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Staff Shortages Are Slowing Affordable Housing Production, Preservation, Adams Official Says

A years-long staffing exodus from the New York City Department of Housing Preservation and Development is making the tough job of affordable housing development in the city even more challenging.

Real Estate Board of New York’s Basha Gerhards, Katten Muchin Rosenman’s Louise Carroll, Rosenberg & Estis’ Daniel Bernstein, Nuveen’s Pamela West and BRP Cos.' Andy Cohen.

Kimberly Darga, the acting deputy commissioner for development at HPD, said at Bisnow's Affordable Housing Summit last week at the New York Marriott Downtown that the lack of personnel has had a tangible effect on the city government's ability to carry out its purpose.

“The preservation team is actually the hardest hit,” Darga said. “Things are just slower than they used to be.”

She said the preservation team has been prioritizing projects that have the most urgent needs, like critical repair issues.

“We've been rebuilding staff, so we're hoping by [the middle of] this [fiscal] year, we'll be in a better position to go back to more normal operations,” she said. “But some of the reason that we're looking for ways to change the process is because the constraint on our end right now for preservation is largely people.”

HPD has 2,244 staffers, 7% fewer than it had before the pandemic and 16% below the level in the city budget this year, The Real Deal reported last week. City Planning staffing is down 18% from what was allotted in the budget, according to the Citizens Budget Commission.

Some of the departures have been attributed to poaching from other agencies and the private sector, while TRD reported that Mayor Eric Adams' mandate for city staffers to be in the office five days a week has hurt retention.

“It’s absolutely harder for us to figure out how to support projects to achieve real meaningful affordability, which is clearly our mission,” said Darga, a longtime HPD staffer who led the preservation finance until assuming the acting deputy commissioner role in April, according to her LinkedIn profile.

Community Preservation Corp.'s William Russo, Keybank's Raymond Li, NewPoint Real Estate Capital's Rob Wrzosek, Jonathan Rose Cos.' Jenny Wu, L+M Development Partners' Jessica Yoon and Windels Marx Lane & Mittendorf's Jeet Gulati

The average rent in Manhattan is now over $5K, and rents have set new record highs each of the last six months.

Panelists at the event said the loss of government tax benefits aimed at spurring new housing development and preservation, namely Affordable New York, also known as 421a, and the J-51 abatement, has slowed down critically needed new construction.

“When you look at over the last four decades in New York City population, three of the last four decades has far exceeded new supply of housing," Darga said. "If you look at a lot of cities across the country, [New York] is producing a very low number of new units relative to population. So that's something we absolutely need to grapple with.”

Add that to the staffing problems, rising interest rates, inflation and supply chain issues, and it makes a potent cocktail of factors making life even harder for developers trying to produce low-cost rental housing.

"All those things are colliding at once and impacting the feasibility of construction,” MSquared Managing Direct Sara Myerson said. "Just because there are rising rents does not make your project feasible.”

Making serious inroads with the problem in New York City is going to require significant federal resources, said Sean Campion, the director of housing and economic development studies at the Citizens Budget Commission. He pointed to the New York City Housing Authority, which Politico reported in 2018 needed nearly $32B in repairs.

“Now it's probably closer to $45B once you factor in inflation, conditions that are worse than they expected, need to electrify, make these buildings greener and healthier and to deal with lead and mold,” he said. “The city definitely can't subsidize its way out of this problem, the state can’t subsidy its way out … It has to come from additional federal resources to really make these deals work.”