Series of Major Housing Approvals, Announcements Mark Progress in Adams’ ‘City of Yes’
Mayor Adams releases his housing plan (photo: Ed Reed/Mayor's Office)
New York City is soon to be awash in new housing construction with the City Council approval in recent months of over 12,000 new units and a mayoral administration promising to bring thousands more through major development projects and changes to city zoning rules.
The development is essential to meet the city's demand for housing, particularly affordable housing, where the vacancy rate for the lowest income apartments is less than 1% while tens of thousands of individuals sleep in shelters or on the streets each night. The approved and announced development alone is not enough to meet that need, but it has largely been hailed as a promising start for a new administration and City Council.
Both Mayor Eric Adams and Speaker Adrienne Adams (no relation), two top Democrats, have touted their pro-housing leanings. The mayor came into office on a campaign promise of taking on the housing shortage, in part through a ‘yes-in-my-backyard’ thrust over anti-development politics that have upended some major housing proposals in recent years and scuttled development overall. The speaker has also called addressing the city's housing crisis one of her top priorities. And the two leaders have a like-minded ally in Albany, where Governor Kathy Hochul, fresh off a campaign to win the state's top office, is promising a "bold and audacious" housing agenda in January.
In total, the City Council approved 42 rezonings between January and November, allowing for the creation of 12,245 housing units, of which 7,811 units, or almost 64%, are below market rate, according to a list provided by the speaker's office. (That total only includes housing where Council approval is needed for changes to zoning rules, and does not account for as-of-right private development.)
"We need hundreds of thousands more apartments with a focus on affordable units," Speaker Adams said at a press conference ahead of a November 22 rezoning vote.
"The lack of affordable permanent housing is the underlying driver of our city's current level of homelessness, which rivals the Great Depression with over 60,000 New Yorkers left unhoused," she said, referring to the number of people sleeping in Department of Homeless Services shelters.
"This is the type of bold action that our city needs to address this crisis and I'm proud that we're stepping up to meet the moment,” she said, referring to the dozens of rezonings to date.
The list includes large developments in low- and middle-income neighborhoods in Brooklyn and Queens, as well as smaller projects, some in more affluent areas of the Bronx and Manhattan. Those are only the areas that have been rezoned to allow greater housing density or residences in what has been commercial and manufacturing space. As-of-right development and conversions, which do not require zoning changes, are ongoing, often facilitated by financing programs through the city Department of Housing Preservation and Development.
Mayor Adams has proposed a number of other major projects, some of which have gotten Council approval as part of the lengthy Universal Land Use Review Process (ULURP). Others are in more nascent stages, like a plan to develop commercial and residential hubs along a strip of new train stations in the Bronx, or a proposal to build a soccer stadium in Queens along with 2,500 units of affordable housing.
To help that construction and make small-scale as-of-right housing creation easier, Adams has also announced plans to propose zoning text amendments that would apply citywide – changes he says would help make New York a "City of Yes."
"We have a severe housing shortage at the root of our affordable housing crisis, and the only way to solve it is to build more housing — especially affordable housing," Mayor Adams said in a November 17 statement after three major rezonings were advanced through City Council committees. "That’s what this administration is doing — building historic levels of affordable housing — and I am proud of what we have accomplished, working hand-in-hand with our colleagues in the City Council."
Here are some of the city's biggest approved or announced development projects and policies:
Approved or Moving Through the City Council
Innovation QNS
The New York City Council approved the $2 billion, 12-building mixed-use development project known as Innovation QNS in southern Astoria last month, after intense negotiations and the approval of local Council Member Julie Won.
The plan allows developers to construct 3,190 residential units on a five-block area in Western Queens with 1,436 units slated for affordability caps. That amounts to 45% of units designated affordable, including 658 deeply affordable units reserved for formerly homeless residents and very-low-income families (with an annual income of $36,030 for a family of three). The plan includes 142 supportive housing units and 157 units reserved for holders of CityFHEPS rental vouchers.
The rezoning deal comes with a community benefits agreement with the developers to commit $2 million for legal services for nearby tenants facing displacement and harassment, as well as discounted rents and space for small businesses. And it would create a community advisory board and entail a study "on the potential use of geothermal energy."
Won's approval came after a contentious debate amid the potential that the rest of the City Council, with support from Mayor Eric Adams, Queens Borough President Donovan Richards, and a number of prominent labor unions, could potentially overrule her to pass the rezoning.
"As a community, we have set a new standard for building affordable housing on private land, and I commend and thank each community member and elected official for remaining steadfast," Won said in a November 21 statement announcing final contours of the deal along with her support.
Innovative Urban Village
The same day as the Innovation QNS approval, the City Council also voted to advance a project called Innovative Urban Village, a 100% affordable mixed-use housing development in East New York, that would create 1,975 new residential units. The project includes 200 units of senior housing, and 100 units reserved for sale to moderate-income households. Of the rental units, 750 will be reserved for low-income residents and 1,100 will be set aside for very low-income households.
The development would also include a number of community services, including round the clock daycare, a grocery store, performing arts venue, workforce training center and cyber cafe, open public space, and shuttles to subway stations.
"A lot of my projects are not city-owned land. It's privately-owned and city-owned, but when we stay together as a Council, you are the power," said Council Member Charles Barron, who represents the district and helped negotiate the deal, before the floor vote to approve it. (Barron also admonished the mayor, Council speaker, and Borough President Richards for failing to stand behind Won in her push for deeper affordability in Innovations QNS.)
Barron’s East New York-based district also saw the approval of a 499-unit, fully-affordable rezoning along Livonia Avenue, and another 751-unit, 100% affordable plan at Gateway Drive a month before.
Celebrating Two Big Deals
Together the two major projects -- Innovation QNS and Innovation Urban Village -- will add more than 5,000 units to the city's housing stock, of which two-thirds are considered affordable. They account for more than 40% of the new units created through rezonings approved by the City Council this year.
"These approved projects are the types of major steps we need to take to address the housing crisis," Speaker Adams said on the Council floor. "They push aggressive affordable housing development forward by demanding more of the administration and private developers by working with this Council to advance affordable housing at deep levels."
“Today marks a new day for affordable housing in New York City," Mayor Adams said in the November 17 statement, after the two projects passed. "On the heels of yesterday’s announcement of plans for 2,500 affordable homes in Willets Point, the City Council’s actions today move the ball forward on thousands more. In the last two days alone, we have taken major steps towards delivering nearly 8,200 new homes for New Yorkers, more than three-quarters of which will be affordable.
Hallett's North
In September, the City Council voted to upzone a block in Hallets Point, along the East River in Queens, to allow for mixed-use construction with greater housing density. The plan is projected to create 1,340 housing units, including 335 units that would be permanently affordable under the city's Mandatory Inclusionary Housing policy, which requires certain affordable set-asides in new building on upzoned plots. The rezoning also includes 21,500 square feet of community space, 1,800 square feet of commercial space, 525 parking spaces, 525 bicycle spaces, and an acre of open space along the waterfront.
Approval for the rezoning came after a push by local Council Member Tiffany Cabán and others to secure more deeply affordable units as part of the project. It was hailed by many as a win for affordable housing development after Astoria Owners LLC, the developer, agreed to a deeper level of affordability than was required by law.
"The best we can hope for without rezoning is a 'last mile' facility where some massive corporation like Amazon would pay our neighbors garbage wages for non-stop, back-breaking work that would clog our neighborhood streets with dangerous, pollution-heavy delivery vehicles," Cabán tweeted before voting in favor of the project. In that comment and others, Cabán framed rezoning privately-owned land for housing as a question of choosing the best option among those available to the property holder, which can include a range from doing nothing to as-of-right changes to rezoning under negotiated conditions.
Bruckner Boulevard
In October, the Council approved the rezoning of several blocks along Bruckner Boulevard in a middle-class, suburban neighborhood in the eastern part of the Bronx, after local Council Member Marjorie Velázquez negotiated the project and ultimately reached details she said she could support. It was the first project during Mayor Adams’ administration aimed at adding housing density and affordable housing to a more affluent, predominantly-white, lowrise neighborhood. The mayor was vocal in his support for getting to “yes,” putting public pressure on Velázquez and the Council to come to an agreement with the developers.
Moses Gates, an urban planner at Regional Plan Association, a nonprofit thinktank and advocacy group, said the rezoning set an "important paradigm" early on in the Adams administration. It "showed a dedication to making sure that those neighborhoods that haven't done their part in the past, that have traditionally been downzoned and exclusionary, also do their part," Gates told Gotham Gazette. "If the Bruckner Boulevard rezoning had not gone through, I think it would have seriously damaged the efforts of the administration to advance a lot of its other projects."
The rezoning would allow for the construction of four new buildings containing 349 housing units, including 168 affordable units. Of those, 98 will be permanently affordable under Mandatory Inclusionary Housing (MIH). A total of 99 (including some of the MIH units) will be income-restricted units reserved for seniors, and 25 more will be reserved for military veterans. The buildings will include a senior center, youth center, and veterans' services, along with a grocery store and other retail, and 309 parking spaces.
Hell's Kitchen Rezonings
The Council approved a 111-unit rezoning in Hell's Kitchen in August and a 157-unit rezoning a few blocks to the south in October. Both sites will be designated 100% affordable. The first site to be approved, dubbed The Lirio, will include open space and new offices for the MTA. The second site, Rialto, will set aside 23 units for formerly homeless individuals and will also include public open space.
Resilient Edgemere Community Plan
In July, with a nod from local Council Member Selvena Brooks-Powers, the body approved the rezoning of 166 acres on the Rockaways waterfront in the Edgemere section of Queens, part of a coastal resiliency project introduced by then-Mayor Bill de Blasio. As part of the rezoning, which includes infrastructure upgrades, coastal protection, and home elevation, the city approved the construction of 530 affordable housing units, part of up to 1,200 units that may be built overall.
Harlem's Stalled One45 Proposal
Not every rezoning proposal has been successful. Among others, a contentious rezoning proposal to build a two-tower complex with housing, offices, and the potential for a civil rights museum in the heart of Harlem reached an impasse earlier this year after the plan advanced from the City Planning Commission to the Council as part of the city’s land use review process.
City Council Member Kristin Richardson Jordan signaled her opposition to the plan, known as One45, which, when it passed the City Planning Commission in April, included the creation of 866 apartment units, 220 of them affordable.
The defeat of the proposal, and the absence of new housing, appears to have helped propel more political support for other deals that did get reached.
“In the midst of New York City’s housing crisis, every new home matters," said Department of City Planning spokesperson Joe Marvilli in an email. "From individual projects to neighborhood plans to our City of Yes initiative, we’re working to find opportunities to create new homes and income-restricted homes throughout the city, and create a more equitable future for all New Yorkers.”
Adams' ‘City of Yes’ Zoning Text Amendments
Mayor Adams in June announced a plan to change the city's zoning rules to streamline development and land conversions to facilitate economic growth, housing development, and new climate infrastructure. The plan is a central component of his "City of Yes" agenda to spur overall development and growth, in part by transforming and revitalizing neighborhoods and commercial corridors throughout the city.
The city is carrying out a public engagement process to develop the language of three zoning text amendments that would remove hurdles to repurposing commercial space, increasing housing density, and creating more clean energy storage and retrofits.
While the exact details remain unsettled, the residential amendment – dubbed Zoning for Housing Opportunity – would make it easier to create housing and affordable housing outside of major development projects and complex rezonings, Adams said.
"All throughout New York, there are places we could be developing and building — they're suited for people to live," Adams said in June when he announced the proposal. "But city zoning laws put artificial limits on the number of studio apartments per building" or small-homeowners' ability to "alter and update their property."
The amendment will include increasing the floor area ratio of affordable and supportive housing to allow for more as-of-right development, similar to existing rules for senior affordable housing. It would also make it easier to convert commercial space into residences and for households to turn apartment space into new rental units without what are often prohibitive parking space requirements.
"That's how you really get to scale with those small buildings that aren't going to be able to go through the time expense for the rezoning process," Gates said. "So I think we're on a really good track there."
Adams also announced the Building and Land Use Approval Streamlining Task Force, or BLAST, which he said will bring representatives from city agencies to streamline the review process of private land use applications. There has been little public discussion of the task force outside of the June 1 announcement, but its recommendations are expected any day now.
“As we face an ongoing housing and homelessness crisis, we need bold strategies to increase the capacity for new housing supply citywide,” said the mayor's chief housing officer, Jessica Katz, in a statement after Adams first announced the City of Yes zoning framework. “The citywide text amendment will create new housing opportunities in every neighborhood, saving time and resources to house our neighbors faster.”
City Planning Commissioner Dan Garodnick said in a statement, “we are committed to making our land use process work faster and better as we deliver results. With these changes, we’re setting the stage for a more adaptable New York City that moves with the times.”
One major question on which Mayor Adams and his team have been relatively quiet is whether and to what degree the administration will pursue broader neighborhood-wide rezonings aimed at adding housing density and other improvements. Adams, Garodnick, and others have indicated they will be part of the administration’s strategy, but they were not included in Adams’ housing plan when it was released in June. Along with the Metro-North projects, the administration is moving ahead plans for a rezoning along a stretch of Atlantic Avenue in Brooklyn. On the campaign trail last year, Adams promised to pursue upzonings in wealthier communities to ensure more affordable housing in resource-rich areas, but he has yet to propose any. He has said this year that he wants to pursue plans with robust community input.
Other Major Housing Announcements
Bronx Metro-North
According to the Mayor's Office, the zoning text amendments will help advance development along a corridor of new Metro-North stations the MTA is building in the Bronx. The plan is part of an effort to expand transit-oriented development, which Adams has been calling for since early in his administration, including in the economic recovery blueprint he released in March.
The Bronx Metro-North developments, plans for which are still being crafted, are slated to be the first of several projects aimed at burgeoning job hubs in each borough, part of Adams’ agenda. The plans will include new affordable homes, job creation, and workforce development, and investments in infrastructure led by the Department of City Planning.
"The Bronx Metro-North zonings are showing just kind of a smart way of developing around rail stations that are getting more service," Gates said, calling it "real bread and butter urban development policy."
Willets Point, Queens
In November, Adams announced one of the largest development projects of his early administration, a proposal to construct a new Major League Soccer stadium in Willets Point, Queens, along with 2,500 new rent-restricted apartments and a 650-seat public school.
According to the mayor's office, it would be the largest fully-affordable new construction project in the last 40 years. The seven planned residential buildings would include 220 apartments reserved for low-income seniors.
The plan would dedicate 40,000 square feet in Willets Point, already home to the Mets' Citi Field, to the soccer stadium, with ground floor retail and a 250-room hotel. The administration estimates the project will create 14,200 temporary construction jobs and another 1,550 permanent jobs, and generate $6.1 billion in economic impact over the next 30 years.
The plan to begin work in 2023 in order to open the stadium by 2027 will first have to go through the City Council's land use process where it will be subject to lengthy negotiation. But it so far has the support of local City Council Member Francisco Moya, who was part of the initial negotiations and announcement.
Housing Policy in Albany
How state leaders address housing, set to be a major issue in the upcoming budget and legislative session, will have a major impact on the city's ability to build more.
Governor Kathy Hochul, a Democrat who just won her first term in the governor’s mansion, has called it a top priority and many of the policies debated in Albany will impact New York City, including whether the state replaces the defunct 421-a tax break for developers. Both Adams and Hochul have said they want to see a replacement to help spur development in the city.
The governor offered a series of housing proposals earlier this year that did not pass, and she’s now pledged to go “bold and audacious” on housing in her January State of the State agenda.
Hochul has outlined a five-year, $25 billion plan to create and preserve 100,000 units of affordable housing, including 10,000 supportive housing units. She secured funding toward that goal in the state budget earlier this year. She is now looking to build on that beginning in 2023.
[READ: As Hochul Promises 'Bold' Agenda, Many Housing Policies on the Table for 2023 in Albany]
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by Ethan Geringer-Sameth, reporter, Gotham Gazette
@GeringerSameth @GothamGazette
Many Variables, Significant Uncertainty in Latest Fiscal Updates for New York State, City, and MTA
Mayor Adams and Governor Hochul (photo: Don Pollard/Governor's Office)
New York State and City weathered the worst of the financial devastation caused by the COVID-19 pandemic thanks to billions in federal aid and a good bit of fortune in revenues from Wall Street and personal income taxes. But fiscal uncertainty looms on the horizon amid major stock market losses, warnings of a recession, ongoing pandemic workplace shifts, and federal relief funds running out, creating future budget gaps that will test the fiscal management of Governor Kathy Hochul and Mayor Eric Adams’ administrations.
Recent budget updates released by the city and state showed positive signs, with revenues stronger than expected, allowing both levels of government to project somewhat higher spending for their respective current fiscal years as well as added savings and prepayments for next year. Though both the state and city have shown some caution in their budgeting, watchdogs say that the fiscal risks they face could be dire and require further belt-tightening and socking away. New York leaders also face the additional burden of saving the Metropolitan Transportation Authority (MTA) from fiscal disaster as federal aid begins to run out and ridership is expected to remain well below pre-pandemic levels.
“If you step back, all three [the state, city and MTA] are living on the tail of federal aid and the city and the state are living on the benefits of a really good last year on Wall Street,” said Andrew Rein, president of Citizens Budget Commission, a nonprofit fiscal watchdog. “So short term, it doesn’t look so bad. Mid- and long-term, there are really big problems…If there's a recession, those problems multiply.”
All three entities have had to put out their latest fiscal updates in recent weeks. New York State’s $220 billion budget grew to $222 billion in its update, but there are significant budget gaps by fiscal year 2027, the end of the financial plan period, and structural issues that remain unresolved. The city’s $101 billion budget grew to $104 billion, but with few new savings and major costs looming that were not budgeted. And while the MTA’s update to its $18.5 billion annual budget is still in the offing, the transportation authority continues to have a $2.5 billion structural deficit and faces fiscal disaster once federal relief runs out.
The budget updates set the stage for next year, when the budgeting processes will start in January with Governor Hochul’s executive budget proposal for the state’s next fiscal year, which begins April 1. That will be followed by Mayor Adams’ preliminary budget proposal, likely to be released in February, for the city’s next fiscal year, which begins July 1. New York State, City, and MTA finances are all intertwined.
“One of the challenges when you have long-term significant problems, but short-term resources is, at best, it takes the wind out of the sails of any kind of spending restraints or restructuring efforts. And at worst, it drives decisions that make the future worse,” he added.
New York State
The state’s mid-fiscal year budget update projects overall spending for the fiscal year at just under $222 billion, marginally lower than previous budget projections but higher than the $220 billion budget adopted in April. Revenues were $3.1 billion higher than in the first quarterly update because of higher than expected personal income taxes and certain other non-tax revenues, and spending was $1.7 billion lower than projected.
The state Division of Budget expects that the state will end the fiscal year with a $2.1 billion surplus and that future budget gaps will be unchanged or even lower than expected.
“This update to the State’s financial plan reinforces what was known from the prior one – global and national economic headwinds will have an impact in every state of the country, but New York is prepared with fiscally responsible budgeting that puts record-level deposits and balances into our reserves,” said outgoing State Budget Director Robert Mujica, in a statement.
But the budget update points to significant uncertainty. “The Financial Plan is subject to economic, social, financial, political, public health, and environmental risks and uncertainties, many of which are outside the ability of the State to predict or control,” it states, citing the continuing covid pandemic, the war in Ukraine, and actions taken by the Federal Reserve.
Nonetheless, the state also has higher reserves than ever before, with $9 billion set aside at the start of the fiscal year and planned deposits of $10.4 billion over the next three years, bringing the total to $19.4 billion, about 15% of state operational spending, by 2025. Budget gaps are estimated at just $148 million in FY24, which begins April 1, 2023; $3.5 billion in FY25, $3.3 billion in FY26, and $6 billion in FY27 when federal pandemic aid runs out.
But, as Rein noted, the state has a structural budget problem. On top of that last gap of $6 billion, the state has budgeted for spending another $6 billion from federal aid and from a temporary personal income tax surcharge on top earners that expires in 2027. That could mean $12 billion in funding needs the year after that the state has not yet planned for. “The state has no effort underway to deal with education aid, or Medicaid, or state operations in any way that's going to reduce spending,” he said.
It’s also near impossible to predict the exact impact of the expected recession. In an interview, Maria Doulis, the deputy comptroller focused on budget and policy analysis for State Comptroller Tom DiNapoli’s office, said, “There's still a lot of uncertainty about how that hits the nation, how that hits the state, the differential impacts between those two and of course, when it happens, and for how long.”
Doulis did note that the state may have enough reserves to handle the initial impact of an economic downturn and has the flexibility to use unrestricted federal aid, which it did not appear to use for new and recurring programs that would otherwise require continuing funding. “In the event of a shock, economic or otherwise, that can be sort of pulled in quickly,” she said of the leftover federal aid.
But, in the case of a recession, the state is far more vulnerable than New York City to a decrease in personal income taxes, which is its largest revenue source. The city’s revenue base depends more on property taxes which tend to be more stable. “I think from the state's perspective, what we need to keep eyes on is the sensitivity of the personal income tax in particular,” Doulis said. The mid-year state budget update does project that Personal Income Tax revenue will fall from $33.4 billion in the last fiscal year to just $22.6 billion for the current fiscal year, before growing to $28.1 billion in FY24; $29.1 billion in FY25; $31.2 billion in FY26; and $37.8 billion in FY27.
The MTA Budget
A big unresolved question for the state is the future of the MTA, which was already struggling with its finances before being thrown into deep crisis by the pandemic. The authority, which is expected to release its latest budget update any day now, was rescued by federal aid but faces a fiscal cliff as it runs out and ridership on subways, buses, and commuter rail has yet to recover. Governor Hochul, the State Legislature, and New York City will face the difficult task next year of finding new, sustainable revenue streams for the agency while also attempting to cut costs.
The MTA’s annual operating budget was about $18.5 billion for 2022 – 38% paid from various taxes, 26% from farebox revenue, 12% from tolls, and 15% from federal aid.
As ridership and revenue plummeted, the authority has received a total of $16 billion in pandemic aid from the federal government, which will be expended through the 2026 fiscal year. But the state-run authority also has a $2.5 billion structural deficit, up from roughly $750 million before the pandemic, with annual spending higher than revenues, which is being covered with federal funds. And the agency has only proposed a $100 million efficiency plan in its current budget, a mere 4% of that deficit.
Rein expects that the MTA’s updated budget will include a larger efficiency plan, and CBC has its own recommendations that would find as much as $2.9 billion in savings for the agency. “That's really hard to achieve, that full amount or close to it, because it relies on working with the unions and changing contracts,” he said. “The unions have to be part of the solution.”
MTA Chair and CEO Janno Lieber has for some time been calling on state leaders to start funding the MTA as an essential service, like policing and schools, meaning rethinking how it factors into the annual budget cycle. But, as Rein said, the state faces its own budget risks. “There's absolutely no question that New York's economy depends on the MTA being successful. But we have to figure out how to balance the successes in New York. It can't come at the expense of devastating taxes or service cuts somewhere else,” he said.
“We do think that there are more savings that are possible without necessarily hurting service,” said Rahul Jain, a deputy state comptroller who focuses on New York City and the MTA.
The ideal solution to the MTA’s woes, Jain said, would be to bring ridership back up to pre-pandemic levels. McKinsey, the consulting firm hired by the MTA, has projected that ridership will only reach 80% of 2019 (pre-covid) levels by the end of 2026. “The simplest way honestly, the best way really is to continue to beat the McKinsey projections,” Jain said. Ridership, however, has been difficult to recover as there have been broad pandemic-era shifts to hybrid and work-from-home models, as well as lingering concerns about public safety on the subway system.
The MTA also currently has long-planned 4% fare and toll hikes scheduled for 2023 and 2025, after a planned fare hike in 2021 was postponed and then canceled by Hochul earlier this year in an effort to encourage riders back onto the subways and buses.
Jain said there could be new recurring revenues raised through taxes but that’s a task left up to the Legislature. “There's pros and cons to sales tax. There's pros and cons to real estate taxes, pros and cons to more broad-based economic taxes like the payroll mobility tax. So that's really kind of a question for the Legislature,” he said.
Reinvent Albany, a nonprofit government watchdog, issued urgent warnings about the MTA’s fiscal cliff in a recent report, which noted that the agency is continuing to lose revenue, collecting $1.6 billion less in passenger and toll revenues in 2022 than in 2019 through September. “The MTA has emergency aid, but the fact is, it would be far better if they started dealing with the impending budget deficit now,” said Rachael Fauss, the report’s author, in a phone interview.
The report makes several recommendations for the MTA, governor, and Legislature to follow: the MTA should continue implementing open data laws to be more transparent about its budget; publicly discuss debt affordability statements and only use recurring revenues in its debt affordability metrics and not count federal aid when measuring debt affordability; and release updated ridership projections with every financial plan update; while state government should ensure existing transit-dedicated funds are sent directly to the authority; use the Outer Borough Transit Fund to improve bus, subway, and commuter rail service, rather than provide toll discounts; and refuse to continue the suspension of the state gas tax holiday; among other measures.
Fauss noted that part of the problem is that the MTA has slowly lost state support over the years, particularly under former Governor Andrew Cuomo, who diverted MTA funds to other state purposes. The authority, she said, needs new sources of recurring revenue, which could be achieved in various ways. “There's different ideas of how to do it and I think that it's just really about the political will of finding the best tax or the best source of revenue,” she said.
“I don't think we can expect very much good news” from the imminent MTA budget update, said Nicole Gelinas, senior fellow at the Manhattan Institute, a conservative think tank. She noted that besides the budget update and the struggling ridership, the agency also has to sign a new contract with the Transit Workers Union next year. With high inflation, TWU workers may demand higher raises than the 2% wage growth that the MTA has budgeted for. “If the unions demand a 10% raise, that's close to an extra billion dollars that the MTA hasn't budgeted for at all and that’s something that they haven't even started talking about publicly,” she said.
“I think we shouldn't even start thinking about new sources of revenue until they have carefully gone through all of the drivers of their costs and have agreed to a new union agreement with some productivity enhancements,” she added.
There’s also the open question of the MTA, with state and city partners, implementing congestion pricing in New York City, which is meant to help fund the MTA’s separate $55 billion capital program by helping it raise more than $15 billion.
New York City
The city’s November budget revised expected spending to $104 billion, a record level for the city and up $3 billion from when the budget was adopted in June.
Prior to the update, Mayor Eric Adams ordered city agencies to cut 3% of their spending in his latest Program to Eliminate the Gap (PEG), which resulted in $2.5 billion in savings across the current and next fiscal years, without making cuts to services or laying off municipal employees. But most of the savings came from spending re-estimates, including eliminating some personnel vacancies, and debt service recalculations rather than finding recurring efficiencies at city agencies.
“Fiscal discipline has been, and continues to be, a hallmark of my administration,” Adams said in a statement. “The city faces significant economic headwinds that pose real threats to our fiscal stability, including growing pension contributions, expiring labor contracts, and rising health care expenses — and we are taking decisive actions in the administration’s first November Financial Plan to meet those challenges.”
The PEG helped the city cut its projected budget gap for the upcoming 2024 fiscal year by $1 billion, bringing it down to $2.9 billion. But those gaps are expected to grow to $4.6 billion in FY25 and $5.9 billion in FY26 because of significant losses in the stock market, which hurt revenue as well as increase the city’s pension obligations.
On Monday, barely a week after releasing the budget update, the administration took the extraordinary step of announcing that it would eliminate roughly 4,700 vacant civilian positions, about half of those currently budgeted, to cover a budget gap of $3 billion for the 2024 fiscal year, Gothamist first reported. The cuts will not affect uniformed agencies or teachers. The decision comes amid a dire staffing crisis at many agencies and follows a budget modification that budgeted for the hiring of 25,000 more workers by June, an unrealistic number but indicative of the extent that city agencies have seen their workforces drop over the last few years and the city’s ongoing hiring challenges.
[Read: Facing Depleted Agencies, New York City Government Plans to Add 25,000 More Employees by June 2023]
The city’s reserves are also at about $8.3 billion, which includes $1.9 billion in the Rainy Day Fund, $4.5 billion in the Retiree Health Benefits Trust, $1.6 billion in the General Reserve, and $250 million in the Capital Stabilization Reserve. But those reserves only account for about 9% of city tax revenue, far lower than what budget watchdogs recommend.
According to the mayor’s office, the increased spending in the budget was largely funded by federal grants or expected federal funding, including a projected $1 billion to shelter and provide services to tens of thousands of asylum seekers that have arrived in New York City over the last several months. But, it is not clear that the federal government will reimburse the city for those expenses.
As the mayor himself acknowledged, the city faces the uncertainty of growing pension costs because of volatility in the stock market, forcing the city to spend more to meet annual pension obligations. The budget also doesn’t sufficiently account for the cost of municipal labor contracts, all of which are expired or expiring and must be renegotiated.
Rein of Citizens Budget Commission noted that the projected budget gap of $2.9 billion for the next fiscal year “assumes that there's no new labor contracts that are larger than one-and-a-quarter percent or that there's no recession. Those are risky assumptions.”
“Quite frankly, what you're seeing at the city, the state, and the MTA is no concerted effort to restructure operations to keep down spending,” he said. “The city's PEG barely did anything to restructure government at all. By and large, the vast majority is spending re-estimates and a little bit of debt service savings and from vacancy reductions.”
Jain from Comptroller DiNapoli’s office noted that unlike the state, the city used federal funds for recurring programmatic expenses, which will be harder to continue to fund if a recession hits. “You've allowed spending to continue, so you kind of need the revenues to come in,” he said. “And then the hard question at the end of that if they don't is where do you start trying to reduce the spend side.”
DiNapoli has raised several concerns about the city’s November financial plan, pointing to a “missed opportunity” to put away more money in the Rainy Day Fund and issuing a report recommending several ways the city could strengthen it.
He also pointed to the several risks the city faces for which it seems unprepared. The $1 billion in projected federal grants for migrant services has not yet been approved, “which we view as a material risk to its budget in the current fiscal year, and which could create spending pressure in the outyears,” he said. And the city has not yet projected weakening revenues as is widely expected.
New York City Comptroller Brad Lander, in his office’s monthly update on the city’s fiscal outlook, also urged the administration to prepare for a recession and to prudently use reserves in the case of that eventuality.
“When economic downturns hit, as people lose jobs and business revenues decline, tax revenues fall just as the needs of the most vulnerable increase. That’s why it’s critical for the City of New York to save for a rainy day,” he stated. “Putting money into our rainy day funds is not an act of austerity – it’s a form of social insurance.”
Ahead of the passage of the city budget, Lander had urged the mayor and City Council to adopt a formula for annual deposits into the rainy day fund, a recommendation that went unheeded. He has repeatedly recommended that reserves should be at least 16% of city tax revenues, while they currently stand at closer to 9%.
On Monday, in response to the administration’s latest vacancy cuts, Lander reiterated his concerns about how the move could impact city services. “While we agree that savings are critical as New York City faces economic headwinds, confronting those risks cannot come at the expense of diminishing the City’s capacity to get stuff done,” he said in a statement. “Today’s directive to agencies furthers our concerns about recruiting and retaining the staff needed to implement critical programs from traffic safety improvements to processing housing applications.”
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by Samar Khurshid, senior reporter, Gotham Gazette
@samarkhurshid @GothamGazette
Facing Depleted Agencies, New York City Government Plans to Add 25,000 More Employees by June 2023
Mayor Adams at City Hall (photo: Ed Reed/Mayoral Photography Office.)
New York City’s municipal workforce dropped by more than 19,000 full-time employees over the last two years, according to a report released this week by State Comptroller Tom DiNapoli’s office, and there are currently more than 21,000 vacancies as city agencies struggle to retain workers and maintain city services.
Questions have repeatedly been raised about whether Mayor Eric Adams’ administration is able to accomplish its policy goals given low staffing across agencies and the disruptive departures of personnel amid stringent workplace policies and often uncompetitive salaries. A lack of work-from-home flexibility allowed by former Mayor Bill de Blasio and now Adams, and many workers choosing a pink slip over the covid vaccine that the two mayors required of the municipal workforce both also appear to have taken a toll.
And while Adams has sought to tighten the city's fiscal belt and right-size spending plans, even removing some vacancies from budget projections leaves a very large number of openings that city government still wants to but appears to have no plans to fill.
Before the covid pandemic, the city’s workforce peaked at 300,400 full-time employees, up 33,023 employees since the 2012 fiscal year. That number has since dropped 6.4% to 281,333 through August 2022.
That recent decline is larger than the 4.7% loss of workers between fiscal years 2008 and 2012 following the Great Recession. (The comptroller’s report does not include the 23,590 full-time equivalent workers that were also part of the workforce in June 2020.)
The workforce loss of the last two years hasn’t been equally distributed across city government. Out of the city’s 37 largest agencies, each of which employ more than 250 workers, 11 agencies saw a decline that was twice the citywide average of 6.4%, and even higher in some cases. For instance, the Department of Correction saw a decline of 23.6% (though much of it was planned, the rate was higher than expected, the comptroller noted). Similarly, the Department of Investigation saw its workforce drop by 22.2% and the Taxi and Limousine Commission saw a decline of 20.5%.
As the report noted, in absolute numbers, the decline was largest in the city’s uniformed agencies – the NYPD, Fire Department, Department of Correction, and Department of Sanitation – which together accounted for a loss of 6,857 employees, or 7.6%. The Department of Education was next, losing 4,815 workers, or 3.6%, followed by a drop of 3,011 workers, or 13.5%, at social services agencies including the Department of Social Services, Administration for Children’s Services, Department of Homeless Services, Department for the Aging, and Department of Youth and Community Development.
"The pandemic caused a significant decline to the city’s workforce, and it is particularly troubling that turnover continues to outpace hiring," DiNapoli said in a statement. "Without the hardworking individuals who keep this city running, critical and essential services for our children and most vulnerable residents could be impacted. Budget gaps loom, and while the city needs to find efficiencies, it also must prioritize a clear understanding of staffing challenges at its agencies and be transparent about their potential impact on services."
The drop in the workforce was also felt disproportionately across occupational groups, the report noted. In 19 major occupations (which involve at least 250 employees) there were declines of at least 13% and higher, many of which included white-collar administrative roles such as lawyers, clerks, auditors, and more. The highest declines were among executive assistants (27.2%), correction officers (25.9%), and groundskeepers and gardeners (24.5%).
The city had expected the municipal workforce to grow and had planned for as many as 302,396 positions across city government through August 2022. But there are 21,063 vacancies, or 7%, owing mostly to a temporary hiring freeze instituted by Mayor de Blasio in the 2021 fiscal year and a sharp increase in attrition. Vacancies remain high despite the fact that the city hired 40,261 new workers in the last fiscal year ending June 30, since attrition far outpaced the hiring rate.
The vacancy rate was highest at the Department of Social Services, with 2,386 positions left unfilled, about 18.3% of budgeted headcount. That was followed by the relatively small Department of Consumer and Worker Protection, which had 85 vacancies, or 17.5% of budgeted headcount, and then the Department of Environmental Conservation, which had 1,020 positions vacant, 16.1% of budgeted headcount.
In absolute numbers, the city’s largest agency, the Department of Education, had the most vacancies: 10,495 positions, or about 7.5% of the department. The Department of Correction had 1,186 positions empty, about 12.4%, the NYPD had 1,267 vacant positions (2.6%) and the Fire Department had 382 vacancies (2.2%).
The comptroller’s report also delved deeper into agency operations and found that 23 agency divisions had vacancy rates of at least twice the citywide average of 7%. Some examples include the Department of Social Services’ division of child support services, which had a whopping 45.5% vacancy rate; early childhood programs at the DOE, which had a vacancy rate of 35%; and the administration division at the Department of Homeless Services, which had a vacancy rate of 25.4%.
At a September hearing, the City Council examined some of the reasons behind the city’s continuing attrition and vacancy crisis, raising concerns that vital city services were being affected. Staffing issues were already hurting the city’s work in myriad ways including the building of new affordable housing, getting housing for homeless New Yorkers, and, a prominent example among them, dealing with the ongoing crisis at the Rikers Island jail complex.
Among the causes cited for the ongoing vacancy gulf are some of the steps taken by Mayor Adams and his administration. He has insisted on bringing all city workers back to the office full-time even as the pandemic continues and private employers continue to offer more flexibility with hybrid work models. Officials at several agencies have been offering the minimum salaries from job postings, as Gothamist reported in September.
While Adams has harped on ending remote work in both the private and public sectors, City Comptroller Brad Lander and Public Advocate Jumaane Williams have continued to allow employees to work on hybrid schedules, warning of the deleterious effects on worker retention. In an op-ed in the New York Daily News in August, Williams said the lack of a remote or hybrid option was among the reasons that the city was experiencing such a high vacancy rate of municipal workers, which in turn was affecting services.
“Those job openings aren’t abstract,” he wrote. “When there aren’t enough people on staff at the Department of Housing Preservation and Development, homes can fall into disrepair and tenants are left without recourse. When there’s a shortage of civil rights attorneys, New Yorkers are vulnerable to discrimination. Without enough mental health workers, people in crisis could reach out and find no one at the other end of the line.”
Meanwhile, at the City Council, central staff members are resisting efforts by Council Speaker Adrienne Adams to bring them back to the office five days a week.
Comptroller DiNapoli did note that vacancy reductions could be a significant source of savings for the city, which could bode well for Mayor Adams, who has repeatedly talked about cutting the city budget and shrinking the city workforce. But DiNapoli echoed warnings from many elected officials and advocates against making budgeted headcount reductions that could affect services.
“Understanding the impact of the uneven decline in staffing on the City’s service performance since June 2020 should inform the City’s decisions over which vacancies may be able to be taken for savings and which should be filled to improve or expand municipal services,” he said in the report.
On Tuesday, Adams released the November modification to the city budget for the ongoing 2023 fiscal year and several years to come. It re-estimated total annual spending upwards to $104 billion for this fiscal year, which runs through June 30, 2023, but also included a Program to Eliminate the Gap that found $2.5 billion in savings, including $900 million in the current fiscal year and $1.6 billion in fiscal year 2024. That PEG included $48 million in savings from lower than expected personnel costs because of vacancies, and nearly $46 million in savings from removing 703 vacancies in fiscal year 2023 alone, without making any layoffs or cutting necessary services.
At the same time, the November financial plan projected that by June 2023, the city’s full-time workforce will increase to 306,594 positions, which would mean the hiring of 25,261 more workers than are currently employed by the city. That number is marginally higher, about 292 positions, than what the June adopted budget had projected, but after bringing the headcount back up, the city also plans to then cut the full-time workforce by more than 5,400 over the next several years.
“Fiscal discipline has been, and continues to be, a hallmark of my administration,” Mayor Adams said in a statement on Tuesday, acknowledging that the city faces economic headwinds and an uncertain fiscal future because of growing pension obligations, expiring labor contracts, and increasing health care costs. “Thanks to a successful Program to Eliminate the Gap, we have achieved significant savings without service reductions or layoffs. We are also investing in new needs that will address our housing crisis, make our streets cleaner, combat climate change, and much more,” he said.
The Citizens Budget Commission, a nonprofit fiscal watchdog, has several recommendations for the city to alleviate its workforce crisis. “The City has plenty of available positions, and in fact many more than it needs. The current staffing issues faced by some agencies and units are the result of management, procedural, and labor market challenges,” said Ana Champeny, CBC’s vice president for research, in testimony at the September Council hearing.
Champeny said the city should move vacant positions to where they are needed, providing more flexibility in reallocating headcount, improve systems to expedite recruitment and hiring, improve retention, improve reporting on vacancies and modernize civil service and public sector employment with skills training, bonuses, and negotiating flexibility and other work rules changes.
CBC President Andrew Rein said in a phone interview that the city could easily eliminate thousands of vacancies without cutting essential services. “You can eliminate probably half of the vacancies and still hire critical positions…You would still have 10,000 vacancies you can still fill,” he said.
“The challenge here is you need to identify what's critical, put the vacancies in the right places,” he added, “because attrition is a blunt tool.”
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by Samar Khurshid, senior reporter, Gotham Gazette
@samarkhurshid @GothamGazette
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