Opinion: A revolving loan fund could help solve New York’s housing crisis

A typical duplex rental in Syracuse may look nothing like a 30-story apartment building in Manhattan, but the housing crisis has hit both our communities in similarly devastating ways. Rents and purchase prices are rising so fast that people are offering more than the already high asking prices just to secure a place to live. Children and grandchildren cannot afford to stay in the communities where they were raised. At a time when New York state wants to attract more residents to stay or move here, we are driving people away by making it impossible to find homes. 

Worst of all, homelessness is rising faster than at any time in modern memory. In Syracuse, homeless families with children now outnumber homeless single individuals for the first time since records have been kept – a sad sign of the deep structural nature of the problem. In New York City, the number of people sleeping on the street has reached its highest point in more than a decade. 

Housing is a complex issue, but the crux of this crisis is simple: there are not enough homes and rental units to satisfy demand, and the shortage is causing prices to spiral out of control and driving people out of their homes. Indeed, researchers studying cities across America have found that the market cost of housing is the biggest driver of homelessness. 

If we want to drive down rental and purchase costs, and reduce homelessness for the long term, we need a dramatic increase in supply of housing. So, too, if we want to balance out the outsized power of landlords and sellers, some of whom are jacking up prices, evicting long-term, reliable tenants or allowing their properties to fall into dangerous disrepair. Government’s role in regulating or subsidizing rents for those whose income cannot cover the market rates remains critical, but without building a lot more housing units, the number of New Yorkers who need subsidies will simply grow and grow. 

One of the biggest barriers to building more housing is the cost of financing. Current interest rates are prohibitively high, while permitting delays, supply chain uncertainties and shortages of construction workers can push financing costs even higher because lenders see projects as risky.

This is why New York state needs a revolving loan fund for mixed-income housing. Such a fund would work by issuing loans at much cheaper rates than typical market rate loans. Once the project is completed, project owners will then be able to obtain permanent financing at a cheaper rate because the risks involved in development have been overcome. The owners can then pay the original loan back to the revolving loan fund, ready to be used again.

We are introducing legislation to establish a revolving loan fund to be used for mixed-income housing, and we will work to incorporate the concept into this year’s state budget. By doing so, the state can unlock new housing production, help grow the economy and provide relief for residents seeking cheaper housing options. At a large enough scale, the fund could create tens of thousands of homes for low- and middle-income New Yorkers.

New York state has a long and proud history of innovation when it comes to affordable housing – from leading the way on public housing in the post-war era, to the creation of more than 100,000 middle-income units as part of the Mitchell-Lama program in the 1960s and ’70s. In that same tradition, our proposed revolving loan fund would be a fundamentally new, prudent use of public dollars – moving us closer to resolving the housing and homelessness crisis and creating a virtuous cycle of investment well into the future.