Affordable-Housing Efforts in NYC Could Spread Nationwide

By Robin Shulman
Washington Post Staff Writer
Sunday, March 15, 2009

NEW YORK -- Shaun Donovan's legacy as New York City housing commissioner is perhaps most apparent in places such as this sprawling, red-brick, low-rent building in the Bronx.

Donovan started a fund that provided nonprofit and small developers with capital to buy this and other buildings and keep the rents low. The fund has provided loans for 2,500 housing units. For tenants in this particular six-story building on Loring Place, Donovan is the man who helped keep them in their homes.

"I couldn't afford to pay more," said Carmen Torres, 63, who survives on disability payments and lives with her granddaughter. "I was scared they would raise the rent and kick me out."

Now Donovan is secretary of the U.S. Department of Housing and Urban Development. He is faced with bigger problems, including a soaring number of defaulting mortgages across the country. Yet Donovan says that the kind of fund he created in New York could be used to buy and renovate foreclosed homes.

He says his experience in New York -- including changing zoning rules to encourage construction of affordable housing, and fostering a program to help homeowners avoid foreclosure -- translates easily to the national stage. And here in New York, affordable-housing advocates, bankers, academics, foundation managers and colleagues from government all say that if one person can tackle the big national problems in housing, it is Donovan.

"I think there is no one in America who understands the nexis between housing policy and the private market in all of the many facets better than Shaun," said Daniel L. Doctoroff, the former deputy mayor to whom Donovan reported while he was commissioner of the Department of Housing Preservation and Development.

It is hard to find a detractor. Bankers and developers say Donovan has a deep understanding of market forces. Affordable-housing advocates say he is committed to the public good.

"He's also super smart, extraordinarily hardworking, easy to get along with and politically savvy," said Brad Lander, the former director of the Pratt Center for Community Development, which has criticized other city housing officials.

After becoming housing commissioner in 2004, Donovan helped expand Mayor Michael R. Bloomberg's (I) iteration of a plan for affordable housing into a 10-year, 165,000-unit, $7.5 billion project.

Donovan's tenure coincided with a crisis in affordable housing. During the financial downturn of the 1970s and 1980s, the city of New York had taken possession of the deeds to many foreclosed and abandoned properties and later used them to create affordable housing. That stock had dried up. At the same time, an overheated real estate market was pressuring poor and middle-class renters out of their homes. Subsidy programs were fading away and rent-stabilization rules had been loosened, so low-rent apartments were moving to the open market.

As head of an agency whose mission is to develop affordable housing, Donovan set out to harness the strength of a frenzied real estate market to create low-cost homes and to carve out a place for working people to live in a boomtown.

He created a $230 million acquisition fund to provide capital for affordable-housing developers, who had relied on the city's supply of property, to bid competitively in the private market. The program combined city loans with guarantees from more than a dozen banks, such as HSBC, Deutsche Bank and J.P. Morgan Chase, and foundations including Ford, MacArthur and Rockefeller.

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