NYC Is Giving Public Lands to For-Profit Developers That Price Out Locals, Report Finds

New York City is giving away public lands to for-profit developers that build housing units largely unaffordable to locals, a new report has found. 

The report, released today by the New York City Community Land Initiative (NYCCLI) found that nonprofit developers building on city-owned land made 38 percent of their units affordable to the most low-income bracket of New Yorkers, defined as 0-30 percent of the area median income, which in NYC is between 0-$38,130 for a family of three. By comparison, for-profit developers built 21.6 percent of their units at this income level. Of the “affordable” units that for-profit developers build on public lands, 14.6 percent are priced for renters making between $152,520 to $209,715 for a family of three. Public land is often sold to developers for low prices, and in some cases a symbolic $1. 

A 2018 report from Association for Neighborhood & Housing Development found that between 2014 to 2018, 75 percent of all housing projects with city subsidies went to for-profit developers. NYCCLI’s data also show that between 2014 and 2023, nonprofit developers built or rehabilitated 7,269 homes on public land, compared to 14,150 units by for-profit developers. 

The report’s release was timed to coincide with a rally at City Hall Park on Thursday in support of the Community Land Act, three bills that would empower nonprofit housing developers and community land trusts. The bills include Int. No. 637, “Public Land for Public Good,” which would require the city to prioritize nonprofits when selling off its land for the purpose of developing affordable housing. Public land would only go to for-profit developers if no nonprofit developer met the city’s requirements. The bill has 33 sponsors, enough to pass in the 51-member city council. Another bill called “Community Opportunity to Purchase” would offer nonprofits first rights to purchase multifamily apartment buildings when landlords decide to sell. It’s modeled after similar laws in other cities, including D.C. , where it has been in place since 1980. That bill has 32 sponsors. 

“We are seeking to push these bills to the finish line, and we're asking Speaker Adams to put the Act to a vote as soon as possible,” said Abigail Savitch-Lew, communications coordinator at New Economy Project, a member of NYCCLI.

The report relies on data from the city’s Department of Housing Preservation and Development (HPD) and other public data sources and was produced by Hayoung Jeong, a member of East New York Community Land Trust and a PhD student at CUNY Grad Center. Motherboard attempted to reach HPD for comment; a spokesperson asked Motherboard to call, but did not return multiple calls and emails in time for publishing. We will update this story if we hear back. 

For-profit developers do build income-restricted housing on land acquired from the city, either because of New York City’s inclusionary housing requirements or because of affordability requirements set by HPD when it sells land. But this housing is not necessarily affordable. Still,  the majority of land that the city sells off goes to for-profit developers. Because vacant public land is most prominent in parts of the city that are lower-income or face chronic underinvestment, the result is that much city-owned land ends up with housing that is unaffordable to locals.

The report looked at low-income neighborhoods where city land was given to developers between 2014 and 2023. In East New York, 53 percent of the units built on previously city-owned land was unaffordable to people making the local area median income, which was $52,670 in 2021. In East Harlem and the Bronx’s Mott Haven/Port Morris, 72 and 73 percent of units built on public land were unaffordable to residents. 

Data that NYCCLI shared with Motherboard also shows that some buildings in the Bronx built on land the city gave away, including Crossroads Plaza and High Hawk, had zero units affordable to the lowest income levels, despite the fact that local area median income is only $38,130 for a family of three.

When the city either gives away or sells off public land, usually for a pittance, it has to make a public Request for Proposals so that for-profit and nonprofit developers can bid on the project. The city typically mandates in that request that a certain amount of units are “affordable,” or restricted for people making certain incomes. But the city also sets thresholds for developers that bid on these projects that favor larger developers with more capital. Nonprofits and community land trusts that typically require city subsidies to develop on vacant land often have trouble remaining competitive with for-profit developers.

Yet while it’s cheaper for the city to give land to for-profit developers, the tradeoff is that they typically do not build deeply-affordable housing, both because these companies need to pay off high debt costs and because they seek higher profit margins in general.

“They're offloading the public expenses on private developers, who aren't returning that to the benefit of (the) public,” Hayoung Jeong, the CUNY researcher, told Motherboard.

Mychal Johnson is a member of the Mott Haven-Port Morris Community Land Stewards, a land trust that is developing a community health center at the vacant Lincoln Detox Center in the South Bronx. The group hopes to eventually acquire housing to take it off the speculative market and keep it affordable in perpetuity as a community land trust. Johnson said he’s seen the impact of the city’s strategy of selling off public land on South Bronx neighborhoods.

“It doesn't really meet the needs of a large portion of the population,” Johnson said.  “We see how the drive for higher incomes and higher rent is pushing people out who are either on fixed incomes or lower economic means.”

When nonprofits want to build on that land, “It's really hard for those projects to win those bid allocations,” he said. Johnson said the land trust is trying to make projects feasible, but without “profiting on the backs of folks who are just trying to have a decent place to live.”

Will Spisak, a program associate at New Economy Project, a member of NYCCLI, said the city’s strategy hinders nonprofit housing providers. “There's this talking point that the city often brings up that nonprofits and community land trusts in particular don't have the capacity to do more development,” he said. “The truth is that if we were given more opportunities to develop public land, particularly in a land acquisition that's virtually free, it would build the capacity of the nonprofit movement.”