Jonathan Rose Companies is one of the biggest developers of affordable housing in the United States. Since 1989, the for-profit New York developer has delivered more than 100 affordable and mixed-income communities, such as the new 709-unit Sendero Verde in East Harlem, a mixed-income housing project that will house people from all income levels, including those who were formerly homeless to those with middle-range incomes. It’s the country’s largest Passive House development and includes on-site social services and a 20,000 square-foot courtyard.
Another notable project is Via Verde in the South Bronx, a nearly 10-year-old, multi-award winning, 222-unit building that is mostly low-income rental and 71 middle-income co-ops, and includes a medical clinic and community garden on its 1½-acre site. The pioneering developer has made it his mission to build housing for all segments, not just the lucky few.
“And by the way, just to give you some perspective, a family could buy a two-bedroom duplex apartment, with washer and dryer, two bathrooms, really nice apartment, for $159,000 [U.S.] with a total cost between the mortgage, taxes and everything else, of $1,500 a month under the co-op program, and then own an apartment, which is worth a whole lot more now,” founder and president Jonathan Rose said in an interview last week.
Mr. Rose, who was born in 1952, started out working for a large, successful family development firm founded by his grandfather and great uncle in 1926. But inspired by the civil rights movement, he decided that he wanted to build housing that was green and truly affordable. He also wanted to grow his business nationally, and form partnerships with cities and not-for-profits. The Washington-based Urban Land Institute recently recognized Mr. Rose with the ULI Prize for Visionaries in Urban Development.
“I am very lucky. I was born with a calling. I was born into a family of market-rate real estate developers who did some affordable housing. My father and uncles, and his father and brother were developers in New York City and I loved the idea of building and creating communities, but at the same time when I was quite small, I was deeply interested in preserving the environment and in social issues,” he says.
Mr. Rose is a developer and urban planner, and author of a book on the future of cities, called The Well Tempered City: What Modern Science, Ancient Civilizations, and Human Nature Teach Us About the Future of Urban Life.
He also created the Garrison Institute in a beautiful old monastery, which offers retreats and holds symposiums on planetary health.
And he’s on the board of Enterprise Community Partners, which bills itself “the only national green building program created with and for the affordable housing sector.” He sits on the board along with actor Edward Norton. Mr. Norton’s grandfather was urban planner and developer James Rouse, an early inspiration for Mr. Rose because Mr. Rouse also saw urban development as fulfilling civic values, not just profit margins.
A city, he says, is not just a bunch of dense buildings. Useful development integrates with the community. People need housing, but they also need great schools, access to work and health care, parks and open spaces. He calls them “communities of opportunity.”
“The lack of affordable housing is a symptom of a system that is out of balance,” Mr. Rose says. “The best solutions are integrated solutions.”
He also disagrees with the ubiquitous refrain that if enough market-rate supply is built, prices will eventually drop and affordability will be attained.
“I’ve been hearing it all my life. Supply is important, but it will not solve the affordable-housing crisis – particularly in a place like Vancouver, which is supply-constrained physically. And secondly, construction costs are expensive. Affordable housing has to be subsidized. Essentially, the market cannot build affordable housing. If the market builds a whole lot more – even if rents drop 10 per cent or sales prices drop 10 per cent – that’s not going to solve the affordable housing crisis.”
As well, he adds, affordable housing is not one-size-fits all.
“The need for affordable housing is extremely diverse, and many of the elements are elements that the market will not naturally build. So the market alone can’t be a solution. That’s number one.
“We are increasingly understanding a need for supportive housing, housing that comes with some sort of social services, and the market is not going to build that. So there are portions of the market that more supply will solve, but it is only a small portion.”
Government subsidies are key to his developments, which is typical of how most affordable housing gets built the world over, he says. That subsidy can take the form of a government grant, or tax credit, or even increased density.
“In the last 20 or maybe even 25 years, every bit of rental housing built in New York City has been built with 25 per cent affordable housing in it because that’s what made the most money for developers. It’s called inclusionary housing, and it built one particular kind of housing. … From a social point of view, they fit very well. You can have a very upscale building and if you have people in there who are nurse’s assistants and teacher’s aides, and other people who very much need affordable housing, it works. It is part of the toolbox.”
It’s only one tool, among many, he adds. His company has created five affordable-housing preservation funds. The fifth fund closed a year ago, having raised US$525-million with 260 or so investors that included pension funds, high net worth individuals, university endowments, registered investment advisers and foundations whose goal was both a solid return on investment as well as social and environmental returns.
He takes a two-pronged approach, building new affordable housing that is mixed-income and green, and purchasing existing affordable housing, most of it built in the late 1970s and early 1980s.
“We buy those particularly if they are at risk of gentrification, and we preserve them as affordable, and with all our projects, both new and preservation, we bring social health and education programs to our residents. …The new buildings take a lot of risks and guarantees and skills, but the way the financing works, not that much equity. But to buy thousands of existing units takes equity. So we raise private equity funds.
“Last year we finished our fifth private equity fund just focused on buying existing affordable housing. And affordable housing has the characteristic that if you are buying in these strong markets, like New York, San Francisco, Boston, Los Angeles, Chicago, the buildings are always filled. They have very steady cash flow, and they make very solid investments, and that’s how we have been able to raise funds to do this work, and it’s allowed us as a company to grow and have more impact. It takes a long, hard time to build new buildings, and it’s easier to buy and retrofit old ones, so we do both.”
It’s a far different model than the usual purchase of existing housing and tearing it down to build more density at higher rents.
“Our mission is to preserve affordability, so we buy the buildings, and we’ve been buying them to be affordable for decades, so there is no displacement [of people].
“What we figured out is how to finance and how to improve these buildings, so we really understand the subsidy programs and the tax-abatement programs, etcetera, to make them financially viable for the long run and preserve their affordability.”
University of B.C. urban design professor, Patrick Condon, who is from Massachusetts, discussed the American approach to affordable housing in his recent book, Sick City.
“The United States does a somewhat better job of providing affordable housing,” he says. “Most of the U.S.A. affordable housing these days is provided through tax subsidies to corporations that are willing to do affordable housing.”
“But having said all that, the degree of public support for affordable housing in the United States is only slightly less pathetic than it is in Canada. The U.S. became victim to the same ‘Reagan/Thatcher revolution’ that moved governments worldwide substantially away from feeling a responsibility to supply housing to the poor or the working class.
“It’s the same problem we have here. With the state and federal governments abandoning the affordable-housing file, it ends up being left largely to localities to deal with it. Here we use things like the [community amenity contribution]. There they use things like inclusive-zoning requirements.”
Your house is your most valuable asset. We have a weekly Real Estate newsletter to help you stay on top of news on the housing market, mortgages, the latest closings and more. Sign up today.