NYC's Rent-Stabilized Subsidy Goes Untapped By Nonprofit Buyers

New York City is relying on nonprofits to save its distressed rent-stabilized housing stock. But they have yet to become the white knight that renters need.

In April 2025, the Department of Housing Preservation and Development relaunched its Neighborhood Pillars program, which aims to provide financing to nonprofits seeking to acquire and rehabilitate multifamily properties. More than a year later, the city has yet to close on a project, HPD Commissioner Dina Levy said this week. 

“Pillars has been a little bit slow-going,” she told the City Council Committee on Public Housing during an executive budget hearing on Tuesday.

Nonprofits, mission-driven organizations, and minority and women-owned business enterprises can tap the Pillars program to fund transactions. HPD provides a subsidy of up to $380K per dwelling unit, along with full or partial property tax exemptions. To be eligible, a building must exhibit signs of financial or physical distress, such as having high levels of housing code violations. 

In exchange, the new ownership must rehabilitate the property, abide by affordability limits and set aside at least 20% of units for formerly homeless individuals. 

Levy told the city council one project “is getting close to the end of the pipeline.” 

An HPD spokesperson declined to provide specifics on the project but said in a statement the program is “an important tool in the city’s toolbox” to stabilize and preserve the city’s affordable housing stock.

“Our goal is to ensure that mission-driven organizations, M/WBEs, and local nonprofits have the resources necessary to acquire and rehabilitate distressed properties,” the spokesperson said. “As New Yorkers face an ever-growing affordability crisis, Neighborhood Pillars provides much needed support to communities fighting against displacement.”

Tenant advocates have pushed for nonprofit and community ownership models as a way to preserve affordable housing. Efforts to maximize returns may pressure private owners to raise rents or minimize maintenance costs. Still, nonprofits have said they are facing the same strains as their for-profit counterparts. 

During the hearing, Levy said she expects the program to become more utilized as distress increases.

“There’s a number of portfolios of rent-regulated housing out there that are now transferring either through voluntary sales or through foreclosure, so we hope to see Pillars getting more legs,” Levy said.

Pillars was a key part of Mayor Zohran Mamdani’s housing platform. His campaign promised to use a $1B city council commitment, made in 2024, to fully fund the program and preserve at least 20,000 homes over the next decade. 

Multifamily distress has escalated following the passage of the Housing Stability and Tenant Protection Act of 2019, which limited the ways that landlords could increase rents and stopped owners from deregulating properties. As a result, property values have plummeted, while many landlords, including nonprofit operators, have seen costs exceed revenue.

In addition to having to make mortgage payments based on valuations made prior to HSTPA, inflation has ballooned. Since 2017, the cost of insurance has surged by 110%, administration costs have risen by 51%, and repair and maintenance needs have increased by 35%, according to a report by low-income housing tax credit syndicators Enterprise and National Equity Fund.

Approximately 60% of properties are in the red after expenses and debt services are paid, according to the analysis of more than 37,000 affordable homes, 64% of which are owned by nonprofits.

Financial pressures have forced landlords to cut maintenance costs. The housing code violation rate for properties in which at least 90% of units are stabilized has increased by 47%, compared to 22% for buildings with a smaller share of stabilized units, according to New York University’s Furman Center.

Just 1% of buildings not subject to any rent control have serious violations, according to the Real Estate Board of New York.

Pillars was created as part of former Mayor Bill de Blasio’s 2017 housing plan and focused more on preventing displacement, rather than distress. 

The program would identify rent-stabilized buildings considered vulnerable to deregulation, a threat that diminished considerably after HSTPA. The de Blasio administration aimed to fund the acquisition and preservation of nearly 7,500 homes over the course of eight years. 

The program was successful in financing a handful of purchases, but it never got close to its goal. By August 2019, HPD had facilitated the acquisition of five projects containing 339 apartments across 10 buildings. The average rehabilitation investment needed at the time was approximately $44K per unit.

Affordable housing advocates hailed Pillars for assisting nonprofits in competing with for-profit buyers. However, the program later went dormant before its 2025 revamp. 

During Tuesday’s executive budget hearing, Committee on Housing and Buildings Chair Pierina Sanchez asked HPD for a breakdown of allocations for Pillars. The Preliminary Capital Plan for fiscal 2027 includes $304.9M for the Participatory Loan Program, down from $400.3M previously budgeted. 

In the budget, Pillars is lumped in with the Participatory Loan Program, which also encompasses the Third-Party Transfer Program and the Multifamily Preservation Loan Program. Doing so “does not provide transparency for how much is actually allocated for the Pillars program,” the city council wrote in its budget overview.