There are several ways to encourage more affordable housing in cities.

Unfortunately, in my opinion, very few of them work very well.

In Boston, most major developments come with “golden handcuffs”. A developer can build, but he has to put aside 10%, I mean 13%, of the units for sale to people at below-market rates. Within the same building.

So, for example, a unit in the new MacAllen building in South Boston might run you $750,000; next door, your neighbor paid $141,000. For the same-size unit.

Everyone has a good laugh about this, and for the very few (or very connected), it’s a great deal. They get a nice place to live, for pennies on the dollar (or the equivalent …).

In raw numbers, however, this does absolutely nothing to lower the cost of housing in the city.

Except, maybe, to make politicians feel good.

Out of the 4,000 condo sales each year, maybe 30-40 of them are “affordable housing” units.

How does that help?

Other cities have struggled with ways to bring the cost of housing down.

New York City, for example, created the 421-a program to encourage development.

According to the Times:

Under the 421-a program, begun in the 1970s to spur housing development of any kind, developers have received a 10- to 25-year exemption from the increase in property taxes that results from their work. When the real estate market in Manhattan revived in the 1980’s, the program was modified to require developers in central Manhattan to build not just market-rate apartments but some lower-priced units to obtain the tax break.

But, the 421-a program doesn’t really help a lot of people, now, does it?

I mean, does anyone think New York City real estate is cheap? I mean, besides Europeans?

The goal is admirable, I’ll give them that.

In Boston, developers are required to set-aside units in new condo buildings.

In contrast, in New York City, at first, developers received tax incentives to build condos, without having to set-aside any. This meant that some of the new owners of condos in such popular neighborhoods such as mid-town Manhattan might be able to enjoy extremely low property tax bills, for ten or twenty years, or longer. (I’m not kidding.)

Sweet deal, eh?

Now, however, in order to get the tax incentives, most developers in NYC will have to build within limited neighborhoods in the city (including some unpopular ones), and will also have to set-aside some of the units for affordable housing.

The mayor of New York City (and future President), Michael Bloomberg, has proposed building 165,000 units of affordable housing over the next decade.

The mayor of Boston, Thomas Menino, has said he wants 10,000 new units of affordable housing during his administration. He’s well on the way, but considering a lot of this is public housing and/or mixed-income housing with large set-asides, it won’t do anything to bring the cost of housing into reach for the majority of people.

I have no idea how to solve this problem (nor does anyone else, apparently).

I don’t think the current way we’re doing things is helping at all, though.

More: Bill Aims to Spur Housing for New York’s Poor - By Janny Scott

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