The New York City Housing Authority is hurting in a myriad of ways: it's facing a $98 million budget gap with dire fixes needed throughout its facilities. Still, over 250,000 people are on the city's affordable housing waiting list, and that list is only growing. Over time, a few different means to generate revenue for the perpetually-underfunded agency have been proposed, like the Bloomberg-era Land Lease program, which would allow private developers to build 80/20 buildings on land leased from the NYCHA. In lieu of that program, Mayor de Blasio has enacted a different plan to sell a 50-percent stake throughout six NYCHA developments to L+M Development Partners and PDP Triborough LLCa partnership between BFC Partners and Preservation Development Partnersthat will net NYCHA major gains, at least in the short term. Still, way more's needed to dig the agency out of its hole.
In a new report entitled Building New or Preserving the Old?, the Furman Center at NYU explores the implications of rehashing the Land Lease program. The report finds that building on underdeveloped NYCHA land will help provide more units and generate subsidy, but only if affected in certain neighborhoods. The potential to generate either more affordable units or gain more substantial lease payments "drops as market rents drop." For instance, neighborhoods with already high rents like Downtown Brooklyn could generate substantial subsidies for NYCHA. Mid-rent neighborhoods like Astoria, though, wouldn't be very worthwhile to develop in by the numbers.
According to the Furman Center,
The report used financial modeling to determine what ground lease payment and/or affordability requirements NYCHA could achieve by leasing land for development in neighborhoods with different market rents. In strong markets, such as Downtown Brooklyn, a high-rise building with 302 units could generate approximately $2.24 million annually for NYCHA while maintaining 20 percent of the units as affordable. If NYCHA chose to forego a ground lease payment and instead maximized the number of affordable units, 47.5 percent of the units in this new high-rise development could be affordable to low-income households without any additional subsidy. A compromise approach could result in an annual ground lease payment of $1.48 million to NYCHA with 30 percent of the units affordable to low-income households. The capacity to lease NYCHA land to generate value in the form of affordable units or ground lease payments is much lower in parts of the city with lower rents. In an area with moderate rents, such as Astoria, a mid-rise development with 20 percent of the units affordable to low-income households would only generate an annual lease payment of $117,000 for NYCHA. Even with no lease payment, that development could only support making 26 percent of its units affordable to low-income households.
The findings echo those of an earlier Furman Center study that found that the neighborhoods City Hall is eyeing for affordable housing largely don't command high-enough rents to make developing affordable housing in them fiscally worthwhile for builders. There's certainly a trend here.
· Building New or Preserving the Old? (PDF) [Furman Center]
· Developing NYCHA Land Has Benefits, But They Drop Off in Less Affluent Neighborhoods [NYO]
· Should The City Build More Affordable Housing In Pricey Areas? [Curbed]
· NYCHA To Sell Stake in Some Affordable Housing to Developers [Curbed]