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NY Times – Aug 19, 2005

Coming Full Circle, City to Sell Blighted Lot


They were the most unsightly evidence of a city in decline - 5,000 vacant lots taken over by New York from delinquent taxpayers during the 1970's and 80's, strewn with weeds and garbage, dotting the landscape from central Brooklyn to Harlem to the north shore of Staten Island.

But beginning today, the city will sell the last 248 of those lots, Mayor Michael R. Bloomberg said yesterday, primarily to developers who agree to build housing for low-income New Yorkers on the plots. The city has already disposed of 100,000 housing units that had also been left to rot by owners who stopped paying their taxes.

The 248 remaining lots, which are mainly clustered in Queens, Brooklyn and Upper Manhattan, will be the last of their kind the city will ever hold, the mayor said.

"The city is not interested in being a landlord," said Mr. Bloomberg, standing amid the crabgrass and beer bottle caps in one of the last lots for sale, in East New York, Brooklyn. "We are here today to mark the end of an era."

That end has been coming gradually over the course of three decades, with the help of the private sector, nonprofit groups and several government agencies. But this final sale of city-owned land - fueled by millions in private-sector dollars, a red-hot real estate market and record population levels - provides the sharpest example of how much the city has changed over the last decade.

The scarcity of inexpensive land around the city has made developers, some of them priced out in a heady market, all the more eager to build on city land, lured by the tax incentives and mortgages offered by the government in exchange for providing below-market-rate homes.

Further, neighborhoods that were once too bleak to retain landowners now attract new immigrants and other New Yorkers who are happy to use a subsidy to buy a home.

Given that surging demand, New York is upping the ante for developers who want to snatch up the last bits of city-owned property, known as "in rem" property.

For the first time, the city's Department of Housing Preservation and Development will give top priority to developers willing to build more than the required minimum of low-income units in the buildings they put up, in exchange for government subsidies and access to tax-exempt financing.

For example, on lots where apartment buildings will be erected, the city will require that 20 percent of the units be set aside for residents whose family income is less than $50,250 a year for four people. On smaller lots fit for two-family homes, at least one-third of the units developed must be for those low-income buyers in order to receive the tax credits and cash subsidies that offset the selling price.

Further, city officials said they would give first priority to development plans that incorporate environmentally friendly designs for multifamily homes like energy-saving appliances or plumbing fixtures that use less water.

Advocates for people who are priced out of the New York real estate market praised the Bloomberg administration's commitment to favor developers who build low-income units. In the past, the city has generally sold its land and property to the highest bidder. But the advocates also agreed that this final request for proposals signals that the city is out of land on which to develop inexpensive housing, which creates a new sort of problem.

"It is very good news, and it is disturbing news," said Hilary A. Botein, the executive coordinator for Housing First!, an advocacy group. "The good news is, the city has absolutely done a terrific job using much of its vacant land to create affordable housing. But the flip side is that the city is saying that they have done what they can do with all of its available land."

The city is able to be more selective in choosing who buys its land in large part because of the monumental housing boom. In 2004, the city approved the construction of 25,208 housing units, more than in any year since 1972, and that number is likely to be surpassed this year.

As development costs soar, builders are in greater need of places to build, and are willing to accept the lower yield of non-market rate housing. Such programs have attracted both developers and buyers in places like East New York, where there was virtually no market for home sales 10 years ago. William Roberts, an East New York resident who attended the mayor's news conference yesterday, said he bought a two-family home there that had been on an in-rem lot 15 months ago for $379,000.

"What's really different here is that we are changing the rules," said Shaun Donovan, the commissioner of housing preservation and development. "We're saying the developer who wins is the one with the most affordability."

In 2002, Mr. Bloomberg announced that the city would build or rehabilitate 65,000 housing units, much of it for poor or middle-income residents. Today, 28,500 units are in the development pipeline, city officials say.

Yesterday, John Kelly, the co-chairman of the New York Housing Conference, a consortium of developers and housing advocates, said that finding new land to develop will be the city's greatest challenge, now that the land it took over during its darkest moments is gone.

"It really requires a whole rethinking of how we find sites and make them available for really low-income housing," Mr. Kelly said. "Everybody talks about brownfields. That is definitely one place where we have to look, but we might have to create more land by more dense zoning." Brownfields are environmentally contaminated sites that must be cleaned before being developed.

Using zoning to increase density would be unpopular in many neighborhoods seeking less development, some of whose residents have complained bitterly about developers who quickly lay down foundations before new, low-density zoning kicks in. ?