Lander seeks to keep for-profit developers from acquiring city-owned land

Legislation would favor nonprofit builders of affordable housing

Most city-owned land slated for affordable housing development is transferred to for-profit companies — a trend that a new City Council bill seeks to end.

The measure, from Council member Brad Lander, would mandate that city-owned property intended for affordable housing be awarded to nonprofit developers. The only exceptions would be if no qualified nonprofits applied or if the property were sold under a state law.

The city’s agreements on such deals do require affordability from for-profits and nonprofits alike, but they typically expire after 20 or 30 years.

The impetus for the bill, Lander said, is to keep such properties “affordable in perpetuity.” Nonprofit organizations have less incentive to flip the property once affordability agreements with the city expire, he said.

“At some point, at the end of expiring restrictions, there’s an impetus to sell the property,” he said. “This is a troubling trend that has developed over the long term.”

Lander, who for years ran the Fifth Avenue Committee, a nonprofit builder in Brooklyn, is expected to introduce the measure during Wednesday’s City Council meeting. Council member Robert Cornegy is a co-sponsor.

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According to the Association for Neighborhood and Housing Development, 75 percent of new construction projects on city-owned land were awarded (through requests for proposals) to for-profit developers between July 2014 and June 2018. Between 2021 and 2037, ANHD estimates that agreements governing the affordability of 184,000 units will end.

Over the past few years, the city has taken steps to increase the affordability requirements of publicly-funded projects. In 2017, the Department of Housing Preservation and Development started including requirements in its RFPs for city-owned land that allowed the city to mandate the renewal or extension of affordability benefits.

For-profit developers often partner with nonprofit builders on projects, especially if the smaller firm has credibility in the community where the housing would be, or to make it eligible for certain subsidies.

But developers have argued that nonprofits sometimes lack the size and experience to build and maintain a large residential complex, and that tenants can end up suffering when a small firm gets in over its head.

Mayoral administrations have tended to support that position. Nonprofits counter that they would build capacity faster if they won more sizable projects.

Lander proposed legislation in 2018 that would create a land bank through which the city could acquire and warehouse properties, which would then be transferred to community land trusts and nonprofits.

In September, Lander wrote in a New York Times op-ed that creating the land bank to acquire distressed properties would help prevent a “feeding frenzy” among private equity firms and the like in the pandemic’s wake.