Here’s another reality check for Zohran Mamdani: A nonprofit is spending nearly $1 million per unit to build affordable housing for seniors, despite only putting up studios and one-bedrooms.
The latest example disproving Mamdani’s claim that he can build affordable housing for $500,000 per unit — with union labor, no less — comes from the Grand Street Guild.
As Lilah Burke reported in The Real Deal, the nonprofit has patched together financing for a $176 million, 191-unit project on the Lower East Side. Her article shows the complexity and cost of subsidized housing.
The Guild is getting $19.5 million from the Department of Housing Preservation and Development’s SARA program, $12.5 million from the Housing Development Corporation’s New Construction Finance program, $105 million from taxable and tax-exempt bonds issued by HDC and $11.3 million from Richman Housing via Low Income Housing Tax Credits.
That adds up to $148.3 million, which means another $28 million is coming from still other streams.
Divide the project cost by the unit count and you get $921,000 per apartment. Meanwhile, Eli Lever is building 49 apartments on East New York Avenue in Brooklyn for $350,000 apiece.
“This problem is too serious to avoid and needs to be fixed,” affordable housing expert Michael Lappin told me. “Lengthy processing, multiple social goals, multiple sources of financing — all feeding upon each other — produces ridiculous costs. In the age of Trump, there has to be some fundamental rethinking.”
Or maybe in the age of Mamdani. He, like Donald Trump, campaigned on the promise of lowering costs.
The winner of the Democratic primary for mayor speaks of a $100 billion pot of money — $30 billion in city funding already lined up plus $70 billion from new bonds he would issue, if Albany allows it. New taxes, which also require state approval, would cover the borrowing costs. Both are long shots.
It would make more sense to reduce development costs, to produce more housing from existing funding. Then Mamdani would have a stronger case for more spending.
Mamdani could give himself a reality check by convening a task force — including for-profit developers — to examine why market-rate housing costs less to build. Then apply those lessons to publicly-funded projects.
No doubt, Mamdani would run into all the sacred cows and political constituencies that inflate costs, such as requirements for large rooms, three-bedroom units, prevailing wages and layers of bureaucracy. Also, each of the numerous financing streams mentioned above comes with fees and other frictions, adding still more cost.
The best time for elected officials to reform hidebound practices is immediately upon taking office, when they have momentum and a mandate. Mamdani would be wise to do his homework now, so if he wins in November, he can hit the ground running.
It would also disabuse him of fanciful notions about what housing costs. That cannot happen soon enough.
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