Report: Leasing NYCHA Land in NYC’s Stronger Markets Could Create New Units & Produce New Revenue
May 13th 2015
NYU Furman Center report explores tradeoffs between leasing underdeveloped NYCHA land to generate revenue, create new affordable units, or achieve some portion of both
New York, NY — A new report released today by the NYU Furman Center finds that leasing NYCHA’s underdeveloped land has significant potential to help the city meet two of the its key housing goals: creating new units of housing for low- and moderate-income households without additional subsidy, and generating new revenue to help fill NYCHA’s budget shortfall. However, this potential varies widely across neighborhoods based on market rents.
The report, Building New or Preserving the Old? The Affordable Housing Tradeoffs of Developing on NYCHA Land, finds that in neighborhoods with high rents, leasing underdeveloped NYCHA-owned land for private development could generate either substantial annual lease payments for NYCHA or significant numbers of affordable units. The potential to generate a substantial lease payment or number of affordable units drops as market rents drop. Where there is potential to lease land for development, the report quantifies the tradeoffs between generating revenue for NYCHA and creating new affordable units.
“The New York City Housing Authority faces tremendous financial challenges after years of declining federal support,” said Jessica Yager, policy director of the NYU Furman Center. “At the same time, there are a diminishing number of sites available for construction of new affordable housing, which the city desperately needs. NYCHA’s underdeveloped land is a valuable resource that could be used to help meet either or both of these needs in neighborhoods with high enough rents,” said Yager.
The study 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.
“Deciding how best to use NYCHA’s land involves many considerations beyond just the economics,” said Yager. “However, this analysis shows that, in some parts of the city, there is capacity to use this resource to help meet both NYCHA's needs and the city’s housing needs.”
Building New or Preserving the Old? The Affordable Housing Tradeoffs of Developing on NYCHA Land is now available at: http://furmancenter.org/thestoop/entry/2967
For more information, contact: Shannon Moriarty, [email protected], w 212-998-6492, c 617-824-0069