Press | May 2, 2014

Beyond 80/20: Alternative Models of Mixed-Income Housing

By Magnus Magnusson


Mayor de Blasio has called for 200,000 new units of affordable housing in New York, and he’s made it clear that developers can build bigger if they include affordable units in their new projects. With affordable units on the verge of being mandatory, which models of mixed-income housing have been most successful?


80/20: Mixed messages

New York’s existing 80/20 program has incentivized developers to create more affordable housing in the city for the past 30 years. The program grants tax credits to developers who rent or sell at least 20% of a building’s units to low-income individuals and families earning under 50% of the area median income (AMI), or $42,950 a year for a family of four. This might be a young couple who both hold entry-level jobs and have two children, or a single mother of three who works full-time at a non-profit. In either case, most apartments in New York large enough to accommodate these families will be out of their budget.


This program has been successful in producing additional affordable housing, but it has been controversial, as well. Some 80/20 buildings have a separate entrance for low-income residents, effectively segregating them from the market-rate residents. In other buildings, the affordable units are grouped in one part of the building, or in a separate building altogether. Some buildings restrict the use of amenities, like pools and gyms, to market-rate residents. In most of these buildings, low-income residents have different apartment layouts, lower-quality fixtures, and less desirable views than market-rate tenants.


Segregating affordable and market-rate units is definitely not the best approach to mixed-income housing, and an 80/20 certainly isn’t the only model that can be financially successful – although mandating that every new residential project in NYC be an 80/20, like Vancouver does, may be a good idea. Changing the 80/20 ratio to include more affordable apartments should also be considered to strengthen New York communities. Two models in particular stand out: 25/25/25/25 and 20/30/50.


Equality through equal numbers

25/25/25/25 is a model we used at Atlantic Terrace, a mixed-income home-ownership building in Brooklyn that opened in 2011. This building includes an equal number (25%) of low-income, moderate-income, middle-income, and market-rate units. Residents of all income levels share everything from a luxurious lobby to the building’s amenities. There’s no “poor door” — market-rate and low-income apartments are side-by-side.


Atlantic Terrace has been a noteworthy success, beyond simply adding affordable units to the New York market. Its residents will tell you that this social experiment has improved their quality of life. Living in close proximity, they form meaningful relationships with their neighbors, crossing perceived divisions between class and race. For example, market-rate and affordable residents together initiated a weekly children’s play group in the building’s community room. In the past four years, not one resident has moved out – and the units have increased in value by 25% since 2011.


Middle-income families need affordable homes, too

At the Aspen, in Spanish Harlem, which opened in 2004, middle-income families join the market-rate and low-income residents. The Aspen is the first building to use the 20/30/50 model (20% affordable, 30% middle-income, and 50% market-rate apartments.) L+M Development Partners and TriVenture developed the 240-unit, mixed-use building. Its amenities, including a parking garage, an outdoor landscaped deck, and a fitness center, are available to all of the residents. The affordable and market-rate apartments share many of the same finishes and a luxurious lobby.


With the city’s focus shifting to its poorest families, it’s important to keep in mind that middle-income families (those earning at or just above the AMI) struggle to afford New York’s housing market, as well. The AMI in New York City in 2013 was $85,875 for a family of four. Schoolteachers, postal workers, artists, and professors might fall into this middle-income category. Although they are not as impoverished as low-income families, these middle-income New Yorkers often cannot find housing they can afford in the city.


Building communities, not just providing shelter

The Aspen and Atlantic Terrace have added more affordable housing to New York, and each of them is financially successful. Going beyond the numbers, the residents of these buildings experience a greater sense of community than in the typical New York multifamily development.


Rather than continue with the moderately successful 80/20 program, now is the time for the city to consider alternate, more effective ways to upgrade the quality of housing, and livability, for all New Yorkers. After all New York is a mixed-income city, and that is one of its strengths.


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