BPCA Seeks Balance for Funding Affordability Near and Far
The Battery Park City Authority (BPCA) has reached an agreement with Mayor Eric Adams and City Comptroller Brad Lander to earmark $500 million for the development and preservation of affordable housing throughout the five boroughs of New York City. This allocation will come from the Authority’s Joint Purpose Fund (JPF), a repository for a share of the monies collected from payments in lieu of taxes (PILOT) and ground rent payments, both of which are remitted to the Authority by commercial and residential property owners in the community.
In 2010, the then-Mayor and Governor agreed to extract $861 million from the JPF, much of which was used to fill budget gaps for City Hall and Albany. (By law, money from the JPF can be allocated to almost any purpose agreed upon by the BPCA, the Mayor, and the City Comptroller.) The final payouts toward that $861 million commitment were made in 2022, and the fund began again to accumulate a rising balance. Since the JPF resumed accruing funds, the only disposition of this money has been a commitment of $5 million to underwrite the creation of affordable apartments for the planned residential tower at Five World Trade Center. The JPF’s current balance is approximately $140 million.
BPCA president and chief executive officer Raju Mann explained, “the Governor’s team made very clear this money had to go to affordable housing, period, end of sentence. We worked hard to make sure this money was not going to fortify the City’s budget or the State’s budget. Those were the marching orders from the Governor.” (This was a reference to the fact that the Governor controls the BPCA, by appointing its board.)
JPF funds in the past have been used to plug budget gaps for City Hall and Albany, rather than for affordable housing. Mr. Mann added, “there’s a legal document, the Settlement Agreement, that makes clear that this money goes to the City’s Housing Development Corporation for affordable homes. We’re extremely confident that it will be put to that use.”
Another potential complication is that past mayoral administrations have used BPCA funds instead of (rather than in addition to) their own standing commitments to affordable housing. In this scenario, City Hall could simply lower its own budget allocation for affordable housing by the same amount that the BPCA is contributing, and divert the funds thus made available to any another purpose. Asked what assurance the BPCA has that this tactic will not be repeated, Mr. Mann said, “the City already has enacted its budget for the coming year, and it would be unusual for them not to spend money they have already allocated. But how the Mayor and Comptroller manage the City’s budget more broadly in the future is a matter outside of our control. We didn’t think it was our role to dictate housing policy to the City.”
In that context, Mr. Mann also pointed to “new reporting requirements contained in the latest version of the Settlement Agreement, in which the City must report back to the BPCA each November with an account of what they’ve spent this money on.”
The new pact is a pay-as-you-go agreement, and will remain in effect until its terms are fulfilled. Mr. Mann says that the initial $140 million will be transferred to the City “as soon as possible, and we expect the full $500 million will be paid out in six to seven years.”
One reservation frequently voiced by community leaders about money raised from ground rent paid by Battery Park City residents being sent elsewhere is that there is an acute shortage of affordable housing in Lower Manhattan. Mr. Mann responded, “housing need is so desperate in so many neighborhoods across the City that it’s hard to prioritize any one neighborhood over others. As a housing policy matter, this money needs to go where the projects are and where they can be done as quickly as possible.”
“This is not to say that we don’t want to support affordability in Lower Manhattan,” he added. “The Authority needs to preserve the limited amount of affordable housing we have here, and we need to understand what sites are potential preservation or construction opportunities. These goals are not mutually exclusive.”
“All of these considerations are a balancing act,” he continued. “We understand that our residents are facing challenges. Part of our job is to advocate, as well, for residents of Battery Park City and Lower Manhattan. But this needs to be considered within the framework that Battery Park City is one of the loveliest neighborhoods anywhere in New York, and there is desperate need elsewhere. So we’re trying to help with affordability everywhere.”
A further objection raised by local leaders is that the community should have been represented in the discussions that led to the agreement allocating $500 million to affordable housing. That concern was voiced in multiple resolutions enacted by Community Board 1 (CB1), calling for “a seat at the table” when the Mayor, the Comptroller, and the BPCA negotiated over the disposition of JPF monies. Most recently, in February, CB1 demanded “transparency and community representation in the decision-making process for determining the expenditures from the Joint Purpose Fund,” while calling upon the Mayor and Comptroller “to issue public reports on at least an annual basis identifying the specific uses to which Joint Purpose Fund funds have been putt.” A separate resolution, enacted in January 2023, urged JPF funds be committed both to preserving affordable housing within Battery Park City and to capital improvements for the New York City Housing Authority. The same measure called for “at least one member of CB1 and at least one person whose primary residence is in Battery Park City” to be included in all future negotiations for JPF allocations, because “Battery Park City residents’ direct and indirect payment of PILOT and ground rent are a main source of the financing of the Joint Purpose Fund.”
Mr. Mann answered this criticism by saying, “these agreements are hard enough to deliver as it is. There are not many others that require unanimous consent from three signatories. I didn’t think it would be responsible for us to introduce new actors to the process. I once served on a Community Board, and I appreciate the role that they play, but there’s a balance here.”
This development comes against the backdrop of ongoing discussions between the BPCA and the Homeowners Coalition, an alliance of condominium and cooperative apartment owners seeking to renegotiate the terms of the ground leases that govern how much ground rent is owed to the Authority each year. Increases in these payments threaten to drive many owners from their homes.
Asked whether encumbering the BPCA’s income with agreements like the one committing $500 million of JPF money to affordable housing outside the community would prejudice the Authority’s ability to make concessions on ground rent, Mr. Mann replied, “the short answer is ‘no.’ The longer answer is that this commitment underscores the value of helping the lowest-income New Yorkers anywhere in the City. We ask that Battery Park City residents keep in mind that that their ground rent is supporting affordability for families making as little as $30,000 per year. But we also need to make sure we’re creating an equitable ground rent structure in this community, while we’re supporting people across New York City.”
The local landscape for affordability has become increasingly grim in recent years. In June, the New York Housing Conference (a nonprofit affordable housing policy and advocacy organization) issued its “NYC Housing Tracker Report 2024,” which found that Lower Manhattan was in a dead heat with one other City Council district (the Upper East Side) for the worst record of affordable housing production in 2023—a year when the Adams administration pointed with pride to creating more than 14,000 affordable units elsewhere.
In March, Mayor Adams designated Lower Manhattan as one of 12 communities across the five boroughs where affordable housing is sufficiently scarce to qualify for the Mixed Income Market Initiative, a new program designed to jumpstart the creation of moderately priced homes.
A 2023 analysis from Manhattan Borough President Mark Levine, “Housing Manhattanites: A Report on Where and How to Build the Housing We Need,” documented that “since 2014, just 212 units of affordable housing were built” in Lower Manhattan. During the same period, the local population expanded by tens of thousands, and many thousands of new, market-rate apartments came online in the community.
According to the City’s online database, the Equitable Development Data Explorer, Lower Manhattan (defined roughly as the area south of a jagged line formed by 14th Street, the Bowery, Canal Street, and the Brooklyn Bridge) contains 57,025 rental units, among which 60 percent are deemed within reach only for middle-income and high-income households, and 23.6 percent are affordable for the bottom three income bands. Almost exactly the same proportion of units (23.2 percent, or 18,831 apartments) within these boundaries are rent stabilized. The zone contains no public housing at all, and only 633 homes that are covered by income restrictions, or other affordability requirements. As of 2022, the last year for which data are available, there are 633 people in the City’s Department of Homeless Services shelter system whose last address was within the same zone.