The New York Times has scared up more details about city and state plans to transform market-rate condos and rentals into government-subsidized “affordable housing” or “moderate-income housing.”

The head of New York State’s Housing Finance Agency, Priscilla Almodovar, said one aspect of the plan will involve using the state’s credit to guarantee mortgages for condo buyers, in return for the developer cutting the price.

The state is also looking at providing $40,000 grants to families whose income is less than $108,000 to help them buy apartments that are slightly out of their price range.

These plans are a two-fer in vintage New York politics.

First, they’re a huge taxpayer gift to politically connected developers and banks, who would have had to cut prices down, anyway, without government money.

Second, the government is using taxpayer money to attract more people to the illusion that they’re dependent on government to do well.

Consider: more than three-quarters of New York families would qualify for an “affordable” apartment under the rough guidelines the paper reported. Only a relative few would attain such an apartment, though, under a process that is vulnerable to New York corruption and favoritism.

The price of the program, to the millions of people who are theoretically eligible but won’t “win,” is higher housing prices for everyone, plus a slower adjustment to market prices.

Furthermore, the program is ineffective even for some “winners”: giving people a $40,000 grant to buy a house is just going to keep the price of that house $40,000 higher than it would have been, meaning a waste of government money.

But this is hard to understand — whereas it’s easy, the city and state pols hope, for people to skim the paper and get the idea that Christine Quinn, Gov. Paterson, and Mayor Bloomberg (whose own larger affordable-housing program, launched in his first term, is based on similar ideas) are looking out for them.

The city and state taxpayers pay another price, as well. Using state credit to back up mortgages means that there is less debt financing available for other worthy infrastructure projects.

Thankfully, we can all blame Bush for this (really).

As one Brooklyn Assemblyman with his own plan to make subsidized rentals out of condo buildings, Hakeem Jeffries, says, many of the banks behind the condo developments received TARP money last fall, and, “it is the right thing for these banks to recirculate these tax dollars into the economy.”

It’s true that bankers now feel even more beholden to government than ever, but lots of for-profit institutions have always happy to take government money.

What TARP did is allow these banks to delay reality on lots of their investments, including half-finished condos, giving the pols time to devise their market-killing plans.

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