Officials estimate proceeds could net $1B for capital repairs
The agency released a request for expressions of interest this week, seeking proposals from developers who own land adjacent to NYCHA properties to acquire the air rights. Officials estimate that proceeds from the air rights sales could net $1 billion for capital repairs — a fraction of the $40 billion needed for renovations across NYCHA’s portfolio.
The “Transfer to Preserve” program, the name given to the agency’s initiative to sell its air rights, was part of “NYCHA 2.0,” a plan proposed in December 2018 by the de Blasio administration to address the agency’s mounting capital needs. Though developers already have the ability to approach NYCHA with an offer for its air rights, the agency hopes to streamline the process and create a “citywide clearing house for evaluating the feasibility of incoming air rights proposals.”
“We want to remind people that we are interested,” said Jonathan Gouveia, NYCHA’s senior vice president of real estate. “In the absence of this procurement, these conversations would continue to happen, but they may not happen as robustly as they could.”
As part of the sales, developers and NYCHA will order separate appraisals to determine the value of the air rights. NYCHA will have to conduct an environmental review for the U.S. Department of Housing and Urban Development showing that the new development that results from the deal will “not have an adverse impact on the residents, community, and surrounding environment.”
NYCHA estimates that after it greenlights proposals submitted by developers, the pre-closing approval process should take nine to 14 months.
Since at least 2017, several developers have actively lobbied NYCHA to buy its air rights, according real estate news website PincusCo. Maddd Equities and Joy Construction began lobbying the agency in the second half of 2017 to acquire more than 90,000 square feet of unused rights at NYCHA’s Ingersoll Houses in Brooklyn. The agency and developers announced in October that the deal would close for nearly $25 million.
In a recent report, the Pratt Center for Community Development recommended that unused air rights at Gowanus Houses, Wyckoff Gardens and 572 Warren Street be offered up as part of the proposed Gowanus rezoning.
But the sale of air rights could face the challenge of resident opposition. Residents and local politicians have vehemently opposed both a proposal to demolish and rebuild Fulton Houses in Chelsea, and plans to build a new 50-story building on a playground adjacent to the Holmes Towers complex.
Brian Strout, of air rights advisory firm City Center Real Estate, noted that pricing could be a main point of tension.
“It remains to be seen how the RFEI will translate into actual transactions that would not have otherwise happened,” he said in an email. “There has been an adjacent owner/developer that has been in negotiations with NYCHA for at least five months, and both parties are still stuck at a price impasse.”
Additional reporting by Erin Hudson