New York’s Nonprofit Housing Confronts Maintenance Crisis Amid Slow City Response

The nonprofit group Asian Americans for Equality (AAFE) has rehabilitated or preserved more than 1,400 residential units throughout New York City over the past 30 years or so. Thomas Yu, the organization’s executive director, recalls how deeply the odds seemed stacked against them when they started.

“When we did our first tax credit project over 30 years ago — which was one of the first of its kind in New York City — it was assumed, because it was a nonprofit-led development, that we would fail,” said Yu, referring to the Equality House project at 176 and 180 Eldridge Street in Chinatown, the first affordable housing project in the city to use federal Low-Income Housing Tax Credits. “The city withheld our developer fee from us and put it in a restricted reserve so that if we defaulted from our mortgage obligations there would be a rescue vehicle. That never happened. 

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“That thing sat there for years, accruing and appreciating, and at the end of the tax compliance period we were like, give us our damn money back!”

Nonprofit organizations like AAFE play a crucial role in developing, operating and maintaining the city’s much-needed affordable housing stock. But that stock, along with the organizations that support them, is in trouble.

An October 2025 report by the Association for Neighborhood & Housing Development (ANHD) titled “The Crisis Facing New York City’s Affordable Housing” found that 290,000 apartments in the city are subsidized via having been built through public programs that guarantee below-market rents for lower-income tenants. The report found that “more than 63,700 homes [are] already in financial distress and facing increasing strain.” 

“Behind the walls of aging buildings, [community development corporations] and other nonprofit owners are fighting to keep the lights on, repair leaking roofs and cover insurance bills that have more than doubled in just four years,” the report reads.

The national nonprofit Enterprise Community Partners, which was a partner with AAFE and Fannie Mae on the Equality House project, released its own report in November 2025 titled “Distress in New York’s Affordable Housing Stock,” which cited increased total operating expenses since 2017 of around 40 percent, including 35 percent for repairs and maintenance, 51 percent for administrative costs, and, echoing the ANHD information, 110 percent for insurance costs.

And, while costs for New York’s housing nonprofits are rising, income is falling, as rent collections are down from almost 95 percent in 2017 to just above 90 in 2024. For the average affordable housing project, a drop in collections from 95 to 90 percent would represent a loss of around $75,000 a year. The Enterprise report also found that while just 3 percent of projects had “deeply troubled” rent collection rates — defined as less than 80 percent — in 2017, that figure rose to 11 percent by 2024.

The situation for the nonprofits that keep New York’s affordable housing stock livable is so dire that the Enterprise report states outright that “the viability of the nonprofit sector is threatened.”

A familiar problem

The current overall housing crisis in New York City has led to a widespread discussion on what many perceive to be the main problem: a lack of supply due to factors that include the many challenges involved in making affordable housing projects pencil out, such as a dearth of buildable land. The solution for many, then, is to devise ways to increase the city’s housing supply, with tax breaks and office conversions prevailing in the discourse.

But, while greater supply is certainly needed, the effect of “Build! Build! Build!” will be nullified if the city’s currently operable housing stock is allowed to fall into decrepitude. It’s an issue often raised in relation to discussions about Mayor Zohran Mamdani’s desire to freeze rents for rent-stabilized apartments, but ignored in other key contexts.

“The city can’t only build its way [to] affordability,” said Baaba Halm, senior vice president of programs at Enterprise Community Partners. “Preservation of affordable housing that has been built is also really critical to meeting the affordable housing challenges.”

Enterprise has invested over $8 billion in the city’s affordable housing stock throughout its almost 40-year history, preserving or building more than 84,000 housing units throughout New York state, with roughly 54,000 of those in the city, according to Halm. She said nonprofits are crucial to New York City’s affordable housing.

“Here, they are critically important,” said Halm. “They really are part and parcel of the fabric of what the city has been able to achieve toward its housing goals. They’re one of the critical actors that are building affordable housing and operating services on behalf of residents and communities. They are integral to the city’s affordable housing ecosystem.”

Stephen Powers, co-founder of brokerage Open Impact Real Estate, notes that nonprofits are particularly essential for the development of much-needed supportive housing, which provides services such as social work, workforce development and support for seniors.

“There’s a mandate [from the city] for 15,000 new supportive housing units by 2028 as well as a new push for housing for the formerly incarcerated,” said Powers. “You need a nonprofit partner to meet these goals because for-profit developers don’t do supportive housing services. They almost always partner with a nonprofit.” 

And all this planned housing is only part of the equation for nonprofits. Yu points out that in the course of preserving affordable housing in Lower Manhattan, his organization became a major force for retail as well.

Yu said many of the buildings his organization rehabilitated have been mixed-use buildings with retail space on the ground floor, leading to another way his organization has helped shape the area.

“We have over 40 buildings in the Lower East Side in an area that rapidly gentrified,” said Yu. “Without the assets that we have stewarded all these years, there wouldn’t be any affordable units. And these buildings all have two or three storefronts at the bottom. So, by default, we ended up owning over 50 retail spots in Lower Manhattan. There, we have the ability to also curate affordable retail diversity for our tenants.”

Just a few of the retailers AAFE has either placed or helped remain in their space over the years include the mainstay corner deli Stop 1 Deli, discount variety store MZ Wang Discount, and restaurant Leciel, all on the Lower East Side.  

“There’s no point in creating formal units if residents can’t purchase goods and services relevant to them or have jobs anywhere,” said Yu. “So nonprofits really stabilize these neighborhoods.”

Halm told Commercial Observer that nonprofit affordable housing operators across the board worry that the current financial pressure could lead to hard choices with detrimental results for city residents.

“Owners and operators are significantly challenged, looking for sources to help them meet the expenses that accrue month to month,” said Halm. “They’re facing choices [like] are they going to do preventative maintenance, or are they going to wait things out because they have to cover operating expenses that can’t wait?”

Halm fears that, in the long term, the habitability of the city’s affordable housing could be deeply affected.  

“We don’t see that manifesting yet,” said Halm, “but we think that if this trend continues, where operating expenses are increasing year to year — doubling, in some cases, like insurance — that could put owners and operators in that difficult position, where they won’t be able to offset losses. Some may choose to delay things in order to pay for operating expenses, and some may need to fold.”

On top of the problems directly associated with their properties, housing nonprofits too are finding — especially given the current federal administration — that outside funding sources have been drying up as well, sometimes even after that funding was promised.

“We’re in an environment where more than 7,000 unpaid invoices to not-for-profits are outstanding, which comes to more than a billion dollars sitting with the City of New York,” said Suri Kasirer, founder and president of the lobbying firm Kasirer, which works with over 50 nonprofit clients. “Much of this is for services that have already been rendered over a number of years. In addition, many of these government contracts do not cover the full range of services that nonprofits are providing. So nonprofits are laying out money in addition to that. There’s just lots of challenges that not-for-profits are facing.”

To provide a sense of scope, when Kasirer is asked for a ballpark figure for how late the average unpaid invoice is from the government to one of her nonprofit clients, she said, “we’re talking three to five years late.” 

(The city Department of Housing Preservation and Development was sent a detailed list of questions regarding the matters in this article, and did not respond by press time.)

This kind of negligence regarding payments that are often intended to cover the full cost of various programs is clearly unsustainable. Sheltering Arms, a nonprofit formed in 1823 that had operated housing programs throughout the city — in addition to homeless shelters and other services — shut its doors in 2023 due largely to late contract payments from the city. 

At the time, Gothamist cited the organization’s “razor-thin reserves,” noting that its 2020 financial statement showed that “the organization took in about $99.2 million that year — mostly from government contracts — and spent all but about $66,000.”

Even for organizations that aren’t as close to the precipice, the current financial crisis affecting nonprofits is making it difficult to sustain even basic services for the housing in their charge. 

Yu noted that while AAFE has the sort of reserves that keep this from being a life-or-death time for the organization, many of his colleagues in the industry are not so fortunate.

“We’re still able to tap into savings we stowed away in the good times,” said Yu. “But there are a lot of other partners in the industry that are going to start sweeping the bottom of that barrel, and there’s no replenishment. We know of industry peers that hit that long ago, and they’re not able to make the kind of important capital improvements that are essential for the safety and security of their tenants and also meet their debt obligations.”

And even with a fair amount in reserve, Yu said that AAFE’s buildings had been well preserved until the pandemic hit. Now, a string of difficulties is making it hard for them to keep up with necessary maintenance.

“Some of the major capital upgrades were postponed because we couldn’t safely access buildings,” Yu said of the pandemic period. “Routine capital repairs were delayed, and then with inflationary costs, all of that escalated where things that used to cost X were doubled and tripled.” 

Yu noted that nonprofit operators of small buildings have come to fear the likes of facade inspections or parapet repairs given increased overall costs.

“They’re draining all the healthy reserves of a lot of these buildings that are going to need reserve replacements, because they’re not getting it from the rents,” said Yu. 

Suggested repairs 

So with all these issues growing worse, what are some potential ways out of the morass for the nonprofit housing sector?

For almost 50 years, the Center for Urban Community Services (CUCS) has provided transitional and supportive housing for vulnerable New Yorkers, including the formerly homeless and those struggling with mental illness.

The organization has struggled with many of the difficulties mentioned here and more. That includes one of its Bronx properties post-COVID, where mortgage debt had to be serviced even while around 60 percent of tenants were in arrears and the building’s basement had flooded.

Beatrice Thuo, the organization’s chief operating officer, spells out some of the solutions CUCS has been investigating and implementing.

“Our short-term plan was to look at the existing relationships we have, from the property manager to our insurance, [and think], ‘Is it time to reset those relationships? If our insurance is this high, is it because we have not been out to the market in a long time?’ ” said Thuo. “One thing we found was that we had not been out in the market for 16 years. We had the same property manager since then. Are there savings we can [find if we] go back to the market? And that’s what we did.”

CUCS issued a request for proposals, and wound up with a new property manager at a better financial deal than had been in place. Then, crucially, they did the same with their insurance company.

Thuo notes that the nonprofit has additionally been working with the city to strengthen its cash flow on several fronts. 

“We went back to the city and our syndicators and said, ‘We want to tap into the replacement reserves to start addressing these issues,’ and that was approved,” said Thuo. “These were all things we did immediately to say, ‘What can we do to address these things in the short term?’ Then, for the long term, [we want to] sit with our city agencies and come up with debt restructuring, [and find out if we can] defer that interest.”

And, for a piece of good news for the entire nonprofit sector, there is some relief on the way for those owed money by the city. 

Kasirer has worked on several bills which have now been approved by the City Council that will speed up the payment process for city-owed reimbursements.

One bill, which takes effect July 1, will require “immediate advance payment of 50 percent of the value of a nonprofit’s contract with the city as an advance.” 

In the City Council’s October 2025 release announcing the bill, Councilmember Justin Brannan said, “The City of New York needs to pay its damn bills on time. Nonprofits keep our city running and offer crucial supportive services to our most valuable neighbors.”

Another law, set to take effect in July 2027, will find certain contracts with the Department of Homeless Services and the Mayor’s Office of Criminal Justice receiving payments of 25 percent per quarter, among other mechanisms intended to speed up payment.

While these should ease the burden for companies owed many years’ worth of reimbursement from the city to an extent that remains to be seen, the problems of growing expenses and shrinking revenue have no easy solution. That leads to a fear that in the midst of a major push to expand housing options, much of New York’s existing stock is endangered due to lack of capital and resources for basic upkeep.

Yu confirmed that there’s a fear in the nonprofit sector that if buildings fall too far into debt, they’ll be foreclosed on and then redeveloped, possibly removing them from the affordable housing pool.

“There’s a resurgence of buildings that are failing and going on the auction block,” said Yu. “At the core of a lot of these is that because nonprofit landlords are not keeping pace with the escalating costs of repair, some of them unfortunately took out predatory loans, and they’re ending up in foreclosure. One of our fears is there will be wholesale gentrification and displacement because of what’s happening.”

Yu used the example of Chinatown, where legacy buildings passed down through generations face yet another obstacle: a younger generation that doesn’t want to deal with the problems that come with affordable housing ownership.

“There are lots of legacy landlords who have owned buildings through two or three generations, and the younger generation doesn’t want the headache of taking over a building that doesn’t have cash flow,” said Yu. “They’re selling these buildings instead. Longtime landlords had relationships with tenants.”

Now, the landlords are sometimes faceless and multinational, Yu said. “It’s adding to a decline in the retail diversity and the health and culture of a community, because those storefronts were also legacy businesses that had a relationship with the landlord through the families.”

Yu said he believes one potential solution would be to allow stand-alone buildings to combine operations, thereby easing their individual burdens. But red tape and government opposition prevent this.

“Stand-alone buildings have thin reserves,” said Yu. “We advocate for combining those buildings into larger, more stable clusters, but we’re hitting a lot of legal roadblocks. The city does not like the commingling of some of these entities even though that would be the best thing to do. If I had a larger cluster to have healthier reserves, why can’t I use that? We have a lot of stand-alone buildings we’re desperately trying to work with, [talking to] the city to say, ‘Please, let us use this to cross-subsidize.’ But we’re hitting all these roadblocks because they have separate regulatory agreements. There’s always a reason why you can’t do it.”

Yu also shared the tale of a building his organization took over in Bay Ridge, Brooklyn. AAFE needed to use a city subsidy to pay tax arrears owed to the city.

“These should just cancel each other out, instead of having to create a huge equity capital SPAC just to pay itself. It makes no sense,” said Yu, referring to a special purpose acquisition company. “That’s an administrative fix that quickly reduces the total development cost of an acquisition preservation project. Can someone sharpen their pencils and work with us to eliminate these barriers that make no sense? Then we can make acquisition and preservation more viable, and reduce the cost across the board.”

The feeling is pervasive among nonprofits in the space that without some solutions on the horizon, the city risks losing valuable affordable housing stock. Given the current crisis, it couldn’t be a worse time to let existing housing fail.

“It does feel that we are at a critical point now,” said Enterprise Community’s Halm. “We have a couple of nonprofits that are thinking about selling off individual buildings within their portfolio, shutting their doors, or looking for support to identify the next viable owners. There are thousands of affordable housing units in jeopardy — there is a real risk that they could lose their affordable status. Losing affordable housing that is already built and operational is a detriment to the city. We can’t just build our way out of new supply for housing. We’ve got to keep the units we’ve already built.”

Larry Getlen can be reached at lgetlen@commercialobserver.com.