Building industry offers tips to Guiliani.

While Mayor Guiliani faces many challenges, some of which may seem insoluble, such as the budget crisis, crime and drugs, one of the most critical - the shortage of truly affordable housing -- can be eased by a few simple steps inspired by other cities across the nation. Surprisingly, some can be achieved without the use of City funds or nearly non-existent Federal assistance, while others give the best possible value for scarce subsidy dollars.

Implementing the following ideas would improve the quality of life in the city, by increasing truly affordable housing for all New Yorkers - many of whom are too cash-poor to compete on the open market, but earn more than what is allowed for low-income housing, and thus fall between the cracks:

Permit as of right development for low density housing: Red tape has doomed the affordability of many projects. Because obtaining necessary approvals from the Buildings, Finance and other city agencies often takes over a year for even the most modest homes, these delays can easily tack an extra $10,000 onto the cost of a home. A solution would be to allow as-of-right development, which, by definition, would comply with zoning, building and environmental codes, to proceed within a maximum of 90 days from the submitting of an application. Privatizing much of the approval process by allowing architects and engineers to self-certify - as other cities do -- would result in substantial savings for the City and homebuyers. This would heighten the incentive for meticulous work because these professionals' licenses and malpractice insurance premiums would be on the line.

Create Housing Enterprise Zones: A serious gap has developed whereby some neighborhoods have gotten a great deal of new housing while many other communities, due to their dependence on the vagaries of the public process, have not. However, privately-financed affordable housing can be dispersed more widely across New York through the use of transferable zoning bonuses. These bonuses would give homebuilders who build in specially designated areas, the right to build 20 percent more market-rate units in the more "desirable" areas of the city. These zones would also be free of sales, transfer and mortgage taxes.

The concept of offering increased density to builders who provide certain public amenities, such as plazas or cultural facilities, is already part of the Zoning Resolution. However, these amenities must be at, or near, the development site. This overloads certain areas with amenities and new units, but leaves others forlorn and devoid of either. Housing Enterprise Zones would link the desirability of Manhattan with the other boroughs.

Legalize Granny Flats: Urge the production and legalization of "Granny Flat" (accessory apartments). Although some residential zones in New York permit accessory apartments, they are illegal - for no good reason - in most others. Legalizing the tens of thousands of existing illegal apartments, while sanctioning the production of new ones, would allow many hard-pressed families the benefit of the supplemental rental income to meet their expenses, while, at the same time, creating a pool of new, safe, affordable rental units. Since the elderly are now living longer than ever, more homeowning senior citizens will find it helpful - if not crucial - to be able to move into or rent an accessory apartment for extra income. City officials would be wise to promote the construction and/or legalization of Granny Flats that comply with reasonable fire and building codes, in much the same way as they did with residential lofts.

Update Mom and Pop Stores for the Nineties: Remember the mom-and-pop stores of our youth, where the merchants' family lived above or behind the store?

Why not transplant this concept to today's inner-city neighborhoods, where local residents would not only run their own stores, but also own the small two- or three-story buildings in which they would be located - living upstairs, with perhaps a rental tenant in another unit for extra cash flow?

The new administration should encourage developers to build low-rise homes with ground-level stores, combining homeownership opportunities with entrepreneurial possibilities. The subsidy, organizational and financing infrastructure is in place and available. The merchants would have more control over their own economic destiny, instead of being at the mercy of a landlord or an expiring lease. They would also have an added incentive to continue to live in the neighborhoods where they work, making a bigger emotional and financial investment in their communities.

Expand Worker Housing Production: SRO's may have acquired a bad name in some circles, but simple, old-fashioned Worker Housing (efficiency units for single working men and women) should be encouraged. Private sector (for profit), rehab and new construction and management with necessary below-market financing should be promoted. It works in San Diego, Orange County and Atlanta, among other places. It'll be a winner in New York, and, most importantly, will serve a critical need.

Encourage City Employees to Live in the City: The city does not have to impose residency requirements in order to force employees to live within the confines of the city. Rather, Mayor Guiliani should create incentives to help meet the housing needs of current or prospective municipal workers -- thereby creating an atmosphere of encouragement rather than coercion. Here are some of the options the new Mayor should consider:

* Interest-free loans for the down-payment on a home, condominium or cooperative apartment in the City.

The loan could be paid back through payroll deductions and should become due and payable whenever city employment ends for any reason other than a job-related disability or retirement.

* Below market are interest on mortgages.

The interest paid by resident city workers could be "bought down" through the use of city employee pension funds or tax-exempt bonds. It would be money well spent.

* Variable rate mortgages in which the interest rate is reduced as the length of service increases.

For example, 90 percent of the prevailing interest rate is paid by the resident worker during the first five years of service, 80 percent during the next five years, and so on.

* Extra subsidy for city workers.

Expand the excellent New York City Housing Partnership/HPD New Homes Program to provide an extra $10,000 per dwelling unit subsidy for homes purchased and occupied by city employees.

The homebuilding industry is ready, willing and able to build new homes, apartments and mixed-used housing in all the neighborhoods of the city, for all income levels. All that's needed is the implementation of some of the above suggestions. These are necessary to bridge the affordability gap and will meet a pressing need. Mayor Guiliani must understand that when it comes to housing, there is no constituency for "business as usual".

R. Randy Lee is a New York-based attorney and homebuilder and president of the Building Industry Association of New York City, Inc.