Opinion: NYC is undermining its own housing goals

The New York City Council recently passed the City of Yes plan to help address our city’s housing crisis by making it possible to build a little more housing in every neighborhood across the five boroughs. And Mayor Eric Adams recently appointed a new Charter Revision Commission focused on delivering affordable housing to working-class New Yorkers. But unfortunately, City Hall is simultaneously working against itself when it comes to this important goal. Allow us to explain.

It’s a simple fact: without building more affordable housing, we will never lift ourselves out of the homelessness crisis. But, right now, City Hall makes it easier for developers to build shelters than to build affordable housing. Developers are building shelters over housing because the well-funded city Department of Social Services can pay handsomely for your shelter project tomorrow whereas the New York City Department of Housing Preservation and Development often takes years to fund housing projects. Both of our districts – on the Upper West Side of Manhattan and deep in southern Brooklyn – have been poisoned by that well.

The Calhoun Building, a 23,000 square foot former private elementary school nestled in the Central Park West Historic District on West 74th Street, was sold in the summer of 2023 for $14 million to Bayrock Capital and was marketed for conversion to market rate housing by a commercial brokerage firm that is now the subject of a corruption probe. We will come back to this point later.

Six months later, neighbors were surprised to learn at a local community board meeting that Bayrock would actually not build housing at the Calhoun Building but was instead converting it into a 146-bed, single adult women’s shelter, which required Landmarks Preservation Commission approval to alter the 145-year-old structure. Bayrock would convert the building into a shelter along with an $80 million contract with a nonprofit vendor to actually operate the shelter over four years, with Bayrock likely receiving lease payments that will far exceed the $14 million they paid for the building – all on the backs of hardworking taxpayers. That equates to more than $10,000/month per tenant, far more than market rate housing for a studio/one bedroom.

Meanwhile, in Bay Ridge, where vacant lots are like unicorns, DSS announced plans to build a homeless shelter at 6530 4th Avenue. Following the lucrative financial model of the Calhoun Building, it was announced that Bayrock would be doing the work with the same nonprofit vendor.

At a recent City Council oversight hearing on city-funded shelter providers, DSS mentioned several times how New York City is facing a “housing emergency.” We agree. But the truth is that we have no idea what the housing landscape will look like over the next few years, so why build a shelter in a vacant building or on a vacant plot of land when the city is in desperate need of affordable housing and after the city announced that more than two dozen shelters, primarily for migrants, are closing? To us, that does not scream emergency. It screams opportunity to build more housing.

And this isn’t just happening on the Upper West Side or in Bay Ridge. From Jamaica Avenue in Queens to Hylan Boulevard in Staten Island, Bayrock is doing this all over the city, and we know they aren’t the only developers taking advantage of this sweet deal. With a finite amount of space to build, this is setting us back from our ambitious housing goals.

Private equity firms are buying buildings below market value and transforming them into shelters in locations like ours that aren’t the best fit, profiting off the emergency housing declarations and the needs of our most vulnerable New Yorkers. It is shocking that building a homeless shelter and leasing it to the city is considered by investors to be the most profitable use. Bayrock has a fiduciary responsibility to squeeze DSS for every cent possible.

Can’t say we blame them since, after all, the city dishes out multi-million-dollar contracts like candy. So, what happens now?

Four things come to mind: 

• For starters, with ongoing investigations by the Manhattan District Attorney into the city’s leasing of commercial properties and the NYC Department of Investigation looking into shelter providers, there must be a moratorium on any new shelter contracts to see what results these investigations might bear and what we can learn from them.
• Second, the mayor recently asked all city agencies to review their city-owned and controlled land for potential housing opportunities. That is great, but we think that review should go one step further and include a thorough review of all shelter sites to ensure taxpayer money is being spent in the most efficient way possible.
• Third, the only way out of our homelessness crisis is by building more low- and middle-income housing, transitional housing and supportive housing (we have plenty of luxury housing already). Our shelters will stay full unless we’re giving people a place to live. We need to incentivize the creation of affordable housing. Whether it is through more local, state and federal grants or incentives for developers to build higher levels of affordable housing, there must be a better way forward.
• Finally, there must be greater transparency between the city and community, especially when it comes to DSS. The Adams administration won’t even tell us how much Bayrock is charging DSS in rent.

In every corner of New York, there is a desperate need for affordable housing. It is why the mayor used every ounce of political capital he had to get the City of Yes passed. But until we fully understand the full scope of how these transactions are being facilitated behind closed doors, these projects should be put on pause. Otherwise, hundreds of millions of taxpayer dollars will continue to flow unchecked, and it will result in the same cycle of poverty. 

It is affordable housing, not more shelters, which will ultimately help get people out of poverty, into stable employment and into a new home environment. That is the real solution.