NYC mayoral candidate Mamdani seeks $70 billion of debt to fund affordable housing

Zohran Mamdani, the democratic socialist polling second in New York’s Democratic mayoral primary, wants to tackle the city’s affordable-housing crisis by taking on tens of billions of dollars of debt.

Mamdani is proposing that New York borrow $70 billion over the next 10 years on top of the roughly $25 billion already targeted for affordable homes in the city’s 10-year capital plan. The city currently plans to issue $136.2 billion of bonds backed by property taxes or sales and incomes taxes to finance schools, roads, bridges and housing. Mamdani’s plan didn’t specify if he would reallocate any of that funding or add to the existing debt load.

Mamdami, a state lawmaker from Queens backed by U.S. Rep. Alexandria Ocasio-Cortez and Senator Bernie Sanders of Vermont, has been running second in recent polls to former New York Governor Andrew Cuomo in the June 24 primary election.

To borrow an additional $70 billion, Mamdani would need state approval, said Howard Cure, director of municipal bond research at Evercore Wealth Management. New York law limits the amount of debt local governments can incur against their property tax base. It also governs the amount of debt New York City can issue that doesn’t count against its general debt limit.

The city had the ability to run up $41 billion of debt as of July 1, 2024, declining to an estimated $33.2 billion by July 1, 2027, according to a November report by the city comptroller’s office.

“It’s very ambitious,” Cure said of Mamdani’s proposal. “He’s going to need state approval if he wants to increase debt by $70 billion. Putting that aside, it’s a big increase in their fixed costs in a high-interest-rate environment.”

A Mamdani campaign representative didn’t respond to questions.

New York City, which spends about $7.7 billion annually for debt service, had about $104 billion of outstanding debt as of June 30, 2024. The city also has about $33 billion of water and sewer bonds, which are repaid solely by customer fees.

Mamdani, 33, wants to build 200,000 new units of affordable, rent-stabilized homes over the next 10 years and double the amount of capital spending to rehabilitate homes for the city’s 400,000 public housing tenants.

To pay for it — and other proposals like making city buses free, freezing rents and offering free childcare — Mamdani would raise corporate taxes and impose a new 2% income tax on city residents who earn more than $1 million a year. Raising those taxes would require state approval too.

Housing affordability is a key issue in the primary.

A city survey last year found the vacancy rate for rentals dropped to 1.4%, the lowest since 1968, down from 4.5% in 2021. Apartments viable for rent to lower-income New Yorkers were even more scarce. The portion of units available for rent for less than $1,100 was a mere 0.4%.

To address the housing crisis, Mayor Eric Adams, who is running for reelection in November as an independent, pushed through an overhaul of the city’s zoning rules. Known as City of Yes, the plan loosened restrictions to allow for three- to five-story buildings near subway stations, reduced parking requirements and expanded the universe of office buildings that can be converted into apartments.

Even as city officials are trying to increase the supply of affordable housing, the Trump administration has proposed slashing federal rental assistance programs by 40%, a $26.7 billion cut.

New York State has approved increases to the city’s debt limit before.

New York City’s Transitional Finance Authority, which sells bonds backed primarily by the city’s income tax, was set up by the state in 1997 to help the city avoid exceeding its debt limit. Initially, the TFA had the power to issue bonds up to an initial limit of $7.5 billion, which was increased to $13.5 billion.

Last year, the state increased the amount of TFA debt not subject to the city’s debt limit to $21.5 billion beginning on July 1, 2024, and $27.5 billion on July 1, 2025.

New York City had about $50 billion of TFA debt outstanding as of June 30, 2024, and $41.7 billion of general obligation debt.