Andrew Bernheimer's 1490 Southern Boulevard project
Courtesy Bernheimer Architecture Andrew Bernheimer's 1490 Southern Boulevard project

“It’s Heaven, It’s Paradise”: That’s the headline of a story in the April 1940 issue of Fortune magazine about the Red Hook Houses, a phalanx of 25 red-brick, six-story buildings that, to this day, dominate nearly 40 acres of the Brooklyn waterfront. An early example of public housing, it was a product of the United States Housing Act of 1937, which provided federal subsidies for low-income housing, and it was built under the auspices of the New York City Housing Authority (NYCHA), the agency that still owns and manages all 176,066 units of the city’s public housing.

The Fortune story is a dazzling production, with every detail of this new housing type lovingly photographed or illustrated. That a leading business magazine would be so enthusiastic about the concept is unimaginable today. For starters, the government no longer builds public housing in this country, not directly anyway. By the late 1960s, the ethnically diverse, working-class population celebrated in the Fortune story about the Red Hook Houses had become, in most public housing projects, predominantly African-American and poor. In 1972, the city of St. Louis blew up several of the towers that made up the Pruitt-Igoe complex, public housing’s most infamous failure.

The Red Hook Houses in the 1930s and 40s
Farm Security Administration - Office of War Information Photograph Collection (Library of Congress) The Red Hook Houses in the 1930s and 40s
The Red Hook Houses in 2006
Bebeto Matthews/AP Photos The Red Hook Houses in 2006

Shortly thereafter, President Richard Nixon began introducing incentives for the private sector to take over the creation of low-cost housing: Section 8 vouchers issued by the Department of Housing and Urban Development (HUD) to subsidize rents in privately owned properties and Community Development Block Grants awarded by HUD to states and cities based on population, which allowed local governments to fund programs—including housing—that they most desperately needed.

That approach is still very much in use today. It’s a financial toolkit filled with an alphabet soup of acronyms, programs tagged by the word “section” or “title,” plus a smorgasbord of tax credits, zoning incentives, and rent subsidies. Most of the funding for affordable housing still comes from the federal government, but it is distributed through a variety of local government agencies, banks, and syndicators—often via corporations that have nothing to do with housing—to a legion of private developers. The result is affordable housing in a wide variety of shapes and sizes, from the townhouse developments typical of the 1990s HOPE VI program to the mid-sized apartment complexes built today.

The problem is that the toolkit approach is indirect and inefficient, contributing to an increasingly acute shortage of affordable housing in this country. “There’s about 2.8 million regulated affordable housing units in America, and that number declines by about 120,000 units a year,” says Jonathan F.P. Rose, Hon. AIA, president of the Jonathan Rose Companies, a for-profit developer who has been building affordable housing for almost 30 years. “So we’re going negative. We’re only solving one-eighth of the need, and each year we only build about 65,000 new units … nationally.”

I spoke with Rose as he was waiting to board a plane in Columbus, Ohio. “Housing prices keep rising nationally and incomes are not.” He said that even in Columbus, “of the top ten most advertised job categories in the market, only one—nursing—pays a salary in which someone could afford to live here.”

A 2004 HOPE VI redevelopment in San Francisco by Van Meter Williams Pollack
David Wilson A 2004 HOPE VI redevelopment in San Francisco by Van Meter Williams Pollack

Meanwhile, the current administration’s proposed budget cuts and tax reforms are threatening to make things even worse. HUD is targeted for a 13 percent budget cut, or more than $6 billion. The agency’s new secretary, Ben Carson, argues that providing the poor with “a comfortable setting” in which to live breeds complacency.

Rose, whose projects are known for being community-spirited and sustainable, ended our conversation with an apology: “I’m sorry there’s no optimism in this.”

From Luxury Condos to Affordable Housing
Perhaps, but over the past decade or two, good, thoughtful architects have become passionate about designing affordable housing. Consider Brooklyn, N.Y.–based Bernheimer Architecture. I first encountered the work of the firm’s principal, Andrew Bernheimer, AIA, nearly a decade ago. His 245 Tenth Avenue is a spectacular tower clad in shiny steel tiles that features lava-rock tile in the bathrooms and offered direct views up and down a notorious magnet for upscale development, Manhattan’s High Line. It was designed and developed with his then-business partner Jared Della Valle as the housing bubble went bust, when apartments in the $2,000-per-square-foot range were languishing on the market.

245 Tenth Avenue
Courtesy Bernheimer Architecture 245 Tenth Avenue

A year or two ago, I started hearing about Bernheimer again. He was working at the opposite end of the real-estate spectrum. Teaching at Parsons with another architect (David Leven, AIA, of LevenBetts), Bernheimer and his students published NYCHAPEDIA, a 382-page compendium cataloging the components of the city’s housing projects. All the original buildings are still in use—albeit crippled by insufficient maintenance budgets and poorly served by their Le Corbusier–influenced designs. The idea was to look at ways NYCHA could exploit its resources—in particular the abundance of unbuilt land on sites that relied on the tower-in-park approach—to revitalize its operating budget and help update mid-20th-century ideas. Current proposals include adding ground-floor retail to existing buildings and filling the spaces in between them with more housing or much-needed facilities like schools.

Meanwhile, since 2011, Bernheimer’s firm has become a key player in designing public housing for the 21st century, competing via the city’s Request for Proposals process to build new projects, mostly in collaboration with private, for-profit developers. At the firm’s office in downtown Brooklyn, 11 architects work elbow-to-elbow, creating designs that are studies in efficiency. It’s not the kind of architecture that allows big gestures or affords much glory. The schemes are generally constrained by tight budgets and government restrictions that, while intended to protect low-income renters from substandard housing, hinder innovation. “We can’t design a building like the Via that Bjarke did on West 57th Street,” laments Bernheimer. “Never.”

Instead, his team focuses on using low-cost construction methods and readily available materials to make a building that looks and works just a little better than it has to. “Its always a budget question. Where are your opportunities? Can you convince the developer to spend a little more on this or even within the kit of parts, can you make something good out of bricks, and blocks, and planks? It can be very difficult. The budgets are really constrained,” Bernheimer says. He adds, “I think we try to compose things well.”

Courtesy Bernheimer Architecture

What that might mean is making “windows 6 inches wider and 10 inches taller” than the size they’d be if the developer and contractor were left to their own devices. On a building in Flushing, Queens, that will provide 230 units of affordable housing, including 66 units for seniors and an adult day care facility, Bernheimer was able to vary the color of the bricks on successive sections to break up the monotony of a 400-foot-long façade. He also made the hallways more colorful and brightly lit than in other buildings by the same developers. “It’s just a matter of a little extra light and a change in paint,” says the architect. “That makes a big difference. It makes the common spaces of the building that much nicer.”

In the South Bronx, Bernheimer’s 1490 Southern Boulevard, which will begin construction next year, has 113 units of supported housing for seniors and a ground floor center providing services for the LGBTQ community. Set on a steeply sloped, city-owned lot that looks out on a stretch of elevated subway tracks, the rectilinear building in the renderings features a dark brick façade, large windows, and a generous communal terrace in the back. More distinguished than the surrounding hodgepodge collection of disused commercial and industrial buildings, and more handsome than the archetypal affordable housing complexes—basic red brick, no conspicuous sign of architectural thinking—the design itself, according to Bernheimer, is “quite straightforward.” The apartment layouts, where architects of more upscale projects might make an impact, are based on floor plans issued by New York City’s Department of Housing Preservation and Development. The challenge came from dealing with the slope of the site, the fact that there’s a large rock formation in the middle of the property (some of which will have to be blasted away), and that the presence of the elevated tracks will limit the positioning of hoists necessary in buildings with pre-cast concrete floor slabs.

The Art of Financing
The real complexity of the project isn’t in the architecture, however, but in the Rube Goldberg–esque way 1490 Southern Boulevard is financed. The project is being developed by a firm called Type A Real Estate Advisors, which is, significantly, a “certified Women-Owned Business Enterprise.” In New York City, Mayor Bill De Blasio has not only called for the building of more affordable housing (some 80,000 units over 10 years) but also for expanding the pool of developers to include firms headed by women and minorities.

One of the Type A partners, Andrea Kretchmer, started out her professional life as a geologist but later began developing affordable housing in partnership with her father, Jerry, a longtime developer and restaurateur. Kretchmer walked me through the process of how they responded to RFPs for a pair of sites, one in Brooklyn (which Jonathan Marvel, FAIA, worked on) and the 1490 Southern Boulevard project. Even making the submission requires a degree of sophistication and significant resources. “So let’s say it costs somewhere between $15,000 and $30,000 for a developer to submit an RFP,” Kretchmer told me, as we sat at a borrowed desk in her father’s office. “Depending on who is on your team, you’re certainly paying an architect. You may pay a zoning consultant if it’s a complicated site. You probably have engineers who are just putting their time in for the planning process at no cost. You have an attorney. You maybe are using a financial consultant. Again, it depends on your in-house expertise, and that sometimes costs some money, too.”

“The rules that come with affordable housing require minimum unit size, certain bedroom size,” he told me. “All that was to protect against building really crummy things. What it has constrained against, from an architecture point of view, is innovation. So we are cranking out the same one- and two-bedroom apartments that we cranked out 30 or 40 years ago.”

Beyond tapping the necessary players, a firm competing for one of the city’s affordable projects requires a plan that describes who will be helped by the housing and how resident support services will be provided. “The goal for the developers is to be incredibly creative,” Kretchmer continues. “You needed to come up with a program that would be enticing to the city. You put together a team of users. For example, on Southern Boulevard, the project we did with Andy [Bernheimer], we brought in JASA, which is the Jewish Association for Services for the Aging. They are going to not only operate the residual units, but they’re going to facilitate programming for the seniors.” Kretchmer’s program also included the LGBT Network as ground-floor tenants offering services that are still scarce in the Bronx.

Once chosen, the developer begins the task of financing the project. An affordable housing development typically needs to secure financing from about six to 12 sources, according to Rose’s estimate. The city’s Housing Preservation and Development (HPD) agency is the pivotal player in this process for 1490 Southern Boulevard, arranging mortgages through a program called Extremely Low & Low-Income Affordability (ELLA). A substantial portion of the $46 million construction budget comes from ELLA loans supplied by tax exempt bonds and other sources. Another portion, as much as 30 percent of the budget, comes from the Low Income Housing Tax Credit (LIHTC), which the Treasury Department has used since 1986 as way to entice private equity to finance low-income rental apartments. A project like 1490 Southern Boulevard is awarded these credits “as of right” says Kretchmer. These credits are then sold by a syndicator to a corporation that wants to lower its tax bill. “So an entity like Chevron or any corporation in America uses these tax credits to offset their own tax bill,” Kretchmer explains. “They get this reduction in their tax bill for making this investment in your project.”

During the first 15 years after the project’s completion, the purchaser of the tax credits technically owns the building and can deduct any of the losses associated with it, such as depreciation. The developer, meanwhile, earns money on rents and other fees (an estimated $7 million in the case of 1490 Southern Boulevard) before assuming ownership of the project after the 15-year period.

How to Improve an Inefficient System
While many countries worldwide still directly fund and build affordable housing, here in the U.S. we shift the risks (and rewards) to the private sector, which is not unlike our approach to healthcare. By peddling tax credits to corporations so that private developers will build affordable housing, our system obviates the political difficulty of raising taxes to pay for the needs of the poor. But it’s a very inefficient way to generate housing.

Indeed, this is the argument made by Marc Norman, curator of “Designing Affordability,” an exhibition mounted at AIA New York in 2015. He was trained as a planner, used to work at Deutsche Bank on funding for affordable housing, and is currently a consultant focusing on community development. “Here are people sitting in investment banks, high-powered law firms, making a fortune with the goal of getting affordable housing built,” he says.

Eighty-four percent of NYC’s Housing Preservation and Development budget for next year comes from federal programs that, according to the latest proposed budget by the current administration, may be eliminated or downsized.

Norman proposes a solution that involves changes to another tax break that largely benefits the wealthy: “You could still have the mortgage interest deduction,” he argues, “but cap it at $1 million.” Rose makes a comparable case: “If you indexed the mortgage interest deduction and said that it only served families making $200,000 a year or less, you could take the savings from that, double the amount of low income housing tax credits and therefore double the amount of affordable housing construction. And you could provide Section 8 vouchers to every family earning under 150 percent of the poverty limit, so $29,000 a year.”

Improvements to the system can also be made from “the architecture angle,” as Rose calls it. “The rules that come with affordable housing require minimum unit size, certain bedroom size,” he told me. “All that was to protect against building really crummy things. What it has constrained against, from an architecture point of view, is innovation. So we are cranking out the same one- and two-bedroom apartments that we cranked out 30 or 40 years ago.”

In other words, ideas that are gaining traction in many cities—micro-units, co-housing, multi-generational housing—are regulated out of the affordable sector. Similarly, Norman points to Detroit’s experiment with “Pink Zoning,” areas of the city where red tape has been eliminated to encourage “lean urbanism.” “Most cities have a zoning policy that is about dictating how people live and how they shouldn’t live,” Norman says. “Well, why are we dictating how people live, which lowers their options and increases their cost? If I want to have a home-based business, if I want to take in a boarder, if I want to put in an accessory dwelling unit for my elderly grandmother, why can’t I?”

The Pruitt-Igoe demolition of 1972
The Pruitt-Igoe demolition of 1972

Tax Incentives Under Siege
Washington’s current approach to innovation is dramatically different. Consider the case of Bernheimer. He devoted himself to affordable housing after weathering the housing crash because he wanted to design something that had an ethical dimension as well as bottomless demand: “I like the idea that there’s a building type that provides a kind of personal satisfaction as well as some level of stability.”

Yet that stability may turn out to be illusory. Eighty-four percent of NYC’s Housing Preservation and Development budget for next year comes from federal programs that, according to the latest proposed budget by the current administration, may be eliminated or downsized. Even the LIHTCs, the workhorse of the affordable sector, are encountering turbulence. Until recently, they were valued at $1.20 each, meaning that an investor would be able to deduct a dollar in taxes for every credit, and additionally write off a variety of other project losses. But news of President Donald Trump’s proposed cut in the corporate tax rate has driven the price of credits down, to about $1.05 each. “If you cut the tax rates, those losses are worth less,” explains Mark Willis, a senior fellow at New York University’s Furman Center for Real Estate and Urban Policy. The tax credits are reputed to have strong bipartisan support, however, and Congress may pass legislation to somehow increase their value to compensate for any tax cut.

Ideally, says Bernheimer, “The government should be providing buildings. Which they’re not really doing. They’re not providing buildings, they’re providing mechanisms.”

Now those very mechanisms, jury-rigged to remove the “public” from public housing, are under siege. Without a fully funded and functional HUD, without marketable tax credits, without a federal government that gives a damn about affordable housing, the whole fragile ecosystem will crumble, much like Pruitt-Igoe a half-century ago. Unless, of course, the Trump administration crumbles first.