In addition to a four-year rent freeze for rent-stabilized tenants, New York City’s new mayor, Zohran Mamdani, has pledged to triple the production of affordable housing by building 200,000 new rent-stabilized units over the next ten years, at an estimated cost of $100 billion. How will Mamdani finance this construction? And what does this mean for the developers and designers of below-market rental housing in New York City?
New York City suffers from an undeniable shortage of affordable housing for low- and middle-income families. About 70 percent of New Yorkers rent, and roughly half live in rent-regulated apartments. New York tenants are rent-burdened: The majority pay at least 30 percent of their pretax income in rent, and nearly one-third pay over half.
Renters also continue to experience dire housing conditions, with Black, Latinx, and Asian residents disproportionately facing the most acute circumstances. Mamdani’s historic campaign reshaped rent-stabilized tenants as a powerful political bloc and centered housing in the city’s economic justice movement. But as his term begins, how can this ambitious agenda become a reality? Or as urban planner and writer Samuel Stein asked last month, how can a socialist housing program run in a capitalist political economy?
The Existing Affordable Housing Stock and Its Finances
Cea Weaver, Mamdani’s newly appointed director of the Office to Protect Tenants and the director of NYC Tenant Bloc, wrote in October that “rent regulations should be understood not as an affordable-housing program but as consumer protection.”
Rent-stabilized apartments in New York City are concentrated in two broad categories: legacy buildings, which account for roughly 65 percent of all rent-stabilized units, and programmatic buildings, which make up the remaining 35 percent. NYC’s stabilized stock relies on a layered and fragile financing structure that combines rental income, tax exemptions, federal and local subsidies, and municipal bonds.
For architects, these structures directly shape design constraints from building type to unit mix, since projects meet underwriting assumptions set out in initial contracts that have little margin for change. Legacy rent-stabilized buildings are not governed by building-level regulatory agreements and receive no ongoing public subsidy except for limited or temporary tax relief (such as J-51, an abatement for renovation). They are financed almost entirely through rental income and private mortgage debt.
Programmatic buildings are typically capitalized through public subsidies; private financing; federal low-income housing tax credits (LIHTC); city and state capital subsidies administered by NYC’s Housing Preservation and Development (HPD) and Housing Development Corporation (HDC); tax-exempt bonding financing; and longterm property tax exemptions, such as Article 421-a and its successor, 485-x.
These public financing programs impose rent stabilization and, often, income restrictions on tenants. In exchange for reduced up-front development costs or ongoing tax burdens, programmatic building owners have limited revenue growth and are issued debt that projects a tight net operating income, with limited flexibility for adjustments.
Historically, loopholes in New York’s rent laws sometimes allowed landlords to raise rents above the rent-stabilized guidelines or deregulate buildings. The major capital improvements and individual apartment improvements programs allowed landlords to apply for rent increases after renovations. “Rent bonuses” also allowed landlords to raise rent up to 20 percent when tenants turned over, regardless of improvements.
Weak enforcement by Homes and Community Renewal made these programs rife with fraud and incentivized tenant harassment and turnover. In the meantime, they did not meaningfully offset costs for owners. Collectively, they caused NYC to lose about a quarter of its stock (or 291,000 registered rent stabilized units) from 1994 to 2019. In 2019, tenant groups fought for the passage of the Housing Stability and Tenant Protection Act (HSTPA), which drastically reduced these loopholes.
Many landlords with unsustainable financial models who were reliant on these programs to stay afloat were driven to bankruptcy. As a result, both legacy and programmatic buildings operate with thin margins and fixed debt obligations. Since the passage of HSTPA, refinancing and debt restructuring have become more difficult.
Lenders have begun pulling back, insurance premiums have risen, property values have declined, and many owners are now operating at a near-zero or net-negative income. These financial pressures have translated into deteriorating housing conditions for tenants and also incentivized owners to leave units vacant (approximately 5 percent of rent-stabilized apartments are currently empty) or sell properties to institutional investors.
This is true for Pinnacle Group, a real estate management firm that placed more than 5,000 of its rent-stabilized units up for auction after declaring bankruptcy. The group’s business strategy was to exploit deregulation loopholes, and it has faced extensive criticism for prolonged disinvestment and widespread housing code violations, leading to unsafe and unlivable conditions for tenants across Upper Manhattan, the Bronx, Brooklyn, and Queens.
In response, residents organized the Union of Pinnacle Tenants, a citywide portfolio-based union demanding a formal role in the disposition process. The union was concerned that a rapid auction could transfer the portfolio to owners unwilling to finance necessary repairs.
On the day of his inauguration, Mamdani visited a Pinnacle building in Flatbush, and announced that he would ask the bankruptcy court for a 30-day delay to explore alternatives, saying that his intervention was motivated both by tenant consumer protections and the longrun sustainability of rent-stabilized housing in the city. This includes addressing the unresolved role of maintenance costs in the provision of genuinely affordable housing that is financially sustainable.
Despite these efforts, the bankruptcy court ultimately approved the sale of the portfolio to Summit Properties for $451.3 million, rejecting attempts by the Mamdani administration to delay or restructure the transaction. Summit has committed to spending $10 million on maintenance in the first year—$3 million of which will immediately address existing code violations—and an additional $30 million over five years for broader capital improvements. While city officials were unable to prevent the sale, they secured remediation commitments and emphasized ongoing oversight.
Expanding Affordable Housing
Outside of this emblematic campaign, the new Mamdani administration faces overlapping and compounding pressures for its affordable housing production agenda: rising rents amid stagnant wages, severe inequality, high interest rates, drastic cuts to federal assistance (President Donald Trump’s FY2026 budget cut rental assistance by 40 percent), and a rent-stabilized stock strained by decades of underinvestment. While funding new affordable housing construction under these conditions will be challenging, it’s more critical than ever and not unprecedented.
The De Blasio administration financed roughly 200,000 subsidized units over ten years, relying on historically high levels of municipal capital spending, private debt, and tax-based incentives including LIHTC and Article 421- a. Meanwhile, the Adams administration focused on private housing production and zoning reforms to fast-track construction. By the end of his term, his administration argued that it was on schedule to build over 500,000 new homes in the next decade or more, but many of those units are far from being built. Some are expected to come indirectly from land-use reforms.
Prior to the primary, Mamdani said his administration would pay for the plan through three mechanisms: expanding municipal bond financing, activating cityowned land and buildings as a source of subsidy, and pooling existing rental assistance into project-based operating support. Of the needed $100 billion, approximately $30 billion is already embedded in the city’s Ten-Year Capital Strategy, and the remaining $70 billion will be raised on the municipal bond market.
To do this, he has proposed removing NYC’s affordable housing bond volume cap and its public debt ceiling, which, Mamdani argues, are legacies of post-1970s fiscal austerity. While this could work, reliance on the bond market exposes the city to long-term debt-service obligations and the disciplining power of credit rating agencies. Mamdani’s administration will also need to carefully assess how the current interest rate environment can raise costs for developers and must be paired with other subsidies.
Mamdani’s proposal prioritizes public-sector leadership but relies on a diverse financing ecosystem that includes private capital, nonprofit developers, and state resources. Central to this vision is a proposed Social Housing Development Authority, which would use state capital to finance affordable housing. If successful, Mamdani’s plan could create a building boom in subsidized housing, which architects stand to profit from. Many local firms specialize in delivering thoughtful design at affordable-housing price points. This sector has long provided steady work during downturns in luxury construction.
Newly appointed deputy mayor for housing and planning Leila Bozorg will oversee two executive-order task forces aimed at accelerating this pipeline. The first, the Land Inventory Fast Track (LIFT) Task Force, will spend the next six months conducting a comprehensive review of city-owned properties to identify sites suitable for housing development, including parcels contracted for other public uses.
The second, the Streamlining Procedures to Expedite Equitable Development (SPEED) Task Force, is charged with identifying and removing bureaucratic and permitting barriers that raise costs and delay construction. If effective, this could shorten project timelines, reduce costs, and bring architects into the production process earlier.
If public housing pipelines are reshaped, it may also be an opportunity to restructure design commissions. Some advocates within the profession believe this is an opportunity to embed unionized design requirements into procurement and early design stages so that architects’ working conditions align with the administration’s broader commitment to using protected labor for housing construction. Rent-regulated housing is one of the most direct and effective interventions to combat rising rents and advance economic justice.
As reported in The Nation, economists have called Mamdani’s housing plan a “commonsense policy that pairs immediate relief with structural problem-solving.” Yet, hurdles remain. In spite of its unprecedented investment, the De Blasio administration consistently underproduced housing affordable to extremely low-income New Yorkers with the highest need because his team prioritized quantity instead of deep affordability.
With these new units there is also the question of how affordable housing might reshape the city itself. Recent economic research shows that the location choice for affordable housing is critical and can generate varying economic returns and distributional effects, depending on neighborhood contexts, and condition access to the units in the first place.
The Mamdani administration must be careful not to conflate unit counts with success, to make deliberate choices on neighborhood placement, and to engage in a sustained way with tenant-led organizations, such as the Tenant Bloc or the Citywide Tenant Assembly, whose demands are expected to push the city to align housing investment with the deepest need.
Sophie Bandarkar is a PhD student in economics and a tenant organizer. Her research focuses on the financing and production of below-market rental housing.
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