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NYCHA air rights eyed by private developers

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Several developers have been working with lobbying firms to help them secure valuable air rights from the city’s public housing stock

The sale of air rights from NYCHA to private developers is poised to help fund major fixes to the city’s public housing stock.
Spencer Platt/Getty Images

Several developers are honing in on city-owned air rights that the New York City Housing Authority (NYCHA) may seek to sell as part of its plan to fix and modernize the agency’s aging housing stock, calling on major lobbying firms to help win the city over.

In December 2018 the agency unveiled a $24 billion initiative called NYCHA 2.0 that will bring much-needed renovations to apartments for 175,000 residents and will roll out new strategies to address issues like broken elevators, lead paint, mold, and heat over a period of ten years. NYCHA also plans to launch three new programs called Build to Preserve, Transfer to Preserve, and Fix to Preserve as a part of the initiative.

The city estimates that Transfer to Preserve will generate roughly $1 billion in capital repairs through the sale of underutilized development rights, or air rights, of which it holds an estimated 80 million square feet.

While the program has yet to take off in any meaningful way, a deep dive into city records by PincusCo found that a handful of developers have spent hundreds of thousands of dollars to lobby the city in an effort to win over air rights in Alphabet City, Chelsea, and Fort Greene.

Developer Madison Realty Capital tapped lobbying firm Capalino+Company in January in an effort to secure air rights from Campos Plaza II, the NYCHA development bound by East 12th and 13th streets and Avenues B and C, to help it develop a property at 644 East 14th Street at Avenue C. The developer provided a $52 million first mortgage loan to site owner Opal Holdings in 2016.

PincusCo speculates that Madison will seek an upzoning of the site to provide air rights that will help Opal develop a long-planned 50-unit residential building at the East 14th Street corner. Madison may also be making the play to bring a 300,000-square-foot community space (read: college dorm) to the corner through a tax lot merger with parcels co-owned by NYCHA.

In Chelsea, developer Real Estate Equities Corp. has been lobbying NYCHA in an effort to obtain air rights from Fulton Houses, the agency development between West 16th and 20th streets and Ninth and Tenth avenues. REEC filed plans with the city in December 2018 to develop an 86,600-square-foot office building on four parcels it controls along the High Line, but its lobbying efforts betray bigger plans for the site—REEC worked with Capalino+Company from mid-2017 through February.

A Fort Greene development site may get a boost with air rights from Ingersoll Houses, the NYCHA development between Fort Greene and Commodore Barry parks. The site at 202-208 Tillary Street was purchased by Maddd Equities and Joy Construction in August 2018 from YYY Brooklyn LLC, which had planned a roughly 234,000-square-foot residential development for the site that would have been subject to the city’s land use review procedure.

The developers indicated after their purchase that they were interested in building a 400,000-square-foot building with NYCHA air rights. Maddd hired lobbying firm Akerman in 2017 in an effort to secure the air rights, and may be the first of the bunch to do so, PincusCo says. The city has said that Ingersoll Houses will be the first development to sell off its air rights, indicating that that could happen in mid-2019.