Are you feeling lucky? Soho used to be cheap. No more. Except for the fortunate few
By MacKenZie Rumage
111 Varick Street Apartments is an apartment building that just looks expensive. Black cast iron design with an undulating facade, it rises from the street like Jack’s beanstalk. Though relatively new on the block, it could be related to other Soho high-rises with their combinations of industrialism and shapes that resemble an unsolved Rubik’s Cube.
111 Varick is a building you walk past and think, “I can’t afford that.”
But what if you could?
Because maybe you can.
There are 100 apartments in 111 Varick. Thirty are designated as “affordable,” or “non-market rate.” At $1,224 for a one-person studio apartment. Not cheap, but much lower than the $2,387 studios usually go for in Soho. And far lower than the $3,895 the last studio went for at 111 Varick.
Yours for a third of the price. But be prepared to jump through more hoops than you can imagine.
Welcome to the world of affordable housing in New York City.
Step 1: the housing lottery. But wait. To be eligible for the housing lottery, you need to have a certain income level. For instance, if you want that one-person studio apartment, you have to make between $48,343 and $58,520. That’s roughly 70% of the Area Median Income (AMI) — what the Department of Housing and Urban Development (HUD) defines as what people in each city make each year. Key to this housing lottery, and all others done under what is known as the Mandatory Inclusionary Housing program, is the AMI and what percentage of it you make.
Mandatory Inclusionary Housing (MIH) is not a new program. Mayor Bill de Blasio started it in 2016, building on his 2013 campaign promise to create thousands of new affordable housing units. Under this program, if developers want to expand a residential building, or convert a non-residential building to residential or build a new residential building with at least ten units, they have to set aside at least 20% of their units for affordable housing. If a city agency wants to rezone a neighborhood, and that rezoning would lead to a “significant increase” in available floor area for developers, those developers would have to comply with MIH.
Then there’s the issue of “affordability.” I may have an idea of what prices I find affordable, and I know what is not affordable to me. But HUD sets the official standard, and a unit is considered officially “affordable” if it costs around one-third or less of the city’s AMI. In the case of New York City, which has an AMI of $107,400 for a three-person family, an affordable housing option would cost about $35,442.
Take 111 Varick and its 100 apartments. Under the rules of MIH, the owner, Jason Kimmel, had to set aside at least 20% of those units for affordable housing. There are a few different ways he could have done this. One option was to make a quarter of the units affordable to families making 60% AMI, or about $50,100. Of those 25 apartments, he would have had to set aside 10% for families who make 40% AMI, or about $33,400. He didn’t choose that option. He also didn’t choose the option that would have set aside 20% of the units to families making 40% AMI, either. This option is known as a “Deep Affordability” option — or an option that is available to very low-income households.
Instead, he chose door number three: allotting 30% of the units for households that make 70% to 130% AMI, or middle- to moderate-income households. Their apartments are not “affordable” by a regular, middle-class New Yorker’s standards, perhaps. And these middle-class people who can afford 111 Varick’s affordable apartments are actually doing quite well for themselves, by New York City standards, says Samuel Stein, a housing policy analyst at Community Service Society, a New York City-based anti-poverty nonprofit. He explains that 70% to 130% AMI is high for a new affordable housing production, but rents are high in Soho anyway.
Because neighborhoods like Soho are higher income than other neighborhoods in New York, the MIH program will look different there than in lower-income neighborhoods. In 2019, the median income for households in Soho was $113,191. But for the rest of the city, it was $63,998. In other words, 111 Varick isn’t “affordable” for a lot of people, but it’s more affordable by Soho standards.
So far, Kimmel’s decision seems to be working. Ever since the housing lottery opened in late September, over 50,000 people have applied for the building’s 30 affordable units. The lottery doesn’t close until November 23rd . Meanwhile, the market-rate apartments filled up in less than a year.
“Over 50,000? Jesus Christ,” exclaimed Stein. I had asked him if it was typical to see 50,000 people applying for a housing lottery. I took his shocked reply as a no. What that jaw-dropping number shows, Stein says, is that there are a lot more people who need apartments than are offered. It is as if the entire city of Bradenton, Florida applied to live in an affordable at 111 Varick. The odds of winning that lottery are .0006.
This is one of the biggest criticisms of MIH since it began in 2016. At that point, the program was supposed to create 12,000 of the 80,000 below-market units De Blasio’s administration wanted to construct over a 10-year period. A noble effort, but critics argued that it didn’t go far enough. The high, strict income restrictions and limited number of units meant that there would not be enough units for the households with the lowest incomes.
Both Stein and Olatunde Johnson are quick to point to this problem. Johnson, a professor of fair housing law at Columbia Law School, says there are several reasons why MIH does not serve the poorest New Yorkers: income restrictions, credit checks done on the lottery applicants, and, at least historically, inclusionary zoning that did not serve Black residents as well as their white counterparts.
“When you’re zoning into low-poverty, whiter areas, the people who tended to benefit where more white,” Johnson said. “And that’s been a long-standing critique about the limitations of these programs.”
Making affordable housing more inclusive of people of color and lower-income households are areas Johnson is particularly concerned about. To her, there has not been enough marketing directed towards lower-income people of color, like advertisements or informational emails. And these ads should be inclusive as well — not just showing young white people, but people of color, too. Housing authorities also have a role to play, she says. If they service or give vouchers to these same groups, they should let prospective apartment renters know about affordable housing opportunities. Nonetheless, a July 2021 report from the New York City Council shows that Black and Latino people are actually overrepresented in housing lotteries, even in majority white communities.
Websites like the New York City Housing Connect website lists all open housing lotteries in the city and is a resource for people to find information on affordable housing options and applying. But for luxury buildings like 111 Varick, they don’t have to advertise it themselves on their website.
If you look at 111 Varick’s website, you’ll see photo after photo of their stunning apartment layouts and descriptions of their amenities — a gym, a rooftop terrace, a conference room, a children’s playroom. Even a 15-car garage that accommodates electric vehicles. But the most you’ll find that has anything to do with affordable housing is Fair Housing Notice and Equal Housing Opportunity notices at the bottom of the webpage, and links to news articles that happen to mention their non market-rate options.
Ben Paljevic, 111 Varick’s resident manager, says that it’s the state and city governments’ jobs to advertise affordable housing options. And the building does have a poster on a ground floor window that lays out their affordable housing options. Johnson, too, says that the onus needs to be on the state and local housing agencies to advertise more by, for example, sending emails to people using affordable housing websites and counseling people using housing vouchers on all their options. Developers, Stein says, don’t see these affordable housing units as a “selling point.”
Developers may not have incentives to advertise their affordable housing options, but there are plenty of incentives to construct them. Under MIH, developers get tax abatements in return for allotting a percentage of their units for affordable housing. 111 Varick gets one of these tax credits — the Low-Income Housing Tax Credit under 421a Tax Incentive Program that was set up by the New York City Housing and Preservation Department. Developers also can choose how they want to approach the policy, because MIH offers several different options depending on where the developers are building. That means developers can choose how many apartments they want to set aside for affordable housing and what those income levels will be. They can also choose to sidestep MIH altogether, because the program only applies when developers are building in an area designated for it.
111 Varick’s address has been in an area designated for inclusionary housing programs like MIH since 2013, according to data from the New York City Department of City Planning. Because it is in this designated area — called an Inclusionary Housing Designated Area — 111 Varick is allowed an extra 33% floor area because it provides 20% of its pre-existing space for affordable housing. There are several incentives for developers to build new, luxury residential buildings, especially in more upscale neighborhoods, like Soho.
“The people best positioned to take advantage of [MIH] are already well-heeled developers,” Johnson said. “I think that’s why programs like the Low-Income Housing Tax Credit program are an important supplement to it.”
Stein takes it a step further. The MIH program, he says, does favor wealthy developers. Nonprofit developers can also use this policy, he adds, but it wasn’t meant for them or smaller or community developers.
“The logic of the program,” he said, is to give public resources to the private developer, so that the developer will create affordable housing for the city.
This is another issue that critics continually bring up with MIH: while the De Blasio administration has made some important strides in affordable housing, his policies have not gone far enough. Neither does his proposed rezoning plan for Soho, Noho and Chinatown.
That plan would allow for building conversions to become residential, and for new construction that would use MIH in Soho and Noho. The idea of converting existing buildings such as hotels to residential use is also supported by Democratic mayoral candidate Eric Adams. (This article was written before the November mayoral election, which Adams won.)
But Stein has questions about Adams’ proposals. There are different building codes for hotels and residential buildings. If Adams wants to convert old hotels, what building codes would he want to change? What could the state government provide to finance these conversions?
Community Board 2, the district where 111 Varick sits, criticized De Blasio’s rezoning plan and rejected it in July. Their complaints echo earlier criticisms of MIH. It does not address the needs of low-income tenants. The Community Board argued that MIH allows wealthy developers to build new luxury buildings without creating affordable housing if instead they pay into a fund to build those non market-rate units elsewhere. The rezoning plan does not achieve what Johnson argues is necessary: socioeconomic and racial integration.
Eric Kober, a senior fellow at the Manhattan Institute, argues in a 2020 report that MIH has not sufficiently increased the amount of affordable housing because of the difficulties in renting one of these units. As of January 2020, only 2,000 MIH affordable dwellings had been approved, most of which receive public subsidies — far fewer than the 12,000 De Blasio had set out to create under the program.
Rather than rezoning in wealthier areas like Soho that do not need public subsidies for constructing new apartment buildings, De Blasio’s administration has focused on rezoning in areas where new housing requires public funding. Kober attributes this to the “well-funded and well-organized opposition to rezoning” in affluent areas. He wrote that “MIH reflects a fundamental failure to recognize that inclusionary zoning is always voluntary.” If developers consider rezoning for inclusionary housing but don’t expect a significant return on investment, then they won’t rezone.
In the years before MIH was enacted, many tenants who lived in mixed-income apartment buildings like 111 Varick’s faced these problems firsthand. In 2014, two years before MIH became policy, the New York Times reported that while a number of mixed-income luxury buildings allowed all tenants to use all amenities whether they were market-rate or not, there were a number of buildings that restricted their use to market-rate residents.
Paljevic has worked at other mixed-income apartment buildings and even opened a couple new buildings but says that 111 Varick is the best one he’s worked at. He admits that the appliances in the nonmarket-rate apartments are not the same as the market-rate ones, but the floor plans are the same, except for the penthouses. He notes that all tenants will be allowed to use all amenities at 111 Varick, and everyone has access to the same entrances. (The Madigan Group and Jason Kimmel declined to comment for this story.)
In the past, some buildings had separate entrances for non market-rate tenants, colloquially called “poor doors.” Sometimes, developers built separate buildings for non market-rate tenants on the same property as their market-rate apartment buildings. In 2015, these “poor doors” were outlawed, but the New York Post reported in July that a Hudson Yards development had set up a separate address for prospective non market-rate tenants that was at the same building and did not give access to any of the luxury amenities.
Then there is still the problem of the lottery. Many say it is too difficult. When you were applying to a housing lottery in the past and didn’t send your application in the right way or made another small, seemingly non-consequential mistake, your whole application could be disqualified. Stein says applying has become better because of web applications, but it’s still not easy or streamlined. Meanwhile, some lottery organizers gather the same data from applicants they don’t share it with each other, leaving applicants to keep resharing the same information.
Ashley Eberhart, a product designer and researcher for Unlock NYC, a housing advocacy group, says that the city and the state governments still make it too hard for people to get to the application stage of a housing lottery or obtaining a housing voucher.
“No matter whether it’s using a housing voucher or using an affordable housing lottery,” she said the housing process should be fair, transparent and discrimination-free. “And we’re not living up to that.” Vouchers are subsidies provided by the government to low-income families, so they can afford decent housing. These vouchers allow families to pay 40% of their monthly income towards rent at most, and the New York City Housing Authority (NYCHA) will pay the rest.
Eberhart says most of these complaints about affordable housing her agency gets have to do with the design of the Housing Connect website. Some applicants find it confusing when they’re asked if they have a housing voucher. It’s a yes or no question that asks if anyone in the household has rental assistance — like a voucher — that will “move with them to a new apartment.” The site states that while vouchers are accepted for rent and minimum income requirements do not apply if you have one, the rent should not exceed the maximum limits set by the voucher program.
This question stumped me when I set up an account on Housing Connect to look at the application process. I don’t have a housing voucher, but I had a hard time figuring out what exactly the question was asking. It even confused Eberhart, whose job it is to improve users’ experiences on websites. She says that many applicants answer “no” then their applications are rejected because they didn’t understand the question.
But even if you have jumped through all these hoops and applied for one of 111 Varick’s apartments, you still have to wait anywhere from two to 10 months. You haven’t been selected for an apartment yet — you’ve been selected for an appointment to confirm your eligibility. Then, you have to bring even more documents that confirm your household size, who the members of your household are and your household income. The pressure, again, is on the tenants to prove their level of need.
When New York City first started using inclusionary housing policy, Soho looked a lot different. The city itself looked a lot different. It was the 1970s, and Soho was still known for being a haven for artists who took advantage of large, unoccupied lofts with low-rents that were previously used for manufacturing.
What you see now when you walk through Soho is a shadow of what it was in the 1970s. Commercialized, with those same lofts sitting above Sephoras and upscale Italian restaurants. The people who came to Soho and neighboring Greenwich Village wouldn’t be able to afford it today.
Unless they get lucky.