In postwar New York State, a powerful partnership among state government, the private sector, and quasi-public authorities resulted in the development of thousands of units of high-density middle-income housing located in New York City and a much smaller amount in other New York State cities. This housing was intended to counterbalance affordable suburban homes that were luring the middle class out of the city. This article describes this initiative and focuses on the contributions made by Nelson A. Rockefeller, governor of New York State between 1959 and 1973. The state made creative use of bond financing and public benefit corporations, raising capital with unsecured moral obligation bonds. New York State’s housing finance mechanisms facilitated a model of housing development that was prescient in its insistence on melding public and private, which is now the dominant strategy for affordable housing development in the United States.
Kenneth T. Jackson, Crabgrass Frontier: The Suburbanization of the United States (New York: Oxford University Press, 1985); Thomas J. Sugrue, The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit (Princeton, NJ: Princeton University Press, 1996); Arnold R. Hirsch, Making the Second Ghetto: Race and Housing in Chicago, 1940-1960 (New York: Cambridge University Press, 1983).
2.
Douglas S. Massey and Nancy A. Denton, American Apartheid: Segregation and the Making of the Underclass (Cambridge, MA: Harvard University Press, 1993); Kevin Fox Gotham, Race, Real Estate, and Uneven Development: The Kansas City Experience, 1900-2000 (Albany: State University of New York Press, 2002).
3.
Gail Radford, "From Municipal Socialism to Public Authorities: Institutional Factors in the Shaping of American Public Enterprise," Journal of American History 90 (December 2003): 863-91; Annmarie Hauck Walsh, The Public’s Business: The Politics and Practices of Government Corporations (Cambridge, MA: MIT Press, 1978).
4.
In 2005, New York City had a 33 percent homeownership rate, compared to 67 percent nationally. Amy Armstrong, Vicki Been, Caroline K. Bhalla, Ingrid Gould Ellen, Carrie-Ann Ferraro, Solomon J. Greene, Jenny Scheutzl, and Ioan Voicu, State of New York City’s Housing & Neighborhoods 2006 (New York: Furman Center for Real Estate and Urban Policy, NYU School of Law, 2007), 6.
5.
Joel Schwartz, The New York Approach: Robert Moses, Urban Liberals, and the Development of the Inner City (Columbus: Ohio State University Press, 1992), 135-36.
6.
Norman I. Fainstein and Susan S. Fainstein, "The Politics of Urban Development: New York City Since 1945," City Almanac 17 (April 1984): 1-26, 11.
7.
United Housing Foundation: Years of Accomplishment (New York: United Housing Foundation, 1971).
8.
Sylvie Murray, The Progressive Housewife: Community Activism in Suburban Queens, 1945-1965 (Philadelphia: University of Pennsylvania Press, 2003), 27-29.
9.
James Leigland , "Public Authorities and the Determinants of their Use by State and Local Governments," Journal of Public Administration Research and Theory4 ( 1994): 521-44, 521-22.
10.
Robert H. Connery and Gerald Benjamin, Rockefeller of New York: Executive Power in the Statehouse (Ithaca, NY: Cornell University Press, 1979), 163-65; David C. Perry, "Building the City through the Back Door: The Politics of Debt, Law, and Public Infrastructure," in Building the Public City: The Politics, Governance, and Finance of Public Infrastructure, ed. David C. Perry (Thousand Oaks, CA: Sage, 1995), 202-36; Radford, "From Municipal Socialism to Public Authorities."
11.
Transcript of speech delivered by Mr. Aaron Rabinowitz, member of the State Housing Board of New York, at the Housing Conference held on April 29, 1931, in Boston, Massachusetts, sponsored by the Massachusetts Civic League, "Amalgamated Housing Project" folder, Special Files, Herbert H. Lehman Papers, Herbert H. Lehman Suite and Papers, Columbia University, New York, 13.
12.
New York State Legislature, Laws (1926), chap. 823, 1507-71; Richard Plunz, A History of Housing in New York City: Dwelling Type and Social Change in the American Metropolis (New York: Columbia University Press, 1990), 208. The 1926 law borrowed its model-albeit in a diluted form-from European limited-dividend and cooperative housing associations, which also received financial support from state credits. Daniel T. Rodgers, Atlantic Crossings: Social Politics in a Progressive Age (Cambridge, MA: Belknap, 1998), 463.
13.
Joshua B. Freeman, Working-class New York: Life and Labor Since World War II ( New York: New Press, 2000), 108-9.
14.
Murray, The Progressive Housewife, 47-59.
15.
Connery and Benjamin, Rockefeller of New York, 208-9 (calculated from New York State Executive Budgets).
16.
Gerald Benjamin, "The State/City Relationship," in Urban Politics New York Style, ed. Jewel Bellush and Dick Netzer (Armonk, NY: M.E. Sharpe, 1990), 223-44, 227-28. Benjamin notes that New York City has "produced a smaller proportion of the state’s votes than the size of its population would indicate, both because of lower participation rates and because many of its residents have been noncitizens." Nonetheless, during Rockefeller’s terms as governor, approximately 35 to 40 percent of the votes cast for governor came from New York City (228).
17.
Folder 3, box 1, series 17, record group (hereafter RG) 15, Rockefeller Family Archives (hereafter RFA), Rockefeller Archive Center (hereafter RAC).
18.
Comparison of Republican and Democratic Platforms, Housing and Urban Affairs, Revised September 7, 1960, and "Housing Perspectives, Background Paper," by Robinson Newcomb, January 22, 1960, folder 119, box 21, series 17, RG 15, RFA, RAC.
19.
Letter from Robinson Newcomb to Roswell B. Perkins, January 10, 1964, folder 121, box 21, series 17, RG 15, RFA, RAC.
20.
Domestic Issues: Housing and Urban Renewal, by Robinson Newcomb, February 10, 1960, folder 1, box 1, series 17, RG 15, RFA, RAC; "Current Positions Notebook," May 9, 1962, "Housing and Urban Development," folder 7, box 2, series 17, RG 15, RFA, RAC; Rockefeller for President Committee, "A Comparison on Domestic Policies: Robert A. Taft, Nelson A. Rockefeller, Barry Goldwater," folder 121, box 21, series 17, RG 15, RFA, RAC; Domestic Affairs, Summaries of Position Papers, June 12, 1960, Housing and Urban Development and Redevelopment, folder 2, box 1, series 17, RG 15, RFA, RAC.
21.
Nelson A.Rockefeller, Unity, Freedom and Peace: A Blueprint for Tomorrow (New York: Random House, 1968), 46-49, 39.
22.
R. B. Perkins, Position Paper M-4 (Preliminary), "Domestic Issues: Housing and Urban Development and Redevelopment," June 11, 1960, folder 1, box 1, series 17, RG 15, RFA, RAC.
23.
"Platform Analysis Notebook," May 14, 1964, folder 1, box 1, series 17, RG 15, RFA, RAC.
24.
Press release, National Rockefeller for President Committee, June 19, 1968, folder 17, box 3, series G, RG 4, RFA, RAC.
25.
Housing developers that were wholly owned subsidiaries of insurance companies were permitted to end oversight by the city as soon as they signed redevelopment contracts. Schwartz, The New York Approach, 90-94; A. Scott Henderson, Housing & the Democratic Ideal: The Life and Thought of Charles Abrams (New York: Columbia University Press, 2000), 126-27.
26.
New York State Laws of 1955, 307 (Mitchell-Lama).
27.
New York State Laws of 1960, 671 (Housing Finance Agency); New York State Laws of 1961, 803-4 (Private Housing Finance Law); New York State Laws of 1968, 173-74 (Urban Development Corporation); New York State Laws of 1971, 551 (Housing Development Corporation).
28.
A state referendum in 1960 sought to add $5 million to the amount that New York State could expend to subsidize housing and urban renewal projects, increasing the total annual amount available to $44 million. The measure passed, carried by New York City voters: in the city the votes tallied 825,330 for and 364,534 against; upstate, 787,171 voters were for and 1,034,682 were against. Several subsequent referenda seeking to increase funding for affordable housing were defeated; by the mid-1960s New York City voters also had turned against funding for housing in many situations. Box 5, series 12309-97, New York State Archives (hereafter NYS Archives); John M. Clapp, "The Formation of Housing Policy in New York City, 1960-1970," Policy Sciences 7, no. 1 (1976): 77-91, 80-81.
29.
Bills 133, 2575, 3705, Int. 133, in Senate, January 5, 1955, series 12590, chap. 407, NYS Archives.
30.
Elizabeth Roistacher and Emanuel Tobier, "Housing Policy," in Setting Municipal Priorities 1981, ed. Charles Brecher and Raymond D. Horton (Montclair, NJ: Allanheld, Osmun & Co., 1980), 145-80, 175-76. The Mitchell-Lama law does not state that it is intended to support development of moderate or middle-income housing-indeed, it refers to construction of "low-income" housing. In a clever legislative sleight of hand, however, low income is not defined as it typically is with affordable housing programs, as a percentage of median income. Instead, households are determined to be "low income" if their incomes do not exceed seven or eight times the apartment’s rent (depending on household size). In practice, this circular income eligibility has meant that the program is used to develop housing targeted to moderate- and middle-income households.
31.
Walsh, The Public’s Business, 211-12, 222-23.
32.
Policy Statement by Nelson A. Rockefeller, Republican Candidate for Governor, on Housing, October 13, 1958, folder 168, box 30, series 17, RG 15, RFA, RAC.
33.
New York State Laws of 1959, chap. 675; New York State Laws of 1960, chap. 669. The "buyout" period was increased in 1960 from fifteen to twenty years for projects occupied after May 1959. The evolution and application of Mitchell-Lama buyout provisions are discussed in detail in David J. Sweet and John D. Hack, "Mitchell-Lama Buyouts: Policy Issues and Alternatives," Fordham Urban Law Journal 17 (1989): 117-61.
34.
Initial Proposal of Task Force on Middle Income Housing, 1959, folder 168, box 30, series 17, RG 15, RFA, RAC.
35.
New York State Laws of 1959, chap. 675.
36.
Connery and Benjamin, Rockefeller of New York, 79.
37.
Second and Final Report of Task Force on Middle-Income Housing, May 27, 1959, folder 169, box 30, series 17, RG 15, RFA, RAC.
38.
Press release, June 6, 1959, folder 169, box 30, series 17, RG 15, RFA, RAC.
39.
"Slum Clearance ," Co-op Contact 2 (October 1957), United Housing Foundation Records, Kheel Center, Cornell University .
40.
Bill 4777, Int. 4463, in Assembly 2/23/60, series 12590 1960 chap. 671, NYS Archives.
41.
Press release, April 18, 1960, folder 33, box 4, series 3, RG 15, NAR Gubernatorial, RFA, RAC.
Perry, "Building the City through the Back Door," 225.
44.
Connery and Benjamin, Rockefeller of New York, 228.
45.
Louis K. Loewenstein, "Urban Development Corporation-A Forgotten Failure or a Precursor of the Future?" Journal of the American Planning Association44 ( 1978): 261-73, 265.
46.
Prospectus for NYS Housing Finance Agency (HFA) bonds, NYS Archives. One of the arguments in favor of using public authorities is that they allow a state or municipality to provide services without increasing taxes; by issuing tax-free bonds, however, they effectively reduce tax revenues, although this reduction is not reflected in the state’s budget.
47.
New York State Constitution, Article VII, sec. 11.
48.
New York State Laws of 1960, chap. 671; Private Housing Finance Law, chap. 41, sec. 47.
49.
Jack Newfield and Paul DuBrul , The Permanent Government: Who Really Runs New York (New York: Pilgrim Press, 1981), 18.
50.
New York State Moreland Act Commission on the Urban Development Corporation and Other State Financing Agencies, Restoring Credit and Confidence: A Reform Program for New York State and Its Public Authorities (March 31, 1976), 87-88.
51.
Emanuel Tobier and Barbara Gordon Espejo, "Housing," in The Two New Yorks: State-city Relations in the Changing Federal System, ed. Gerald Benjamin and Charles Brecher (New York: Russell Sage, 1988), 445-78, 459; William J. Quirk and Leon E. Wein, "Rockefeller’s Constitutional Sleight of Hand," Empire State Report (November 1975): 429-31, 430.
52.
New York State Moreland Act Commission on the Urban Development Corporation and Other State Financing Agencies, Restoring Credit and Confidence, 114; Walsh, The Public’s Business, 266.
53.
Lawrence O’Kane , "Opposition Rising to Low-Rent Aid,"New York Times, December 6, 1964, 80.
54.
Tobier and Espejo, "Housing," 460, 462.
55.
Contrary to popular assumptions and to the demographic shifts occurring in public housing in other large cities, Wendell Pritchett’s research reveals that the percentage of very poor residents in New York City Housing Authority housing did not significantly rise during this time period. Wendell Pritchett, Brownsville, Brooklyn: Blacks, Jews, and the Changing Face of the Ghetto (Chicago: University of Chicago, 2002), 117-20.
56.
James E.Underwood and William J. Daniels, Governor Rockefeller in New York: The Apex of Pragmatic Liberalism in the United States (Westport, CT: Greenwood, 1982), 165, 172-78, 203.
57.
Humphrey S. Tyler, "The Steady Growth of Backdoor Financing ," Empire State Report (June 1975): 211-23, 222.
58.
Margaret D. Pacey, "Slamming the Back Door? Bond Buyers Grow Uneasy over ‘Moral Obligations," Barron’s National Business and Financial Weekly, June 3, 1974, 54.
59.
Connery and Benjamin, Rockefeller of New York, 228; Annmarie Hauck Walsh, "Public Authorities and the Shape of Decision Making," in Urban Politics New York Style, ed. Jewel Bellush and Dick Netzer (Armonk, NY: M.E. Sharpe, 1990), 188-219, 205.
60.
HFA, however, conducted much of its own underwriting.
61.
"National City Bank Group Wins $43 Million N.Y. State Bond Issue," Wall Street Journal, October 19, 1949, 8; "Groups Form for New York State Sale," Wall Street Journal, April 29, 1952, 10; "New York State Plans Housing Issue Totaling around $60 Million," Wall Street Journal, November 27, 1953, 11; "Chase Bank Group Wins New York Housing Issue of $61,005,000," Wall Street Journal, January 7, 1954, 12; "New York State Sells $50 Million Housing Bonds at 2.2597% Cost," Wall Street Journal, March 23, 1955, 16; "New York $40.4 Million Housing Issue Sold at 2.667% Interest Cost," Wall Street Journal, February 15, 1957, 15; "New York State Issue Sold at 3.093059%, Top Rate Paid in 20 Years," Wall Street Journal, July 31, 1957, 17; "New York State Sells $49 Million Housing Liens at 2.917% Cost," Wall Street Journal, June 18, 1958, 18; "New York State Sells $55,125,000 Housing Issue at 3.481% Cost," Wall Street Journal, November 19, 1959, 24; "New York State Sells $63,450,000 Bond Issue at 3.4873% Interest Cost," Wall Street Journal, January 18, 1961, 20; "Chase Group Narrowly Wins New York Bonds; Annual Cost Is 3.17419%," Wall Street Journal, October 17, 1961, 24; "New York State Sells $33,068,000 in Bonds to Chase Bank Group," Wall Street Journal, January 11, 1962, 21; "New York State Sells $37,330,000 of Housing Bonds at 3.21978% Cost," Wall Street Journal, May 24, 1962, 24; "New York State gets 3.0421% Annual Cost on $48,755,000 Issue," Wall Street Journal, May 16, 1963, 19; "New York State Sells $30 Million Bond Issue to Chase Bank Group," Wall Street Journal, September 16, 1964, 21; "New York State Sells $34,805,000 Bond Issue at a Cost of 3.38216%," Wall Street Journal, October 29, 1964, 23; "New York State Sells $43,610,000 of Bonds to Chase Bank Group," Wall Street Journal, March 10, 1965, 23; "Chase Manhattan Group Wins New York Bonds With Lower Dollar Bid," Wall Street Journal, November 15, 1966, 24; "New York State Sells $49,980,000 Housing Bonds at 3.7753% Cost," Wall Street Journal, August 10, 1967, 20.
62.
Walsh, The Public’s Business, 227-28, 386.
63.
Robert H. Connery, "Nelson Rockefeller as Governor," Proceedings of the Academy of Political Science 31, no. 3 (1974): 1-15, 12.
64.
"Wrong Kind of Memorial," New York Times, April 11, 1968, 44.
65.
Eleanor L. Brilliant , The Urban Development Corporation: Private Interests and Public Authority (Lexington, MA: Lexington Books, 1975), 29.
66.
New York State Laws of 1968, chap. 173.
67.
"Recommended Position: Urban Development Corporation," May 29, 1968, folder 41, box 6, series G, RG 4, RFA, RAC.
68.
Richard Schickel, "New York’s Mr. Urban Renewal," New York Times, March 1, 1970, 222.
69.
Newfield and DuBrul, The Permanent Government, 22-23.
70.
Study Group on Housing and Neighborhood Improvement, "Let There Be Commitment": A Housing, Planning Development Program for New York City (New York: Institute of Public Administration, 1966). Lindsay then offered Logue the job of directing the city’s new housing agency, the Housing and Development Administration (HDA), but Logue declined when HDA was not endowed with the superpowers that he thought necessary, including control over the functions retained by the Department of City Planning. Brilliant, The Urban Development Corporation, 26. Lindsay later opposed the Urban Development Corporation (UDC) legislation. Schickel, "New York’s Mr. Urban Renewal," 226.
71.
Walsh, The Public’s Business, 270-71. Rockefeller made such personal gifts to several colleagues and associates.
72.
Schickel, "New York’s Mr. Urban Renewal."
73.
Underwood and Daniels, Governor Rockefeller in New York, 178-79; Connery and Benjamin, Rockefeller of New York, 264-66; Brilliant, The Urban Development Corporation; Martin Gottlieb, "UDC Looking to Suburbs and Rural Areas," New York Times, November 27, 1983, 40; Newfield and DuBrul, The Permanent Government, 23-24. UDC’s power to override municipal zoning and construction codes was repealed in 1973. New York State Laws of 1973, chap. 446, sec. 3(5).
74.
Edward Logue, "The Future for New Housing in New York City," in Housing Form and Public Policy in the United States, ed. Richard Plunz, Cynthia Jara, Alfred Mediolo, and Steven Abrams (New York: Praeger, 1980), 7-18, 8.
75.
New York State Urban Development Corporation, Annual Report, 1972 (New York: UDC, 1973), 16.
76.
"A Moral Issue," Time, March 10, 1975.
77.
Martin Shefter, "The Electoral Framework," in The Two New Yorks: State-city Relations in the Changing Federal System, ed. Gerald Benjamin and Charles Brecher (New York: Russell Sage, 1988), 151-78, 173.
78.
"A Moral Issue," Time.
79.
Newfield and DuBrul, The Permanent Government, 33-34.
80.
Byron Klapper, "Crisis of Confidence," Wall Street Journal, February 28, 1975, 32; Peter B. Roche, "Two New York State Agencies Meet Debts Only by Paying High Rates on New Loans," Wall Street Journal, September 16, 1975, 39.
81.
Jason Hackworth , "Local Autonomy, Bond-rating Agencies and Neoliberal Urbanism in the United States," International Journal of Urban and Regional Research26, no. 4 (2002): 707-25, 716-17.
82.
Freeman, Working-class New York, 258; Roger Sanjek, The Future of Us All: Race and Neighborhood Politics in New York City (Ithaca, NY: Cornell University Press, 1998 ), 88-89.
83.
Joseph F. Zimmerman, The Government and Politics of New York State (New York: New York University Press, 1981), 240; E. Bruce Hallett, "Good Money After Bad?" Wall Street Journal, August 20, 1979, 59.
84.
New York State Moreland Act Commission on the Urban Development Corporation and Other State Financing Agencies, Restoring Credit and Confidence, 4.
85.
Ibid., 10.
86.
New York State public agencies have continued to issue debt aggressively: in 2002, seventeen state public authorities accounted for $34 billion in state-supported debt. Office of the State Comptroller, New York State, Public Authority Reform: Reining in New York’s Secret Government (February 2004), 4.
87.
Doug Guthrie and Michael McQuarrie, "Privatization and Low-income Housing in the United States Since 1986," Research in Political Sociology 14 (2005): 15-50.
