “Well, if they can’t operate, then they deserve to go bankrupt.”
We have to get rid of that attitude. It’s no guarantee that anything that’s visionary or experimental is going to operate flawlessly. If we’re going to make this work, we have to support it through good years and bad.
The Social Housing Authority’s Independence And Governance Structure
If we’re to avoid problems that happened in the past, where these programs were suddenly cut or defunded, the agency will have to be insulated from certain political pressures. The best way to do that is to structure it as an authority whose board operates according to its own prerogatives, its own fiduciary duties, and is accountable to different stakeholders than simply who is in the governor’s office.
We thought, to make this truly accountable to the people who live in the housing, there should also be seats on the board given to people who actually live in the housing. To that end, what we proposed was a board where there are appointments from the legislature, from the governor, as well as seats for tenants.
You want to trust the leadership of all of our agencies. But I don’t know if in four years or 10 years, the person running Homes and Community Renewal [the state’s affordable housing agency] is going to care about this program or share our vision. So another reason for making it independent of any existing agency, and for constructing the board as we did, is to ensure that it’s not dependent on just one person who’s in charge.
Another reason that I liked the independent authority model is that it can issue its own bonds, which are tax-exempt. Having that financing power is necessary to execute capital projects. Otherwise, it would be subject to annual appropriation from the legislature, which is just more uncertain. You could have one year where there’s a lot of pressure in Albany to fund the program, to give it capital money, and then the next year there isn’t. That’s tricky, so having independent financing power is very important.
The Social Housing Authority As A Safety Net
Tax foreclosures have been common in New York for a long time. They’ve also been controversial because if someone’s foreclosed on, the right to that property is auctioned off. We don’t want that to be happening. Or let’s say there’s a downturn in the property market, or there are bank foreclosures, as there were in 2008. There was an issue with zombie homes around the state. Homes were kept in limbo, and there was no one to buy them and then they became blighted. The authority would be able to step in, buy the bad debt and keep people in their homes while adding property to its portfolio. It could act as a safety net in the private housing market, which doesn’t really exist right now.
The problem extends upstate as well. In places like Utica, the financial conditions of the local property market are not such that private capital is willing to reinvest in any kind of rental — whereas the authority could come in, buy the building and rehab it. It wouldn’t make a difference to the authority whether that building is in Utica or in central Brooklyn. For private capital, it does. Private capital is unwilling to make those investments in a distressed property market. People in older housing stock, which is common throughout the state, deserve to have that building rehabbed and maintained regardless of where they live.
Drafting New York’s Social Housing Bill
When we came back from Vienna, we wanted to take what we had learned and put pen to paper.
Look, good ideas can just float around in Albany for a while, but I didn’t want that inertia to befall this project. So whether or not Assembly member Gallagher was going to carry the bill eventually, I thought that someone just needed to start drafting the bill.
I kept in constant communication with everyone who went to Vienna with us and I started reaching out to other housing advocates and organizers and academics and policy wonks who weren’t on that trip, in addition to labor unions — because of our political leanings, I thought we had to incorporate to every degree possible, the interests of organized labor.
Union labor was a very salient feature of other social housing models that existed in the New Deal-era New York. So we wanted union members to be building the housing. We wanted unions to be able to invest in the housing. We wanted the housing to be green. The building sector currently accounts for the majority of New York City’s CO2 and greenhouse gas emissions, and is also one of the largest contributors statewide.
We introduced the bill in February with the nascent coalition of organizations that we’ve been working with. We still plan on improving the bill and expanding the coalition and investing even more time and energy to build momentum for it next year.
Social Housing Around America
[The SHDA] is not a novel idea. Not only with respect to the fact that New York has its own storied history of experimenting with social housing, but also because the housing crisis isn’t just in New York. These pressures are manifest worldwide and across the United States.
We had conversations with people out in Seattle, where the city created its own city-wide social housing authority that shared our vision, in terms of having a very inclusive board that included tenants and stakeholders from the housing movement and labor, and a desire to create mixed-income, deeply affordable housing.
We also read proposed social housing legislation in other states, like California, Hawaii and Massachusetts. It’s been really inspiring and thought-provoking to see the laboratory of democracy at work in other states and cities where people are saying, “Hey, social housing is a proven solution, and we need another tool to make our cities affordable for everyone.”