Lease it or lose it? The implications of New York’s Land Lease Initiative for public housing preservation

Introduction

Urban scholarship and practice wrestle with a fundamental tension between the goal of equitable cities and the polarised outcomes of typical urban growth in market-based economies. Normative arguments for the just city provide convincing reasons why planning should support a fair distribution of resources and opportunities, in part because this is a fundamental right of all residents (Fainstein, 2005, 2010; Harvey, 2009; Marcuse, 2009). However, existing urban theory predicts that wealthy, private business interests will pursue development – with government support – at the expense of low-income residents, especially in the neoliberal era (Logan and Molotch, 2007; Marcuse, 1986a; Molotch, 1976; Newman and Ashton, 2004; Stone, 1993). The recent experience of public housing in the USA provides some support for these claims as the federal government provided funding for developers to demolish public housing buildings, build market-rate units and displace poor families from their homes (Goetz, 2013; Keating, 2000; Vale, 2013).

This paper questions the basic assumption about who benefits from development by reassessing a provocative housing proposal in New York. The New York City Housing Authority (NYCHA) Land Lease Initiative called for offering undeveloped lots on public housing sites to private developers for predominantly market-rate residential construction. Proceeds from the leases would generate funds for long overdue repairs and improvements to the subsidised housing stock serving low-income families. Based on interviews with housing agency officials involved in formulating the plan and analysis of plan documents, public testimony and media reports, we show how the content and framing of the plan contributed to fears that it would eliminate public housing and displace poor families from their neighbourhoods.

Despite the sharp criticism and public backlash generated by the plan, we reveal four unconventional ideas for preserving public housing that are embedded in the plan: (1) retaining 100% of low-income units – including much-maligned high-rise public housing buildings – through development, instead of eliminating them through demolition; (2) deconcentrating poverty on public housing sites by increasing residential density, as opposed to dispersing low-income residents to other neighbourhoods; (3) building additional affordable housing units on the site of high-poverty, public housing projects; and (4) creating a mix of incomes by bringing market-rate residents around low-income families, in addition to the more-typical approach of mixing incomes within buildings. These ideas represent important shifts in how the concept of public housing and its physical stock of buildings can be managed and sustained. For cities faced with federal retrenchment, the choice between preserving affordable housing and privatising it may no longer be mutually exclusive.

Plans and policies to maintain public housing are increasingly important given rising needs and declining funding. The number of poor households in the USA who pay more than half of their income toward rent, live in substandard conditions, or both, has steadily increased since 2001 while annual federal appropriations for public housing have dropped from US$3 billion to US$1.8 billion (Steffan, 2013). Local agencies are caught in the squeeze of needing to help more families while receiving less financial assistance from the federal government. This research offers lessons for cities seeking to preserve the precious stock of affordable housing and offers new directions for urban practice and theory in the face of government retrenchment. Research on public housing redevelopment has important implications for broader debates about the role of government and how the state has embraced neoliberal approaches to social problems. The ways in which different actors interpret and respond to plans is also useful to our understanding of the practices and material consequences of urban policy making.

Theory and literature: The enduring growth machine?

Despite criticism and the passage of time, the theory of the city as a growth machine offers insights into the relationship of local economic development and urban politics. Growth machine theory relies on two competing views of the value of land: exchange value and use value. Exchange value involves the potential for deriving profits through different rates of investment and development of land. An exchange value perspective views houses as sources of rent for land owners. Use value refers to the role of places and buildings as settings for human habitation and interaction. A use value perspective views houses as homes for residents (Logan and Molotch, 2007; Molotch, 1976). Growth machine theory argues that entrepreneurs focused on the exchange value of land will seek to make money through different rates of investment and development across urban space. Land-based coalitions, consisting of developers, realtors and banks, drive up exchange value and accumulate wealth by intensifying land use (Jonas and Wilson, 1999; Logan and Molotch, 2007; Molotch, 1976).

Growth coalitions influence urban politics to promote their development agenda so local government plays an essential role in the operation of the growth machine. Local governments have shifted from a managerial role focused on providing services to an entrepreneurial role that emphasises economic development, as elected officials hand over land and tax breaks to private investors in hopes that development will generate revenue from property taxes (Hackworth and Smith, 2001; Harvey, 1989; Weber, 2002). Land-based elites and government officials use ideology and discourse to convince residents that development will spur additional growth and ultimately benefit everyone (Jonas and Wilson, 1999).

Theory predicts that through the processes of differential land investment and political influence, cities become places that privilege growth and leave little room for uses with low economic value, often at the expense of low-income residents. Subsidised housing is viewed as an obstacle to growth because rents are capped, which runs counter to the goal of seeking higher exchange values. The preservation of low-income housing is also seen as a barrier because it obstructs the intensification of land use, which is essential to obtaining higher rents. Prior work argues that even some government policies explicitly focused on improving the lives and conditions of disadvantaged groups may ultimately benefit developers and private business interests (Marcuse, 1986a; Newman and Ashton, 2004). Critiques of the growth machine as a conceptual model note the importance of structural forces, political power and nuanced political processes in urban development (Clavel, 1986; MacLeod, 2011; Mossberger and Stoker, 2001; Stone, 1993). However, the durability of growth machine theory is demonstrated by the shared prediction that development will disproportionately benefit private business interests.

Growth machine theory provides a useful framework for interpreting prior research on housing redevelopment, especially the conflicts between use value and exchange value in US public housing. Use value is evident in portrayals of how residents have formed vibrant communities despite socioeconomic challenges and deteriorated physical environments (Vale, 2002; Venkatesh, 2000). Exchange value is demonstrated by local governments and private developers dismantling public housing projects that were previously 100% low-income and building a mix of market-rate and affordable housing options, with fewer benefits for low-income residents (Chaskin and Joseph, 2010; Vale, 2013). Through this process of state-supported gentrification, hundreds of public housing buildings were demolished and tens of thousands of low-income families were displaced from their homes and neighbourhoods (Goetz, 2011, 2013; Vale, 2013). Given this troubling track record, both urban theory and previous studies of public housing raise the question: can private development ever benefit low-income residents, and if so how?

Methods

This research draws on a combination of methods to understand the motivation, rationale and response to the NYCHA Land Lease Initiative. We conducted in-depth interviews with key housing agency officials who were closely involved in creating and developing the plan. Interviews were conducted with individuals who were currently working at the housing authority at the time of the interview, as well as former employees who had left the agency. The semi-structured interviews, which lasted 45–60 minutes each, included open-ended and closed questions about the content of the plan, internal debates and the decision-making process. The interviews were recorded using audiotape and later transcribed. In addition, we collected public testimony and statements from NYCHA officials regarding the Land Lease Initiative. The testimony and statements were taken from transcripts of City Council hearings, State Assembly meetings and public events.

To supplement the data collected from the interviews and public testimony, we examined official NYCHA documents and records related to the Land Lease Initiative. The written and visual materials included the Request for Expressions of Interest (RFEI) issued to developers, supporting appendices for the RFEI, NYCHA Annual Plans, and presentation slides on the Land Lease Initiative that were shown to public housing residents (see the Appendix for a complete list). We also reviewed references to the Land Lease Initiative in the NYCHA Journal, a housing authority newsletter for residents, and the NYCHA Employee Bulletin, a housing authority newsletter for staff. These materials were publicly available and obtained from the NYCHA website.

In addition, we examined media coverage, reporting and journalistic accounts of the Land Lease Initiative and public response from many quarters, including residents, activists and community organisations. Using LexisNexis, we conducted searches of news articles in the three major New York daily newspapers: New York Times, New York Daily News and New York Post, which yielded 146 articles. We also examined print and online media coverage in news magazines and local publications, including New York Magazine, New York Observer and City Limits. These methods were used together to triangulate and understand the planning process through different lenses.

Management and financial challenges facing NYCHA

Created in 1934, the New York City Housing Authority is the largest public housing authority in the USA; it administers public housing for over 400,000 low-income people, which is about equal to the population of Miami. To house these residents, NYCHA manages more than 175,000 apartments, or 1 out of every 11 apartments in New York City, across 2500 buildings located in 334 developments (NYCHA, 2014).

Residents, housing activists and community groups have questioned NYCHA’s capacity and commitment to public housing despite an 80-year legacy of providing affordable housing for low-income New Yorkers (Bloom, 2008, 2012). Public housing residents repeatedly complained about apartment maintenance problems, including mould, falling plaster and broken windows; NYCHA acknowledged that the number of unfulfilled repair requests reached 400,000 at one point (Smith, 2013a). Some tenants reportedly waited years for basic repairs, prompting hundreds of residents to join community organisations in filing lawsuits against NYCHA (Chen, 2014; Navarro, 2013b; Smith, 2013a). Investigations revealed that more than 2000 apartments lay vacant for an average of 40 months, with some remaining unoccupied for ten years or more, while 160,000 families remained on the waiting list for a public housing unit (Gonzalez, 2008; Thompson, 2006).

Housing advocates accused NYCHA of fiscal mismanagement, including revelations that agency executives received six-figure salaries and were escorted in city-owned cars while sitting on millions of dollars in unspent housing funds (McShane and Smith, 2012). A high-ranking NYCHA official observed that:

[T]he conversation was around the negative [New York] Daily News articles around NYCHA’s board, the leadership, the maintenance and repair issues, or our inability to get those things done. The issues that NYCHA faced seemed to culminate in a lot of negative press and a lot of loss of hope and expectation that the Housing Authority itself could ultimately get its act together.

The bleak outlook was compounded by the fiscal environment.

Declines in funding have made it difficult for housing authorities to manage and maintain the aging stock of public housing. Since 2001, the US Department of Housing and Urban Development has reduced NYCHA’s operating subsidies and capital funding by a combined US$1.5 billion, while the city and state have completely eliminated funding for 21 developments that they built but which are managed by NYCHA. Another top NYCHA official observed:

Public housing is virtually 100% federally funded … The [NYCHA] operating budget is somewhere between two and three billion dollars. The vast majority of that is paid by the federal government. The second biggest contribution is rent. And then there’s traditionally been a deficit in the 20 to 100 million dollar range. That was met conventionally by taking the incredibly inadequate capital contributions every year, which has been running at about $250 million and taking 20% of that and just throwing it into the operating fund. The operating budget is close to balanced but what is really out of whack is capital.

The agency’s general fund deficit, which includes operations and central office expenses, is estimated to be between US$69 million and US$191 million but unmet capital needs were approximately US$6 billion in 2013 and were projected to exceed US$13 billion in 2015. Most of NYCHA’s public housing stock was built more than 50 years ago, so capital improvements, which include repairing roofs, upgrading heating and ventilation systems, and replacing elevators, are long overdue. As New York housing scholar Nicholas Bloom described it, ‘Basically, it’s a 1950s automobile that New York City is still driving. It’s like Cuba’ (Navarro, 2014).

The Land Lease Initiative: A plan to save public housing

To address the shortfall in funding, NYCHA proposed a plan to generate revenue from its public housing property. The plan, contemplated over several years and formally proposed in 2013, called for offering 99-year ground leases on land parcels in public housing sites to private developers for residential construction. The Land Lease Initiative emerged from the fact that the amount of existing public housing on NYCHA properties does not reach the maximum allowable buildable volume permitted by zoning regulations, which creates an opportunity for additional development on public housing sites. For the initial proposal, NYCHA selected 14 sites in eight public housing developments, all of which are located in Manhattan (see Appendix Table 1). According to the Executive Vice President for Development, the sites were chosen on the basis of the following criteria:

First, the sites must have no negative impact on residents’ quality of life and will not displace a single existing apartment … Second, we want areas where the long-term land leases will generate the most income. Third, the building sites must be near enough to the sidewalk so they are capable of having their own street address … And fourth, the sites must be ‘as of right,’ so there is no need for rezoning or waivers or special permits. (NYCHA, 2013a)

The plan required that at least 20% of newly built units be affordable to households earning up to 60% of area median income (AMI). NYCHA estimated that the ground leases would generate US$30–50 million each year, which would be used to leverage financing to pay for capital needs and maintenance costs of the public housing units at the selected development sites. In addition, the new development was anticipated to create hundreds of construction and permanent jobs.

Overall, NYCHA officals envisioned that the Land Lease Initiative would preserve more than 10,500 units of public housing, create nearly 800 new units of affordable housing, and build 3000 units of market-rate housing. Despite proposing to preserve all public housing units on site and to generate funds to upgrade those units, the plan quickly met with sharp criticism. The reaction to the Land Lease Initiative must be understood within the larger context of NYCHA’s management challenges and development efforts.

Reactions to the Land Lease Initiative

Undeveloped space is not unused space

NYCHA identified undeveloped land in selected public housing developments for new residential construction, but this space had important social meaning and uses for residents. Of the 14 proposed sites, one parcel housed a community centre and healthcare facility; four parcels contained playgrounds, basketball courts and baseball fields; and the remaining parcels served as resident parking lots. In the plan, however, people are conspicuously absent from NYCHA photographs and documentation of these spaces, implying that they are uninhabited (see NYCHA, 2013b: RFEI Appendix A). But these areas serve as important locations for planned community activities and informal gathering. For example, residents of Smith Houses organise an annual family day event that takes place on the parcel that NYCHA proposed to lease for new construction (Smith, 2013b). Playgrounds and parking space are important amenities for residents, particularly in dense urban areas such as New York. What NYCHA viewed as underutilised parcels that had not reached their full financial potential, residents saw as valuable spaces for social interaction. As is so often the case in public housing redevelopment, design issues and political issues became closely conjoined. This design politics proved extremely difficult to disentangle (Vale, 2013).

To suspicious observers, the urban design of the Land Lease Initiative as depicted in the plan documents implicitly encoded class distinctions between existing public housing residents and those who would be privileged to live in the adjacent market-rate development. Most of the proposed new residential buildings would literally tower over their public housing neighbours – an uneasy confluence of physical stature and socioeconomic status. The design guidelines for the Smith Houses South Street parcel indicate a maximum building height of 500 feet and show a rendering of a proposed building that is 50 stories tall, which is more than triple the height of the existing public housing on site (see Appendix Figure 1). A New York Daily News headline read: ‘High and mighty NYCHA: Luxury towers on leased land would “look down” on projects’ (Smith, 2013b). In case there was any confusion about the narrative, the story subheadline drove the point home: ‘The City Housing Authority’s plan to lease public housing land for luxury housing gives new meaning to the phrase “looking down on the poor”.’ The Land Lease Initiative design guidelines seemingly heightened class tensions, which were a growing issue as highlighted by the ‘poor door’ controversy regarding separate entrances for wealthy and low-income residents for a proposed private housing development project (Brash, 2011; Briquelet, 2013).

In addition to the physical size of the proposed buildings, the siting of new development had potential class implications. New residential construction on public housing land would both block low-income residents from view and block them from views. NYCHA chose parcels sited along major streets to maximise exposure and street frontage, reinforce the urban street wall that is characteristic of much of Manhattan, and reintegrate the layout of existing public housing back into the prevailing urban fabric. As a former NYCHA official described it, the parcels ‘had to be on the perimeter of the development, not buried inside, so that they would have a conventional street relationship and to some small extent counteract the towers-in-the-park approach to public housing because it would create more street wall perimeter’. However, placing new buildings on these parcels would result in walling off residents of public housing on the interior of these properties. The effect would be reinforced by the likely orientation of new buildings on the selected sites. Private apartment buildings in Manhattan typically have entrances facing the street, especially if developers can capitalise on a desirable street address. At Carver Houses, NYCHA identified parcels along Madison Avenue and Park Avenue, which would have strong marketing appeal (see Appendix Figure 2). By facing the street, new buildings would also turn their back on the existing public housing residents on site.

The new buildings on these sites would also block light and views for existing public housing residents. After seeing the guidelines, an outraged tenant observed, ‘It’s appalling. We won’t have any sun’ (Smith, 2013b). One of the most attractive parcels is located in the Lower East Side on the Smith Houses property, which sits along the East River and has beautiful waterfront vistas. The Request for Expressions of Interest highlights this amenity by featuring an image with a sweeping scene of the Brooklyn Bridge and East River (see Appendix Figure 3). The photograph was taken from Smith Houses but the proposed building would be located directly in front of the existing public housing so it is precisely the view that public housing residents would no longer enjoy. To add irony to insult, the photograph was taken while the Brooklyn Bridge was shrouded in tarps for renovation work. If the Land Lease Initiative proceeded, the views once enjoyed by public housing tenants would be replaced by close-up views of building materials while the new development was under construction. Moreover, the irony for low-income residents is intensified because the new infill housing repudiates the towers-in-the-park concept that envisioned public housing as surrounded by open space that would provide light and ventilation for residents, in contrast to the darkness of a previous generation’s tenements. Similarly, the land around public housing buildings had been intentionally designed for resident use, in part to compensate for the compact layout of the housing units. The proposed development would eliminate this open space, raising questions about who deserves urban amenities.

Fears of gentrification and displacement

Many public housing residents felt threatened by the Land Lease Initiative; news coverage highlighted these fears and depicted the story as a battle between rich and poor that would eventually lead to displacement of low-income residents. According to the New York Daily News, ‘The [New York City] housing authority is planning its very own Tale of Two Cities’ (Smith, 2013c). Reporters interviewed community organisers and public housing residents who were wary of housing development long before the Land Lease Initiative was officially announced. The New York Times quoted a community leader as saying, ‘There’s always an ongoing rumor that [Donald] Trump is going to buy the buildings. If a white man in a suit that no one has seen before walks through the development, the next thing we hear is, “They’re looking at the buildings to buy them”’ (Navarro, 2013a). New York Magazine reported that, ‘At Wagner Houses in East Harlem, many residents insist Donald Trump already owns the place’ (Jacobson, 2012). The suspicions of a secret coalition of land-based elites appeared consistent with the processes predicted by the theory of the city as a growth machine.

Media reports highlighted concerns about gentrification and displacement, which were framed as a process of being physically squeezed in and then economically squeezed out. A City Limits story quoted one public housing resident as saying, ‘We heard they are pulling down parking lots to build luxury housing. It’s gonna be like sardines in here’, and another resident asking, ‘First the parking lots. What’s next? … Where will the poor go?’ (Ungar-Sargon, 2013). In a New York Times article, a public housing tenant predicted, ‘They’ll make our buildings condos. They’re trying to move us’ (Navarro, 2013a). News coverage framed the Land Lease Initiative as one step down the path toward the removal of public housing residents from valuable real estate.

The proposed construction of market-rate units and the potential influx of wealthy residents raised concerns that public housing communities would experience the harmful effects of gentrification. Through the process of staged gentrification, well-heeled households would move in, drive up prices and demand expensive goods and services that businesses would increasingly provide but would be too expensive for public housing residents to afford, resulting in indirect or exclusionary displacement (Marcuse, 1986b). However, gentrification of public housing neighbourhoods had previously occurred in the form of high-end residential development around these sites. As one NYCHA official observed, low-income residents:

are already priced out of all these neighborhoods. [In] these neighborhoods … rents for a new one-bedroom [apartment] are over $3,000 [per month]. Having more of those one-bedrooms versus the number they already have … in some ways, adding to supply might, you could argue, make it easier to maintain the subsidized stock that you have.

Indeed, strong housing demand in these areas is one of the reasons why the Manhattan sites were chosen for the Land Lease Initiative.

Discourse and framing the problem in financial terms

For housing advocates, analysts and a wary public who already questioned NYCHA’s credibility because of repair backlogs and financial mismanagement, the language and discourse used by the agency to frame the issues added to their suspicions. The choice to name the plan ‘Land Lease’ suggested that this was a business transaction involving the transfer of use rights to real estate property. The name treated land as an abstract object that was severed from its context and setting as a place where public housing residents make their home. The name made no reference to public housing or preserving affordable housing, in contrast with previous agency documents that introduced the proposal, such as the 2011 Roadmap for Preservation and the 2006 Plan to Preserve Public Housing (NYCHA, 2006, 2011).

Agency officials also used language that suggested NYCHA was primarily concerned with funding and fiscal deficits, while resident needs were a secondary consideration. In the Request for Expressions of Interest, the opening message from NYCHA Chairman John Rhea noted, the ‘great legacy [of public housing in New York] is directly threatened by the relentless decline in federal operating and capital funding over the past decade as well as the elimination of support from the State of New York’ (NYCHA, 2013b: 4). From the beginning, the issue was described as a financial one with the emphasis on the loss of government subsidies. The Chairman’s message continued, ‘This lack of funding not only defers capital repairs for the Authority’s aging buildings, but’ – added almost as an afterthought – ‘also threatens quality of life for our residents’ (NYCHA, 2013b: 4). Similarly, the public heard Chairman Rhea (2013) frame the issues in frank financial terms to describe the investment potential of land when he testified:

we undertook a comprehensive review of the Authority’s real-estate footprint, with an eye toward offering NYCHA-owned sites for the development of market-rate and affordable housing and, in some cases, commercial, retail, and community facilities … Each site has substantial unused development rights and the ability to generate new revenue.

The description suggested that NYCHA prioritized development as a strategy to address a fiscal problem.

The tension between competing priorities related to people and property was also revealed in NYCHA’s changing description of its strengths. According to Plan NYCHA, the agency’s ‘most valuable asset is its people’, which referred to NYCHA personnel in this specific context but by extension also included public housing residents (NYCHA, 2011: 41). However, Land Lease Initiative slides that were presented to public housing residents stated that the agency is ‘Looking at ways to use NYCHA’s most valuable asset – our land – to generate revenue’. The subtle change from people to land signalled potentially shifting values wrapped up in the development plan.

The terminology used to describe the Land Lease Initiative also revealed competing perceptions about the intent of the plan. According to the Request for Expressions of Interest, the plan sought ‘infill’ development to capitalise on the ‘underdeveloped’ land left by the towers-in-the-park site design of New York’s public housing projects. Mayor Bloomberg and Chairman Rhea also used the term infill to describe the plan to elected officials (Bloomberg, 2013; Rhea, 2013). Perhaps because infill conjures up images of heavy machinery, difficult site conditions and intense construction operations, that term was conspicuously absent in NYCHA presentations to public housing residents. The first slide prominently displayed the title of the presentation as ‘Preserving Public Housing’, which conveyed active and ongoing efforts to maintain the subsidised housing stock. However, the electronic file for the slide presentation was saved under the title of ‘Infill Sites Presentation’, which reflected how the plan was viewed internally by NYCHA staff. While it may not be surprising that the plan was rebranded for different audiences, and the changing terminology may simply reflect lack of consistency and oversight, observers wondered aloud about ulterior motives to use development to drive out residents (Navarro, 2013a; Ungar-Sargon, 2013). Some advocates and analysts even predicted that the Land Lease Initiative marked the beginning of a pathway that would lead to eliminating public housing altogether: the plan formed ‘one of many steps toward dismantling public housing’, and ‘a step along the slippery slope leading to the destruction of public housing’ (Angotti, 2013; Ungar-Sargon, 2013). These predictions appeared inconsistent with NYCHA’s historical reluctance to demolish any of its public housing stock – highly unusual in comparison to other US cities – but the reactions revealed how discourse and language surrounding the plan were interpreted as signs of an unstoppable growth machine.

Discussion: Harnessing the growth machine?

The Land Lease Initiative proposed to generate enough revenue to pay for capital improvements for 10,000 public housing units and create nearly 800 units of new affordable housing, while neither demolishing any public housing buildings nor forcing residents to move from their homes. Why did this seemingly favourable plan meet with such fierce opposition, especially from those who stood to directly benefit? The severe repair backlog and reports of fiscal mismanagement provided a backdrop for growing public doubt about NYCHA’s commitment and motivation. Further, the negative reaction to the Land Lease Initiative can be understood within the larger context of the political economy of place and the limitations of growth machine theory (Logan and Molotch, 2007; Molotch, 1999). By formulating use value and exchange value as competing interests, and identifying those values with historically opposed interest groups, growth machine theory makes it too easy to conceive of these values in opposition to each other. Accordingly, private developers are perceived to be solely concerned with pursuing exchange value at the expense of use value, which pits their interests in making profits against the interests of low-income communities in preserving affordable housing. Local government agencies pursuing urban development to increase revenue – even if the revenue is intended for public services – are viewed with suspicion because of allying with private investors and the temptation to seek higher and higher returns at the expense of vulnerable communities. But the theoretical formulation and the embodiment of these roles leave little room for alternative approaches.

The Land Lease Initiative can be understood as a concerted effort to find a middle ground between unfettered free market forces and the needs of low-income residents. The plan sought to channel real estate development and private investment, which often lead to the displacement of poor families and the destruction of their communities, for the benefit of low-income households. In this interpretation, the plan sought to dissolve the theorised exchange-use value dichotomy and to instead leverage exchange value to enhance use value. Urban theory predicts that the growth machine cannot be tamed but the Land Lease Initiative attempted to at least harness the growth machine toward more equitable ends. The plan identified the shared interests of the housing authority, private developers, public housing residents and housing advocates, and offered a housing development proposal that could be mutually beneficial to all sides.

The challenges of public–private deals

Public-sector affordable housing deals with the private sector involve a complex set of priorities, conditions and agreements. These deals often revolve around three factors that influence project outcomes: governance, commitment and financing details. Public–private affordable housing deals involve competing interests so a key issue is who controls the project and who protects the public interest. Private-sector involvement can raise concerns that low-income residents will have less power in decisions that affect their homes and quality of life. In the Land Lease Initiative, many residents did not trust NYCHA and worried they would not have a voice in the decision-making process. Public–private deals also raise questions about the duration of the partnership and its commitment to affordable housing. Public housing has faced financial pressures for decades as costs have exceeded funding and revenues. NYCHA experienced many of these pressures while observers questioned private-sector commitment to affordability given the local housing market; these concerns might have been alleviated through an alternative commitment mechanism such as a community land trust. Finally, financing details in affordable housing development determine who pays, how much and who ultimately benefits. Typically, local governments try to attract private investors with tax breaks and subsidies to participate in affordable housing projects, at the government’s expense. NYCHA proposed to lease public housing land to developers without such incentives but there were still questions about whether the deal could have yielded greater revenues and more affordable housing.

Housing authority officials were tasked with the difficult challenge of creating and promoting a plan that would both: (a) appeal to wealthy private developers and encourage them to invest large sums of money in constructing market-rate housing, and also (b) reassure low-income residents that the gentrification and displacement occurring all around them would not happen here and that long overdue physical building infrastructure problems would finally be addressed. Community groups, activists and residents interpreted these two components as opposing goals that could not be reconciled and questioned NYCHA’s commitment to the latter given strong market forces and its history of problems. Local government officials attempted to carefully navigate the political minefield by expressing vocal support for public housing residents while quietly acknowledging the need for additional funding and the lack of other options. Private developers were noticeably silent on the proposal, perhaps because they realised public opinion was firmly against the plan, housing authority decisions could provide them with political cover, and there was much to lose and little to gain from entering the fractious political debate.

New ideas for public housing

Although residents, activists and community groups opposed the Land Lease Initiative, criticism of the plan overlooked several new and important ideas about the future of public housing. First, the plan called for retaining 100% of public housing units at the selected developments. This would be a significant achievement in light of the steady decline in the overall number of public housing units around the country because of demolition and redevelopment (Goetz, 2013; Keating, 2000; Popkin et al., 2004). John Rhea (2013) noted, ‘When other cities across the country faced similar challenges, many chose to disinvest, reducing their public housing stock to rubble’. In addition, the Land Lease Initiative would preserve high-rise public housing towers despite the negative stigma associated with them. In comparison, Baltimore, Chicago and other cities have systematically torn down high-rise public housing structures, in part because they are notoriously associated with crime, violence and social disorder (Goetz, 2011; Vale, 2013). By proposing to preserve high-rise public housing built over 50 years ago, NYCHA would signal that this model of affordable housing is not outmoded in the 21st century (Bloom, 2008). In addition, the choice to keep all public housing units would respond to the high demand for subsidised housing in New York.

Second, the plan offered a new approach to deconcentrating poverty on site by increasing residential density. The typical strategy for reducing the proportion of low-income households in public housing redevelopment is a combination of relocation and displacement (Goetz, 2013; Vale, 2013). Housing authorities build fewer replacement units for demolished public housing and offer vouchers to residents to permanently move elsewhere, both of which reduce the number of low-income families who return to the original site. In contrast, the Land Lease Initiative intended to increase the number of low-income families on site by requiring that at least 20% of newly constructed units be affordable to households with incomes up to 60% of AMI, assuming that the affordability restrictions remained in place and were faithfully implemented. However, the plan would decrease the proportion of low-income families by bringing in market-rate residents and increasing the total number of households. This approach would achieve the goal of reducing concentrated poverty with the added benefits of potentially increasing local economic activity and neighbourhood safety. Additionally, the approach would address problems with dispersal strategies by preserving vital social networks and established community relationships; maintaining access to existing education, employment and transit options; avoiding disruptive removal and relocation; and enabling public housing residents to remain in their homes, which often hold great social and emotional value.

Third, the Land Lease Initiative not only sought to preserve all public housing units and high-rise towers, it also proposed to add affordable housing units to public housing sites. Concerns about the effects of concentrated poverty have led many cities to try to locate new affordable housing away from low-income areas (e.g. McClure, 2006). Instead, NYCHA envisioned building new units for low-income families on land with existing public housing, which flies in the face of conventional thinking about poverty concentration. The Land Lease Initiative would not only benefit public housing residents, it would also address the broader need for affordable housing among low-income communities.

Fourth, the Land Lease Initiative proposed to create mixed-income communities by attracting market-rate residents to live around public housing families, in addition to the standard approach of establishing a mix of incomes within the proposed new buildings. Typically, HOPE VI redevelopment projects produce mixed-income communities through a combination of moving some low-income families out and bringing market-rate residents in so that there is a mix of household incomes within a building (Popkin et al., 2004). The Land Lease Initiative envisioned mixed-income communities on a larger scale by constructing market-rate housing so that there is also a mix of household incomes between buildings. This is similar to the standard process of housing development in New York and elsewhere except that market-rate housing would be located on the same site as existing public housing. Bringing in more market-rate residents could improve the quality of local retail goods and services, responsiveness of elected officials and public services, including schools, police enforcement and transportation (Galster, 2007; Joseph et al., 2007). However, previous research also suggests that mixed-income redevelopment projects have resulted in limited social interactions among different types of residents (Graves, 2010; Joseph and Chaskin, 2010); the siting of the new buildings and the preservation of existing public housing buildings in the Land Lease Initiative could contribute to low-income residents becoming even more physically and spatially separated from other households.

The Land Lease Initiative raises the issue of whether the approach and the ideas for public housing can be applied to other places. Clearly, the extremely strong housing market in New York City was essential to the financial viability of the plan, at least on paper, so this type of development approach may be limited to large cities with strong housing markets, large superblock projects and ample open space, including San Francisco, Boston, Seattle, Dallas, Los Angeles, Denver, Houston and Washington DC. Urban areas experiencing economic decline would be unlikely to attempt, let alone replicate, the Land Lease Initiative. Although there are many differences, small cities and towns were able to redevelop housing on public housing sites through the HOPE VI programme, which suggests that local demand for housing in neighbourhoods where public housing is located may be a factor in addition to the overall size and strength of the housing market. NYCHA’s decision to limit the development plan to selected sites in Manhattan provides some support for this idea but may even suggest that the Land Lease Initiative has limited applicability within New York City. In many ways, the strong housing market in New York offers the toughest test of leveraging private development to benefit low-income residents. If such an idea could not be implemented where it was most financially viable, it is hard to imagine it working anywhere else.

The fate of the Land Lease Initiative

Despite many new ideas for public housing, the Land Lease Initiative stalled out owing to the complexity of New York City politics. By October 2014, it was taken offline – quite literally: all plan documents were removed from the NYCHA website. The plan had been officially announced during the waning months of Mayor Bloomberg’s final term in office; candidate Bill de Blasio condemned the original proposal and as mayor has made several changes at NYCHA, including replacing the Chairman, but was careful to leave the door open to alternative schemes. The 2014 housing plan issued by Mayor de Blasio stated he would ‘Re-evaluate the approach to development on NYCHA property’, ‘Identify underdeveloped City-owned or publicly controlled sites … that could be harnessed to deliver housing’ and ‘Modify “tower-in-the-park” zoning regulations to better enable appropriate development for underused land for housing and mixed use’, which sound similar to the ideas in the Land Lease Initiative (City of New York, 2014). In other words, the Land Lease Initiative was taken offline but not taken off the table.

Although the Land Lease Initiative failed to be implemented, it was successful in shifting the conversation from if public housing land will be developed to how it will be developed. According to housing scholar Nicholas Bloom, ‘The way it [the Land Lease Initiative] was conceived is not the way it will move forward. The new NYCHA chair is open to some kind of continuation of infill but not monetizing the ground’. Increasingly, elected officials, community organisations and the media have spoken more favourably about the idea. The editorial board of the New York Times cast its vote in favour of the Land Lease Initiative by stating that, ‘Mr. de Blasio should seriously consider a plan, proposed by the Bloomberg administration, that would lease open space in the public housing projects to developers …’ (2014). The Community Service Society of New York, an advocacy organisation for low-income residents, acknowledged the possible benefits of public–private partnerships to develop public housing land: ‘Given NYCHA’s assets there is real potential to transform and re-invigorate our public housing communities, provided that private development serves the interests of the community’ (Jones, 2013). The Manhattan Borough President matter-of-factly noted that:

Many NYCHA properties possess development rights that can be an asset to the agency’s future financial stability. Knowing this, it is imperative that future land lease or ‘infill’ development plans engage NYCHA residents, community members, local business organizations, and other stakeholders in a comprehensive community planning process. (Brewer, 2014)

The statement is notable because it assumed there would be ‘future land lease or “infill” development plans’. The knee-jerk opposition that characterised the initial response to the Land Lease Initiative had morphed into a more careful consideration of costs and benefits, augmented by the need for community engagement and an inclusive planning process to manage potential development.

Indeed, the latest proposal introduced by Mayor de Blasio calls for engaging residents in a plan to build more affordable housing for low-income families (City of New York, 2015). The plan, named NextGeneration NYCHA, takes additional housing development on public housing land as a given while shifting the proportion of units to be 100% affordable in some locations and up to 50% affordable and 50% market rate in others. Although this balance may be more politically palatable, it remains to be seen if developers will find it financially appealing and if it can generate enough revenue to address NYCHA’s fiscal deficits. The latest public housing development plan also suggests some convergence in terms of shared interests and concerns among the various actors. By continuing to call for development of public housing property, the mayor recognises that market forces and scarce land drive financing and private developer decisions. By requiring a larger proportion of affordable housing, the plan seeks a way forward that could be embraced by community groups and residents.

Conclusion

According to NYCHA, the Land Lease Initiative would generate needed revenue to make overdue improvements to aging public housing buildings, preserve all public housing units on site, keep residents in their homes and even build new affordable housing. Taken at face value, the plan would appear to benefit diverse interest groups, including public housing residents, private developers, community organisations, and the housing authority. As John Rhea (2013) stated, ‘So if you believe we should do more to give existing NYCHA residents better homes – and if you believe we should do more to create affordable housing – this is a true win-win’. Residents and advocates believed that NYCHA should do these things but they did not believe NYCHA. Public adoption of the plan rested on the assumption that NYCHA’s promises would be taken on faith. Against the backdrop of past NYCHA missteps, the content and framing of the Land Lease Initiative made this an implausible assumption. A NYCHA official explained:

[The Land Lease Initiative] was going to income integrate these developments, it was going to create, essentially, an endowment so those places would stay in public housing forever and not have to worry about their capital needs. Ultimately, if it was done right, those eight developments would have profits well in excess of what they needed to maintain themselves. And that could actually help other developments … That particular link, which I think is very important and was part of the intellectual theory of this thing from the very beginning, really wasn’t articulated strongly enough. And not at all in the beginning because we weren’t committing to where this money was going to go. I think that we didn’t appeal strongly enough to the self-interests of the individual residents. It got painted as a plan to get rid of public housing when it was exactly the opposite.

The question remains whether, and how, it is possible to simultaneously encourage economic development and preserve housing for low-income households in the same place. The theory of the city as a growth machine claims that these competing goals are mutually exclusive by formulating interests in use value and exchange value in opposition to each other. But this formulation constrains alternative approaches and opportunities to identify shared interests. The Land Lease Initiative offered a path toward merging the goals of development and preservation but the reaction from residents, advocates and community groups suggests that trust, coupled with a strong public-sector commitment, is needed to harness the growth machine toward more equitable ends. In the face of declining federal funding for public housing – which shows no signs of abating – local governments and housing authorities will need to find alternate sources of revenue to maintain the stock of subsidised housing. Without such measures, the slow and steady deterioration of public housing buildings will continue and eventually reach a point where the process cannot be reversed, thereby making it easier for opponents to eliminate public housing units. As one NYCHA official observed, ‘the path of preservation doesn’t come without tradeoffs and hard decisions’. However, planners must be careful that housing preservation plans involving private development do not become another step along the neoliberal path toward the end of public housing.