In late 2022, the state legislature offered some relief to owners of certain affordable housing projects: They could collect the full voucher amount on apartments where the rent was less than the value of the rental assistance.
But the rollout was slow. One affordable housing provider said that thousands of applications for the program have been waiting several months to be processed.
“It was this great thing that popped on the scene, and everyone was excited,” the provider told The Real Deal. “But the result is different from what anyone was hoping for.”
Now, the relief is fully cut off.
HPD announced that it is not accepting new applications from landlords seeking to collect the full voucher amount in their buildings under Section 610 of the Private Housing Financing Law. The agency’s website points to “the current situation created by the uncertainty at the federal level,” noting that federal funding is limited and must be stretched across all public housing agencies in the U.S.
The “current situation” may be uncertain, but there are some major known challenges.
Congress approved a stop-gap budget resolution this month that increased funding for Section 8 contract renewals, but not enough to keep up with rising costs. By some estimates, it could result in the loss of 32,000 vouchers.
In the last two months, payments to New York landlords accepting Section 8 vouchers were delayed. The first delay, in January, resulted from confusion around whether President Donald Trump’s order to pause federal grants and other government programs applied to rental assistance, given that the New York City Housing Authority receives Section 8 payments from the U.S. Department of Housing and Urban Development.
Actions on the federal level are not the only challenges at play.
By City Hall’s count, some 11,000 households in city shelters that have vouchers through the City Family Homelessness and Eviction Prevention Supplement, or CityFHEPs, cannot find housing. The cost of the program will reach more than $1.1 billion in fiscal year 2025, according to the Citizens Budget Commission. One of Mayor Eric Adams’ key arguments against the City Council’s expansion of CityFHEPs was that costs would balloon and create even more competition for limited housing. A court sided with Adams in August, and the Council appealed.
Given this climate, it wasn’t surprising that a new discretionary program like Section 610 would be put on ice. From the program’s launch, HPD cautioned that its application could be disrupted if the available subsidies became too strained.
“We kind of saw this coming,” said Rachel Fee, executive director of the New York Housing Conference. “The agency doesn’t have good options right now.”
Still, it’s a hit to some of the most vulnerable rent-regulated properties.
Gov. Kathy Hochul signed Section 610 into law in December 2022. In its guidance for owners, HPD indicated that Section 610 was “intended to help the most financially troubled, regulated affordable housing developments.”
It permitted affordable housing owners to request permission to collect the full voucher amount, either through a local or federal program, even if it is higher than the legal rent of a unit (without affecting what the tenant pays). Voucher holders pay 30 percent of their income toward rent, and government subsidy covers the rest, up to a “fair market rent” set by HUD. Those thresholds differ in some parts of the city that calculate caps on a zip code level.
Only owners with regulatory agreements with the city or state that require affordable housing are eligible. The city excluded new construction from Section 610 and specified that projects that solely had affordable units through the city’s Mandatory Inclusionary Housing program or the property tax break 421a were not eligible.
Owners often try to close on their projects by June, the end of the city’s fiscal year. One attorney said some clients were hoping to secure Article XI by that time (a tax exemption for new projects and rehabs that have an affordable housing agreement with HPD) and, by extension, be eligible for Section 610.
HPD’s announcement may kill those projects.
There may be some hope. The New York Apartment Association, a group that represents rent-stabilized apartments, is pushing a bill at the state level that would fill in for Section 610. The measure, introduced last week, would temporarily allow some stabilized owners to collect the full voucher amount.
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