Corey Johnson. | William Alatriste/NYC Council In lieu of building affordable housing, developer offers to pay into city fund

For four hours on Wednesday, city officials, politicians, developers and housing activists debated whether Mayor Bill de Blasio's new affordable housing policy should apply to a mixed-use proposal in Chelsea.

The City Council hearing ended without a vote, but with an offer from the developer, Acuity Capital Partners, to contribute money to a city-controlled fund for below-market-rate housing in lieu of adhering to the new requirement. The exact amount was not discussed, but an attorney for Acuity said it would be comparable to the cost of the mandate.


The fund has not been created yet.

The dispute, which has played out publicly over the past three months, has pitted the de Blasio administration and Acuity against Manhattan Borough President Gale Brewer, the local community board and housing activists.

Acuity is planning less development than it is entitled to — 118,000 square feet instead of 138,000 — on a lot located at 42 West 18th St. in Manhattan. But the permit it is seeking, which requires City Council approval, would allow for other desired changes: an exemption from a 15-story setback requirement and less space between the rears of two buildings that would be included in the development.

Acuity's representatives said the special permit would enable 66 apartments — more than the 40-44 units that would otherwise be permitted.

The issue has put the de Blasio administration in the interesting position of having to oppose more affordable housing, when it's a central policy goal to increase affordable capacity.

The Department of City Planning and Acuity believes the Mandatory Inclusionary Housing policy, which requires a portion of below-market-rate apartments from developers benefiting from a city-issued rezoning, does not apply to this application. If it did, the builder would have to set aside 20 to 30 percent of those new units — about five apartments — for residents who qualify for low to moderate rents. Their logic is that the policy, which cleared a vote of the City Council in March, is specific to rezonings and Acuity is asking the city for a different type of permit.

Valerie Campbell, Acuity's lawyer, testified that "the requested bulk waivers simply facilitate the use of permitted residential floor area on the project's zoning lot."

"Applying Mandatory Inclusionary Housing in a special permit application such as this one will create a significant financial disincentive for future applicants who may elect to develop hotels or offices instead of a residential building or to just forego the bulk waivers that could be used to create a more appropriate building for the historic district," she said.

The opposing view, presented by Manhattan Borough President Gale Brewer, the local community board and affordable housing advocates, is that because permit benefits the developer, it should require a concession in the form of housing for low- to moderate-income tenants.

"I believe that any special permit that allows developers to build significantly more residential units and floor area than they would otherwise should trigger Mandatory Inclusionary Housing," Brewer said in prepared testimony. "The special permit process is the only way most neighborhoods in Manhattan will see any affordable housing under the Mandatory Inclusionary Housing program."

The City Council is likely to follow the lead of Corey Johnson, the member representing Chelsea.

In an interview, Johnson said he has not settled upon whether he thinks the policy should be applied in this instance.

"They're building less than what their as-of-right floor area scenario allows them, but they still need a zoning waiver," he said. "They still need a special permit to be able to build a building that they want, that's going to be profitable, that's going to include high-end luxury condominiums and so that's what the balancing act is."