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Should NYCHA Privatize Vacant Land? Yes, But...
September 27, 2012
... make sure it's used for affordable housing.
This week, New York City Housing Authority Chair John Rhea announced his plan to supplement NYCHA's operating income by allowing private developers access to vacant NYCHA land. ANHD typically questions any move to privatize public resources, which often uses a short-term (and government self-inflicted) funding short-fall as an excuse for a long-term pull-back of government responsibilities. But NYCHA's plan may be an instance where a controlled expansion of private development works in the interests of NYCHA's mission, its residents, and of our city - but only if the new developments meet community needs.
First, the context - NYCHA's management may deserve some of the recent criticism, but even critics must admit that NYCHA's severe operating deficit is mostly a result of a "starve the beast" federal policy that has created a $60 million annual operating deficit and a $13 billion gap in much-needed major capital repairs. While NYCHA must improve its governance and operations, this structural underfunding remains as NYCHA's greatest challenge.
NYCHA's mission is key. It houses 600,000 New Yorkers (more people than live in Washington DC), managing 2,600 apartment buildings in 334 developments across the five boroughs. NYCHA's housing is the most affordable and the most stable in our city, and is the backbone of many neighborhoods. Our city owes NYCHA the resources to do its job well.
To protect this mission, Chairman Rhea announced that NYCHA would form "partnerships with real estate developers to create a mix of affordable and market-rate housing on under-used NYCHA sites". He stated a few important principals: 1) NYCHA will use only vacant land so there will be no demolition or displacement of current residents; 2) NYCHA will not sell the land, but instead long-term lease it to provide a cash-flow to NYCHA; 3) All new income will be used as an operating resource to support NYCHA current residents and mission; 4) There will be a requirement that the developer include affordable housing in the newly developed housing; and 5) NYCHA residents will benefit from the construction jobs created. Each of these principals is correct, but here are a few we would add:
- The affordable housing requirement must be a significant percentage and permanently affordable so that the City is getting the maximum return for its land.
- NYCHA should balance their need for generating income with the concerns of residents and the community as it decides which sites to develop, and with which developers to partner. Operating income is important, but so is green space, and even parking lots.
- One way to find this balance is to include meaningful resident participation the site and developer selection process, another is to consider mission-driven local developers who will respect the community's needs as partners.
- The land must always be ground-leased for development and never sold outright. By ground leasing, NYCHA can get the operating income they need, but still retain long-term control of the asset so it can respond to market conditions and community needs.
- NYCHA residents must have access, not just to temporary and low-skilled construction jobs on the development sites, but instead to jobs that are an explicit pathway to union membership so the jobs become a ladder to economic stability and advancement.