NEW YORK, July 15, 2014 /PRNewswire/ -- Leonard Grunstein, a prominent real estate expert, today released a plan to resolve the affordable housing crisis in New York City. Grunstein's plan, published in the Spring 2014 edition of the Real Estate Finance Journal, proposes a new mixed-income, mixed-use model of affordable housing that enables the free-market to fund the development.
"Affordable housing is one of the major public policy challenges of our time," said Grunstein. "While the government must play a role, subsidies and grants can often be costly and inefficient. Rather than leaning completely on the public sector, we need a new approach that taps into the power of the market, allowing us to cut costs and build more sustainably."
In his plan, Grunstein proposes a number of changes to let the market play a larger role in New York's housing policy. He urges reforms to lower the cost of land in order to attract free-market financing and equity through the capital markets. This would enable the development of existing vacant or underdeveloped tracts of land around the city, especially those owned by the City. It would also encourage developers to lease the ground on which new projects are built to generate rents from the luxury component of the mixed-use complex.
Using the additional funds from these rents, Grunstein encourages the creation of self-funded "sticky" rent vouchers that empower struggling families by letting them rent an apartment like others in the marketplace. As he states in the article, the answer to low-income affordability is more income, not more structurally flawed low-income projects.
To put these ideas into action, Grunstein is urging the City to create an Affordable Housing Authority, based on existing agencies such as the 42nd Street Development Corporation, which can resolve issues using a public-private partnership model.
"Mayor de Blasio's affordable housing plan is forward-thinking but extremely expensive," said Grunstein. "By using this model, the funds needed for new developments can be financed through capital markets without the massive outlays of the mayor's plan."
Grunstein is currently a managing member at Hanlen Real Estate Development & Funding of Teaneck, NJ. He has played a key role in a number of historic New York City real estate deals, including the Marriott Marquis, the Hotel Pennsylvania, and the Battery Park City. The latter deal, for which Grunstein created the legal framework, helped jumpstart the stalled redevelopment of Lower Manhattan. In 2006, Grunstein worked with the tenants association of Stuyvesant Town to develop a financing model to enable them to purchase the complex and keep apartments affordable. He previously helped structure, finance and accomplish the West Village Article XI cooperative conversion that preserved the complex as affordable.
SOURCE Leonard Grunstein