Two Affordable Housing Buildings Were Planned. Only One Went Up. What Happened?

The Neighborhood

The lack of housing options across the region makes high-demand areas particularly expensive.

Homes are built in Westchester County and the Long Island suburbs, for example, at some of the slowest rates in the country. In New York City, only 1.4 percent of apartments were available to rent in 2023, according to a key city survey.

And median rent in the city has risen significantly over the past few decades.

That leaves neighborhoods like the Upper West Side and Crown Heights sought after by people of all income levels. Both neighborhoods have good access to parks, subways and job centers in Brooklyn and Manhattan.

The pressures are immense, even as each neighborhood has added some new housing to try to match the demand, though at different rates.

Crown Heights has become one of the most striking emblems of gentrification in the city, with new residents, who tend to be white and wealthy, pushing out people who can no longer afford to live there. Low-rise rowhouses line many streets, just blocks from Prospect Park. But there are also shiny new high-rises.

There were more than 50,000 housing units in the Crown Heights area, according to a 2022 U.S. Census Bureau estimate, a roughly 13 percent jump over the past decade.

The Upper West Side has long been one of the city’s more exclusive enclaves with many brownstone homes. Next to Central Park and Riverside Park, with easy access to downtown, the neighborhood is home to many of the city’s affluent residents.

There were 129,000 housing units on the Upper West Side according to the 2022 Census Bureau data, an increase of roughly 5 percent over the same time period.

The Lot

There isn’t as much empty land left in New York City compared with places like Phoenix or Atlanta, which can expand outward. City developers have to look hard to find properties with potential, and then they have to acquire the money to buy them.

Between the two proposals, the Crown Heights site seemed to be more promising at first glance. Until 2018, it was just vacant land that local businesses sometimes used as a parking lot. The developer, Nadine Oelsner, already owned it, removing a potential roadblock that can often tie up projects or make them financially unworkable.

On the Upper West Side, though, the site was already occupied by three aging parking garages with a shelter and a playground in between. The garages would need to be demolished if the developer, a nonprofit known as the West Side Federation for Senior and Supportive Housing that operated the shelter, succeeded in its plan to build apartments on either side of the playground.

The new development, which was floated to the community in 2015, would also include a renovated and expanded shelter. And the nonprofit did not own the garages or the land — the city did.

One thing working in the group’s favor, though, was that the city had wanted to build housing on the site since at least the mid-2000s, according to planning documents.

The Zoning

But something invisible can matter more than a plot’s physical characteristics: zoning.

That governs how every piece of land in New York City can be used. Zoning determines, for example, whether homes or warehouses are allowed in a particular area, how much parking is needed and how tall a building can be.

It also aims to prevent growth in haphazard ways, with schools next to factories next to office buildings.

The city’s modern zoning code does not leave much room for growth, which means that a bigger building often requires a zoning change. One 2020 study by the nonprofit Citizens Budget Commission found that only about one residentially zoned plot in five would allow for that kind of additional housing. A zoning change triggers a lengthy, unpredictable bureaucratic process.

The site Ms. Oelsner owned was zoned for industrial, not residential use, a throwback to a time when that part of Brooklyn was dominated by businesses supported by the nearby railroad line.

Community leaders were frustrated by one-off changes to individual lots — there had been at least five zoning changes within a two-block radius of Ms. Oelsner’s site in recent years. To counter the trend, the community decided to come up with a bigger rezoning plan for the area. Ms. Oelsner saw an opportunity for her lot in that idea.

But she would need a zoning change, too.

The site on the Upper West Side had a slight edge: It was zoned for residential use.

As the project began to move forward, the city also sought a slight zoning change to allow for a bigger structure with more homes.

The Proposal

U.S. housing is mostly built and run by the private sector. If developers and owners can’t cover their costs with income from rents and sales — and make a profit — they most likely won’t build.

This can make it hard to keep rents affordable to potential tenants without big subsidies from the government, such as money a developer receives directly or tax breaks in exchange for making some units affordable for people at specified income levels.

Here are more details of what the two developers planned.

The proposal for the Crown Heights lot was by Ms. Oelsner and her company, HSN Realty, who were private developers working without city support.

Ms. Oelsner also made the case that her family had been part of the community for years, operating a Pontiac dealership.

Most of the apartments she proposed would rent at market rates, meaning the rents could be set as high as the landlord thought tenants could pay. This was similar to other new buildings in the area.

In Ms. Oelsner’s case, a government subsidy would likely come in the form of a decades-long property tax exemption.

In exchange, several apartments would be made “affordable” — in this case, rents would be capped at a certain percentage of gross household income for particular groups.

Under one plan, for example, 38 units would be restricted in this way. Of those, 15 might rent for around $1,165 for a one-bedroom apartment, or $1,398 for a two-bedroom.

The proposal from the West Side Federation had a much stronger case because of the city’s support. The group wanted to construct a building where all the apartments would rent below market rates and be targeted to some of the city’s poorest residents.

Most units would rent to people who were formerly homeless, often referred from shelters and typically relying on government-funded voucher programs to pay almost all of their rent. The remaining apartments would rent for between $865 and $1,321.

The West Side Federation said it had slowly built trust in the community over decades, in part because of the shelter it already operated on the street and was now expanding, as well as two dozen other area buildings it ran.

Because of that track record, and the need for affordable housing, the city decided to do several things. It essentially gave the developer the land — appraised at about $55 million — for free, a typical government practice in such a scenario.

It also chipped in $9 million to help pay for construction and another $33 million through a federal tax credit program. The West Side Federation would not have to pay property taxes on the development.

The Politics

Both projects met immediate opposition as they began to wade through a bureaucratic city process in which housing proposals often run into challenges from community members and politicians. It’s not unusual for this process to be costly and time-consuming, often taking more than two years.

In fact, this is where Ms. Oelsner’s project in Crown Heights met its end.

In Crown Heights, neighbors wanted more apartments to be available at lower rents and were concerned about parking. Ms. Oelsner worried the bigger rezoning plan of the area would take too long and, if she waited, would run up the costs of her project, which she said she had designed to be consistent with the broader efforts.

In the end, Crystal Hudson, who held the power to approve or reject the development as the local council member, voted against Ms. Oelsner’s proposal last year, effectively killing the project. Ms. Hudson said she would not back individual developments until the bigger neighborhood rezoning was finished.

On the Upper West Side, a vocal resident group had several complaints: that the loss of the parking garages could lead to an uptick in traffic, greenhouse gas emissions and accidents; that the development could disturb students at a nearby middle school; and that it could reduce the amount of sunlight in nearby parks.

The councilman who represented the neighborhood at the time, Mark Levine, initially said he would hold off on supporting the plan until he better understood the effects of more cars on the street.

Eventually, though, the project gave the community enough of what it wanted, the group behind the project said, and government officials came around. The project was split into two phases, keeping one garage running for a few years after the first two were demolished.

The Results

One key to successful development is buy-in from the government and local politicians. The Upper West Side plan had that, despite the opposition it faced, while the Crown Heights project did not.

That’s in part because the Upper West Side lots were owned by the city, which was ready and willing to chip in lots of money to create a deeply needed housing project in the area that would most likely not have been built otherwise. The Crown Heights lot, on the other hand, is privately owned and mostly out of the city’s control — which made the project potentially very lucrative for the owners, even if it added some benefit to the community.

The dirt lot in Crown Heights remains a dirt lot. The broader plan Ms. Hudson pushed is underway, set to be completed next year.

Ms. Oelsner, however, has said that she’s not sure whether it still makes financial sense to build her project, so its fate remains uncertain.

The Upper West Side building has been open for about two years. It is full and has a long waiting list.

And the amount tenants pay in rent remains low. That’s because the government sends the West Side Federation about $1 million annually to help cover the rent.