Inclusionary zoning is a bad enough idea, but at least it doesn’t cost taxpayers anything directly. But New York State’s Housing Finance Agency is taking the worst of both worlds – affordable housing mandates and public subsidies – and plopping them down in new luxury construction in the heart of Downtown Brooklyn. Behold, some of the most expensive “affordable housing” in all five boroughs (at least, let’s hope it’s the most expensive!):

• 388 Bridge Street Apartments, between Willoughby and Fulton streets in Downtown Brooklyn, a 234-unit, brand new 49-story multifamily rental apartment building controlled by the estate of Stanley Stahl, which received $94.6 million in financing. Forty-seven of the units will be set aside for tenants with household incomes up to $39,600 for a family of four. • 25 Washington St., between Plymouth and Water streets in DUMBO, a 106-unit, eight-story multifamily rental apartment being converted by Two Trees Management Co., which received $22.2 million in financing. Twenty-one of the units will be set aside for tenants with household incomes up to $39,600 for a family of four. • 29 Flatbush Ave., at Nevins Street in Downtown Brooklyn, a 333-unit, brand new 44-story multifamily apartment building controlled by The Dermot Company, which received $99 million in financing. Sixty-seven of the units will be set aside for tenants with household incomes up to $39,600 for a family of four.

That comes out to a little over $2 million per subsidized apartment in the first tower, $1 million in the second, and almost $1.5 million in the third. And that’s not even counting the rent that the future impoverished (because, let’s face it, if you earn less than $40k for a family of four in NYC, you’re impoverished) tenants will have to pay. That’s $215 million spent (see correction) so that New York can fulfill its social engineering wet dream of moving more 136 families into gleaming glass-and-steel luxury skyscrapers in an area that’s in the running for the Curbed Cup neighborhood of the year. Just imagine how far that money could have gone if it were given to families to choose their own housing, in, I dunno, say, a building where their neighbors don’t have an income an order of magnitude larger than theirs?

Correction: It looks like I overstated the benefit. Adam explains in the comments:

It’s not a grant, its tax-free, low-interest financing. Also, just to be clear, the “94.6m” is for the financing of the whole building because it conforms with affordable housing requirements. Some ratio must be affordable, like 70/30, etc. To calculate the “subsidy” per affordable unit, you’d have to calculate the present value of the interest savings over the lifetime of the lower-interest loans and divide that by the number of affordable units. Its still a number in the hundreds of thousands per unit, but not quite in the millions.

In other words, the benefit really depends and is very hard to calculate. I found the exact program, though – it’s called the 80/20 program, and here are the terms, which I don’t totally understand:

Under the 80/20 program, for specific periods of time 20% of a project’s units must remain affordable to low-income households and these units will be subject to a Regulatory Agreement between the owner and HFA. HFA’s Regulatory Agreement assures that the maximum rent on these affordable units cannot exceed 30% of the applicable income limits. The remaining units in an 80/20 project can be rented at market rates. The tax-exempt bond financing generates 4% “as of right” Low Income Housing Tax Credits, which can either be syndicated to generate part of the required equity a borrower must contribute to the financing or be utilized to offset the borrower’s tax payments. All bonds or bond financed mortgages, including those financed under the 80/20 Program, must be credit enhanced. Credit enhancement provides security for bondholders and ensures a higher rating on the bonds issued, which in turn produces a lower mortgage rate. Click here for more information on credit enhancement options.

Maybe someone with more knowledge of development financing can interpret that for us and give a rough estimate of the NPV of the benefit.