| Description |
LMDC Residential Grant Program:
Background:
The World Trade Center disaster had an immediate negative impact on the housing market in lower Manhattan, which resulted in a significant increase in vacancy rates. The residents of lower Manhattan, particularly in the area south of Chambers Street and west of Nassau and Broad Streets including Battery Park City (“Zone 1”), face a number of concerns regarding the effects of the tragedy such as quality of life issues, transportation issues, and the disruption caused by ongoing construction that will be necessary to rebuild lower Manhattan. As part of the recovery process, the economic impact of many of these issues is being addressed through existing grant programs administered by FEMA, as well as recovery efforts by other Federal, State, and City agencies. Unfortunately, when the initial criteria for this program were first introduced, the lower Manhattan housing market remained depressed despite the efforts that were being made in the area.
The United States Housing Market Conditions Regional Activity Report issued by HUD reported that lower Manhattan rental rates were down approximately 10 to 15%. After September 11, 2001, approximately one-third of Battery Park City rental tenants did not return to their apartments. Some rental prices fell 30 percent in Battery Park City and rents in the Financial District fell from 16 to 21 percent on average.
Owner-occupied housing saw a similar downturn in the aftermath of the tragedy. Real estate agents estimated a 10 percent to more than 25 percent drop in apartment prices between September and December 2001. By January, very few units had sold in Battery Park City while some were still listed at 15 percent below September prices.
Purpose of Program:
Lower Manhattan’s residential population is essential to the continued viability of the area’s businesses. Increased housing vacancy rates have a significant negative impact on the area’s economic recovery. Increasing vacancies in the rental and owner-occupied housing markets begin a downward economic cycle, reducing business activity, which in turn makes housing in the area less attractive.
Development of an effective program to encourage individuals to remain in, or move to, housing in lower Manhattan requires the creation of significant incentives to encourage individuals to renew existing leases, sign new lease agreements, or purchase residential units. Without such a program, the perceived disadvantages of lower Manhattan as a housing location would continue to adversely impact the area’s housing market and commercial activity.
The incentive program outlined in this Partial Action Plan meets these goals. Response to the Draft Assistance Plan for Individuals first announced in February was immediate and positive. Although Battery Park City’s occupancy rate fell to 60% after the disaster, its occupancy rate “rose by several percentage points, to 74 percent,” a few weeks after the Draft Assistance Plan for Individuals was released for public comment. In general, anecdotal evidence from building owners and prospective tenants shows that, after the plan was announced, there was a substantial increase in interest in apartments in the lower Manhattan area.
Area Characteristics:
The population of the area south of Canal Street is diverse. Approximately half of the area’s residents live within walking distance of their place of employment. Residential income characteristics reflect the area’s industry mix, which includes a significant number of financial service businesses, small manufacturers (including garment producers), restaurants, retailers, and providers of professional and personal services. For example, residents of the area east of Broadway and south of Canal Street have a median household income that is lower than the area west of Broadway, which is characterized by relatively high household incomes.
The area of lower Manhattan adjacent to the World Trade Center was attractive to urban professionals because of the presence of the major transportation hub at the World Trade Center and major shopping and service areas located at the World Trade Center and the World Financial Center. These attributes were complimented by the presence of attractive residential units in locations like Battery Park City and Tribeca. In Tribeca alone, more than 5,000 units were converted to housing from other purposes in the 1990’s.
The areas of Chinatown, Little Italy, and parts of the Lower East Side have historically been a major residential entry point for immigrants in New York City and include predominantly lower and middle income households. While parts of this area are not south of Canal Street, this area experienced significant inconvenience, disruption, and economic hardship as a result of September 11th.
Criteria for Assistance:
This program offers substantial financial incentives to offset the perceived and real disadvantages of living in lower Manhattan. To encourage individuals to sign or renew leases or purchase or retain housing, in lower Manhattan, the following categories of grants are proposed:
Two-Year Commitment-Based Grants: Items 1 – 6 -
These grants provide an incentive to individuals to make a two-year commitment to lower Manhattan. This two-year commitment by residents stabilizes the residential communities adversely impacted by the September 11th tragedy.
1. Rental units and owner occupied housing within Zone 1 (Zone 1 is defined as the area south of Chambers Street and west of Nassau and Broad Streets, including all buildings which face on those streets and the entirety of Battery Park City) will be eligible for a grant of 30% of the monthly rent (or mortgage payments, plus maintenance costs and real estate and related taxes for owner occupied units), up to $12,000 over two years. To provide maximum benefit to lower income individuals in the area, the Plan provides a minimum grant of $4,000 per assisted unit over two years. However, no residents will receive grants in excess of their total two year payments.
2. Rental units and owner occupied housing within Zone 2 (Zone 2 is defined as the area outside Zone 1 but south of Canal Street and southwest of Rutgers Street, including all buildings which face on those streets) will be eligible for a grant of 30% of the monthly rent (or mortgage payments, plus maintenance costs and real estate and related taxes for owner occupied units), up to $6,000 over two years. To provide maximum benefit to lower income individuals in the area, the Plan provides a minimum grant of $2,000 per assisted unit over two years. However, no residents will receive grants in excess of their total two year payments.
3. To be eligible for the grants related to rental units described in Items 1 & 2, all applicants must meet the following criteria:
- The unit must be occupied by the applicant and the applicant must comply with one of the following two options:
(a) The applicant must have entered into at least a two-year lease commencing prior to July 1, 2002 and ending on or after May 31, 2003; or
(b) The applicant must have entered into at least a two-year lease commencing on or after July 1, 2002 and on or before May 31, 2003.
- To be eligible for the program under option (b), the following rent restrictions apply:
- Rents paid by tenants in rent-regulated units may not be more than the legally permitted rents for rent-regulated units.
- Rents paid by tenants in non-rent-regulated units may not be more than the following:
- In Zone 1 -- 90% of pre-9/11/01 rents for the same rental unit, plus an adjustment equal to the level of rent increases set for two-year renewal leases by the New York City Rent Guidelines Board.
- In Zone 2 -- 95% of pre-9/11/01 rents for the same rental unit, plus an adjustment equal to the level of rent increases set for two-year renewal leases by the New York City Rent Guidelines Board.
- These rent restrictions do not apply to newly constructed units coming on line after September 11, 2001 or to units whose rent-regulation status changed or will change between September 11, 2001 and June 1, 2003.
- Going forward, these rent restrictions may be adjusted to reflect market conditions.
- Leases of existing tenants where the term of the lease is or has been renegotiated will only be eligible if their term expires at least two years after the effective date of the renegotiated lease or at least two years after the date the renegotiated lease was executed, whichever is later.
- Tenants must show that their rental payments are up to date (or have otherwise been lawfully placed in escrow).
- Payments under the program will be made directly to eligible tenants for up to two years.
- One grant will be made per housing unit.
- Additional eligibility criteria regarding health, safety, and habitability of buildings may be applied to this program.
4. To be eligible for the grants related to owner occupied housing described in Items 1 & 2, all applicants must meet the following criteria:
- The unit must be occupied by the owner applicant and the owner applicant must comply with one of the following two options:
(a) Existing owners must agree to remain for at least two years after July 1, 2002; or
(b) New owners who purchase on or after July 1, 2002 and on or before May 31, 2003 must agree to remain for at least two years.
- Only owner-occupied residences will be eligible for assistance. Owners who lease out their residences will not be eligible for this assistance, but their tenants will be eligible if they satisfy the criteria set forth in Item 3. See Item 5 for possible exceptions.
- Existing owners who have completed the payment of their mortgages will be eligible for a grant of 50% of monthly maintenance costs and real estate and related taxes, up to the maximum amounts of $12,000 or $6,000 over two years.
- Owners must show that mortgage, maintenance, and real estate and related tax payments are up to date (or have otherwise been lawfully placed in escrow).
- Payments under the program will be made directly to eligible owners for up to two years.
- One grant will be made per housing unit.
- Additional eligibility criteria regarding health, safety, and habitability of buildings may be applied to this program.
5. Units leased or owned for residential purposes by corporations, universities, and other designated institutions may be subject to special criteria. These units will only be eligible for the grants described in Item 1 and Item 2.
6. LMDC will determine whether buildings are in compliance with the criteria of this program (i.e. offering two-year leases and complying with the rent restrictions outlined in Item 3), before its housing units will be deemed eligible. This certification process may vary for certain subsets or categories of buildings.
One-Time Grant Per Housing Unit for September 11, 2001 Residents: Item 7 -
These grants for residents of lower Manhattan who have continued to live in the area since September 11th provide an additional incentive for them to remain. These grants recognize the value of their commitment to remain in lower Manhattan despite the significant inconvenience, disruption, and economic costs that these areas have sustained since September 11th. Their continued residence has supported the immediate and surrounding residential and business communities during this period.
7. A one-time grant of $1,000 is available per currently occupied housing unit in Zone 1, Zone 2, or Zone 3 (Zone 3 is defined as: the area north of Canal Street and Rutgers Street; south of Delancey and Kenmare Streets; and east of Lafayette Street in Manhattan, including all buildings which face on those streets with the exception of Canal Street and Rutgers Street). Applicants for this one-time grant must have resided in rental units or owner occupied housing in Zone 1, Zone 2, or Zone 3 prior to September 11, 2001 and continue to reside in Zone 1, Zone 2, or Zone 3 through the date of application and the date of award. Residents who relocated within or between the eligible zones will be eligible for this grant.
One-Time Grant Per Housing Unit for Families: Items 8 - 10
These grants provide an incentive to families to make at least a one-year commitment to live in lower Manhattan, recognizing that keeping and attracting families is crucial to the stability and vitality of lower Manhattan.
8. Eligible rental units and owner occupied housing within Zone 1 whose household includes one or more children under age 18 at the date of their application will be eligible for an additional family grant of $1,500. One grant will be made per housing unit. The additional eligibility criteria for these grants are described in Item 10.
9. Eligible rental units and owner occupied housing within Zone 2 and Zone 3 whose household includes one or more children under age 18 at the date of their application will be eligible for an additional family grant of $750. One grant will be made per housing unit. The additional eligibility criteria for these grants are described in Item 10.
10. To be eligible for the family grants described in Items 8 & 9, all applicants must meet the following criteria:
- The unit must be occupied by the applicant and the identified child(ren) and the applicant must comply with one of the following four options:
(a) The applicant must have entered into at least a two-year lease commencing prior to June 1, 2002 and ending on or after May 31, 2003; or
(b) The applicant must have entered into at least a one-year lease commencing on or after June 1, 2002 and on or before May 31, 2003; or
(c) Existing owners must agree to remain for at least one year after June 1, 2002; or
(d) New owners who purchase on or after June 1, 2002 and on or before May 31, 2003 must agree to remain for at least one year.
Supplemental Assistance: Item 11 -
11. Abatements and subsidies for the same purpose as the grants in this program will be factored into the determination of eligibility and the calculation of grant amounts for all types of grants.
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