80/20 Housing in NYC: A Trend That's Good for Everyone?

Published on Sep 13, 2011


Affordable housing in Manhattan can be elusive, but a recent trend among developers of NYC rental apartment buildings also means that, sometimes, it can be quite luxurious. Let me explain.

For many years, NYC real estate developers were offered tax incentives if they agreed to set aside a certain percentage, usually 20%, of their individual apartments--or, "housing units"--as need-based affordable housing--hence the term 80/20 housing.

For just as many years, developers would simply build a whole different building (sometimes in another borough) for their NYC affordable housing rental tenants, or, at a minimum, segregate the two types of residents within the building, sometimes creating separate entrances.


But as The New York Times reported recently, in 2008 that all changed.

In order to receive the most attractive tax incentives today, New York City rental apartment developers can't sequester one type of tenant from another. And with the dramatic increase of high-end luxury rental apartment buildings being built as 80/20 housing in NYC, this can lead to some unusual (though becoming slightly more usual) situations.

For example, someone making, say, $300,000 a year and paying $3,000 a month for a Manhattan studio apartment may be living next door to someone who makes $30,000, and pays just $500 a month for the same amount space.


This is good news for everybody in the NYC rental apartment market: developers, market-price tenants, affordable-housing tenants. For one thing, getting the tax incentives is often the only way anyone can afford to construct all these great new NYC rental buildings, such as Midtown West buildings Emerald Green (in the Garment District), Silver Towers and MiMA (in Clinton/Hell's Kitchen), as well as downtown's Tribeca Green in Battery Park City, all of which are 80/20s.

As Gary Jacob of Glenwood Management says “I do not believe you can build a 100 percent rental building in Manhattan where you do not do an 80/20.” Another benefit is the law helps the market-price tenants as well, because their apartments are automatically rent-stabilized for a set number of years.


Of course, getting an affordable-housing apartment in one of these 80/20 housing rental buildings isn't easy, mostly because, no surprise, the demand far exceeds supply. Also, requirements can be quite stringent (credit history, references, in-home visits, etc.).

For a look at current (and upcoming) New York City affordable-housing lotteries, which can be entered only after a pre-screening process which, as the Times reports, weeds out as many 60% of the applicants (before the more in-depth screening takes place), the NYC Department of Housing Preservation and Development website is a good place to start.

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