Part of NYCHA’s Metro North Plaza Houses, which will receive funds from the transfer of development rights at Hobbs Court. Image Credit: Google Maps

NYCHA seeks to raise revenue for capital repairs by selling transferrable development rights on NYCHA properties. On March 5, 2020, the New York City Housing Authority (NYCHA) announced the finalization of an agreement to transfer approximately 9,000 square feet of development and parking rights at the Hobbs Court development, located at 315 E 102nd Street in East Harlem, Manhattan.

Hobbs Court is a 259-unit affordable housing development with a 196- parking space garage. Hobbs Court is not owned by NYCHA but is located on NYCHA-owned land. The land was Federal Housing Administration-foreclosed land that was transferred to NYCHA’s possession in the late 1980’s. In 2009, NYCHA engaged in a Request for Proposal Process to redevelop the twelve existing buildings on the property and selected Phipps Houses for the project. The buildings were redeveloped while NYCHA retained control of all excess development rights, which enabled NYCHA to sell development and parking rights to a neighboring property owner. The transfer of the development rights will allow the neighboring property owner an expansion of what they can build as of right.

The neighboring property owner wants to build an approximately 115,000 square foot mixed-use residential and commercial building with 185 apartments and 13,000 square feet of commercial space. The neighboring project will provide 30 percent affordable housing through the 421-a Affordable New York Housing Tax Incentive Program. Construction is anticipated to begin later this year.

For the transfer of the development and parking rights, NYCHA will receive approximately $2,664,000 to fund capital repairs. As Hobbs Court is not a NYCHA development, the proceeds from the transfer will be given to Metro North Plaza, the nearest NYCHA development, at 307 East 101st Street. Metro North Plaza residents will have an opportunity to provide feedback for how the proceeds will be used after the closing of the transaction. The NYCHA Board approved the transaction in January 2019.

NYCHA Real Estate Senior Vice President Jonathan Gouveia stated, “This deal is a great example of how NYCHA is leveraging a range of underutilized assets to support needed repairs for our residents living in public housing. We look forward to working with Metro North Plaza residents in the months to come to shape a plan for utilizing the proceeds of this transaction.”

Following the success of the Hobbs Court transaction, NYCHA expanded the application process for expressions of interest in the transfer of unused development rights to adjacent properties. On March 10, 2020, NYCHA announced a citywide Request for Expressions of Interest to purchase unused development rights from NYCHA. Prior to this, NYCHA only evaluated inquiries for development rights purchases as needed. By establishing a citywide procedure, NYCHA will be able to evaluate a larger number of requests with the goal of raising funds for needed repairs while maintaining a high standard to approve requests.

Under the citywide Request for Expression of Interest, interested parties must propose a possible as of right zoning lot merger to that would facilitate a transfer of the development rights from the NYCHA property to the interested party’s property. The request must be in accordance with the Zoning Resolution. Once approved and completed, the proceeds would then go to the nearest NYCHA development.

CityLand reached out to NYCHA and confirmed that the review of Requests for Expressions of Interest is continuing on a rolling basis and is not delayed due to the COVID-19 outbreak. NYCHA will continue to review submissions through July 31, 2020.

By: Veronica Rose (Veronica is the CityLaw fellow and a New York Law School graduate, Class of 2018.)