November 21, 2024

The Housing Crunch

Why New York City has something for everyone, except somewhere to live.

An empty lot at 962 Pacific Street, viewed through a chain-link fence. The lot has patchy grass and a rundown fence.

A developer had hoped to build a nine-story apartment building on this vacant lot at 962 Pacific Street in the Crown Heights neighborhood of Brooklyn. Hiroko Masuike/The New York Times

She Wants to Build Apartments in Brooklyn. But How Long Can She Wait?

	By Mihir Zaveri

The Crown Heights neighborhood in Brooklyn has felt the housing crisis deeply.

The area, which for decades had been home to mostly Black and Orthodox Jewish families, has seen an influx of white residents in recent years. Compared with Manhattan, the neighborhood had been diverse and relatively affordable, with ready access to transit and amenities like Prospect Park and the Brooklyn Museum.

A lot of housing has been built to accommodate the demand. The area around the neighborhood has added nearly 5,000 units over the past 10 years — more than most other areas, according to the Planning Department.

But at the corner of Grand Avenue and Pacific Street, a 33,000-square-foot lot has been vacant for more than 50 years. In such a high-demand neighborhood, where rents have risen roughly 30 percent in the past decade or so, why does this spot remain empty?

The story of the lot, at 962 Pacific Street, illustrates in many ways why housing developments fall apart in New York City, including how challenging and unpredictable projects can be and how the results of contentious negotiations can leave few people happy.

Like every housing project, this one has its own context. The 962 Pacific Street development became embroiled in the politically fraught debate over how to plan for growth in a neighborhood that has gentrified rapidly. The changes have angered longtime residents who feel they are being pushed out.

"In this particular area, people felt like these big buildings keep going up," said Crystal Hudson, a Democrat who represents the neighborhood on the City Council. "We're not addressing broader community needs."

The Lot

At one point in the 1850s, there were more than a dozen rowhouses on the site. Then, in 1961, the homes were demolished and the lot was zoned for manufacturing uses, consistent with the industrial businesses popping up around the nearby rail line.

The designation meant that the current owner, Nadine Oelsner, and her company HSN Realty, could not build apartments without engaging in the monthslong bureaucratic process required to change the zoning. The lot had been owned by her family for decades and at one point had been used as a parking lot for unused or broken down cars.

A development boom in Crown Heights in recent years had prompted the rezoning of at least five sites within a two-block radius of 962 Pacific. Much of the area still feels industrial, with gleaming new apartment buildings mixed in with older, low-rise town homes and auto shops.

Community leaders, frustrated by one-off changes for individual lots, decided that they should come up with a broader rezoning plan that prioritized affordable housing and industrial jobs. The city backed the effort, and released a draft "land use framework" in 2018.

Oelsner figured the time was right to get the lot cleaned up. She lined up a construction loan.

Cars parked along a street, with a man on a motorcycle driving by.

Cars line the street near the Pacific Street lot. Some who objected to building apartment buildings wondered where new residents would park. Hiroko Masuike/The New York Times

The Proposal

Then Oelsner waited.

Four years after the initial discussions, and after an earlier effort was scrapped, the Planning Department announced in 2022 that it would rezone the area. The process could take years.

Oelsner decided not to wait any longer. Her loan had become more expensive and soon, she told the community board's land use committee, the rising costs would "force us to make some hard choices and potentially risk losing the site."

In December 2022, she applied for a zoning change that would allow her to develop a building with residential and manufacturing uses. She would, according to the development process, have to defend her project to the community board and get approval from the Planning Commission and the City Council.

Oelsner wanted to build a nine-story building with 150 apartments, about 40 of them designated as "affordable." In government terms, that meant rents for those units would be no more than 30 percent of the gross income of targeted income groups. Under one plan, for example, 25 might rent for around $1,800 for a one-bedroom apartment, or $2,000 for a two-bedroom.

Oelsner's plans called for a smaller building than other developments nearby. She wanted apartments big enough for working families, meaning no studios. She said the building would include an early childhood education center and space for industrial business.

Many of these elements, she said, were designed to be consistent with the city and community board's broader planning efforts. But those efforts might not come to fruition for years. She said she felt like she had to do something now.

What Happened?

Members of the community board fought Oelsner's project. At a September 2023 meeting, one member said she worried about where the new residents would park. Another wondered why all of the units were not going to be affordable.

The community board recommended that the project be rejected, unless Oelsner made more apartments cheaper and was more transparent about her potential profit. Oelsner and those working with her argued that the level of affordability the community board was calling for was not "financially feasible."

The board's resistance might not have not have been fatal because its vote was only advisory. But Oelsner also faced an objection from the person who holds the most power over land use decisions in the area: Hudson, who became the local council member in 2022.

Hudson had said she would not support individual developments until the broader neighborhood rezoning was finished. When she voted against Oelsner's proposal at a Council meeting earlier this year, she said the lot owner was essentially trying to cut in line.

Which she may have been.

Or was it more like proceeding through an intersection after the traffic light has been stuck on red for what feels like too long?

The process for the neighborhood rezoning began in October, and the final plan could come to a vote as soon as the spring. Hudson said there were benefits to a "very deliberate" process that takes into account needs for open space, green space, streets, train stations, schools and more.

For Oelsner's project, next year is most likely too late. She has abandoned her plan for the nine-story apartment building for now, and 962 Pacific remains vacant. She has not said what she might do next.

An external view of Morris Houses in the Bronx.

Morris Houses, a public housing development in the Bronx. Jade Doskow for The New York Times

Q&A ✏️

David Garten, the chief executive of Red Oak Street, a New York-based consulting firm, asked several good questions on the social media site X last week after the Housing Crunch series launched. I'll focus on two that are related:

How does creating more market-rate housing address overall affordability?
What role does NYCHA play?

It can be a counterintuitive concept — that building pricey, market-rate homes can help everyone. But there is a lot of research to support this. The simplest explanation is that adding more homes means landlords need to compete for renters to fill them, which they often do by dropping prices. There is also the idea of a "chain of moves" — that households moving into these new homes vacate others, which might be older, lower quality or in cheaper parts of the city, and thus more affordable. Many housing supporters point to Minneapolis and Austin, where rent increases have tempered as development has boomed, as real-world examples.

There are a few caveats. One is that while adding homes will probably improve affordability, it may just slow how fast rents go up and not make things cheaper (or at least not for many years). Another is that adding market-rate housing may bring higher-income residents to a neighborhood where they contribute to localized gentrification, although that might have happened even without new homes.

The bottom line is that preventing new housing from being built — even if it is not affordable — is not going to solve New York City's problems. Helping people who are struggling the most typically requires more government investment, whether through subsidizing development or helping people pay rent.

Which brings us to the role of public housing.

The New York City Housing Authority, or NYCHA, provides some of the city's last deeply affordable apartments. The official number of people living in the city's 335 public housing developments is more than 360,000. That's more people than the entire populations of Orlando, Fla., or Cincinnati or Pittsburgh. (The unofficial count is thought to be far higher.) NYCHA also runs a Section 8 voucher program, providing rental assistance to an additional 167,000 people.

The average rent in a NYCHA apartment is $557 a month, according to the agency. More than 40 percent of families who live in NYCHA apartments have at least one working member, according to the agency. A similar chunk rely on fixed income like social security. It's unlikely that these people would have many other places to go without NYCHA.

Terms to Know 🏘️

Rezoning: Changing the rules about how a piece of land can be used. Some rezonings are proposed by private parties, like developers or landowners, and often focus on one lot or a group of nearby parcels. Others are led by the government to enable growth in bigger swaths of the city. For example, the rezoning of the Gowanus section in Brooklyn, which was approved in 2021, targeted about 82 blocks in the central part of the borough. It can be tricky to balance these bigger and smaller efforts.
Luxury housing: The term evokes an image of a special, opulent home. But it has come to be synonymous with new, market-rate apartments and condominiums, even if they are not all that fancy. And what does it mean for something to be market-rate? The landlord gets to set rents at whatever level they want or believe people will pay.
Rent regulation: Nearly half of the apartments in New York City are not subject to market forces. The vast majority are rent-stabilized, meaning they are owned by private companies that can raise rents only by amounts decided by the Rent Guidelines Board, a panel of mayoral appointees. This system is possible because New York City is considered to be in a "housing emergency," meaning its rental vacancy rate is below 5 percent.

A view of the Astoria neighborhood in Queens, with houses in the foreground and two bridges in the back.

The Astoria neighborhood in Queens. Maansi Srivastava/The New York Times

Borough Bio: Queens

The 108.5 square miles that comprise Queens make the borough New York City's largest by land area. But it also has many of the city's lowest-density neighborhoods, and its homeownership rate of nearly 45 percent is far higher than the citywide figure of 33 percent.

The median rent was roughly $1,880 in 2023, up from closer to $1,300 a decade earlier, according to the U.S. Census Bureau. Queens has about 2.3 million people, and its 919,800 housing units make up about a quarter of the city's overall housing stock.

The borough has neighborhoods with large numbers of illegal basement apartments. Donovan Richards, the Queens borough president, said that as a child he had lived in several basement apartments and he rejected the position taken by community boards that oppose legalizing such dwellings.

"They're here," he said. "They're a form of affordable housing."

But basement units can also be dangerous because climate change has led to more severe weather events. Richards cited Hurricane Ida, which caused flooding in many basement apartments, as a reason to make the apartments habitable.

"I had to go to funerals of people who died during Ida," he said. "They didn't have egress in their basement apartments, so from a safety perspective we need to do it."

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