A dispute over a private development planned within a Yorkville public housing complex is heading to court — the latest blow to Mayor Bill de Blasio’s bid to raise money for the ailing New York City Housing Authority.

Manhattan Borough President Gale Brewer sued Thursday over Fetner Properties’s proposal to raze a playground and build a 50-story building next to Holmes Towers, home to about 1,000 residents.

The city’s plan would allow Fetner to skip the usual public review system and flout zoning regulations. But Brewer decried the “undemocratic” approach – arguing that state law is on the people’s side.

She said City Hall and Fetner would be better off going through the full review process rather than trying to push through “a plan cooked up behind closed doors.”

It marked the latest snag for de Blasio’s so-called NextGeneration NYCHA program, which aims to raise funds for the cash-strapped agency through private development deals on public housing sites.

The suit was filed just days after THE CITY reported NYCHA had quietly shelved another NextGeneration project: Harborview Terrace in Hell’s Kitchen, which was tied to the deal to build Hudson Yards.

NYCHA declined comment on Brewer’s suit to stall the Holmes Towers addition, which has been in the works since 2016. The planned tower — dubbed “The Bellwether at Yorkville,” court documents say — would contain about 340 apartments, half market-rate and half affordable.

In a statement, City Hall spokesperson Olivia Lapeyrolerie defended the project, saying it would raise $25 million for “critical repairs” at Holmes Towers and bring more affordable housing to the Upper East Side.

“We are using every tool in our arsenal to reverse decades of federal divestment in NYCHA,” she said.

But residents of Holmes and the nearby Isaacs Houses, which span First Avenue between East 92nd and East 96th streets, are concerned about noise, dust and the destruction of green space.

‘It’s All About Money and Business’

On the day the lawsuit was filed, Lucy Pino and her two-year-old son played in a Holmes Towers playground set to be demolished, under the Fetner tower plan. Pino, 27, said she can’t imagine how the new building would fit in the triangle-shaped open space she and her toddler visit daily.

“We come out every morning because my baby wants to play in the park,” she said. “How are you going to put a building here? It doesn’t make any sense.

“It’s all about money and business. Clearly, it’s not about us and our safety,” added Pino, who has lived in Holmes for 10 years. “They’re not even thinking about how we’re going to feel because we don’t pay as much as they would pay in this [new] building.”

A spokesperson for Fetner Properties said the company had not yet reviewed the lawsuit, but “remains committed to delivering new affordable housing, open space, and a state-of-the-art recreational and community center, as well as new funds to support much-needed building and infrastructure repairs for NYCHA residents.”

City Hall chose Fetner two years ago, but the deal has not yet closed, according to NYCHA. It’s unclear when that may happen.

Three other potentially money-generating NYCHA development sites — at Wyckoff Gardens and Cooper Park in Brooklyn, and at the LaGuardia Houses on the Lower East Side — are currently pending.

Brewer also opposed the Harborview plan, joining local elected officials in speaking out against a proposal introduced by the city last year to add hundreds of market-rate units to a building originally set to include only affordable apartments.

While the Holmes plan goes to court and Harborview is put on a seemingly permanent pause, NYCHA is facing serious institutional changes and challenges – including a search for a new chairperson and increased oversight by a newly installed federal monitor.

Meanwhile, a big booster of the 50/50 NextGeneration NYCHA concept — building half market-rate, half affordable buildings on NYCHA land — recently left City Hall.

Before her exit, former deputy mayor Alicia Glen told POLITICO New York the program “was a failure.”

The estimated $25 million the Fetner project would bring to Holmes Towers does not come close to covering the fixes needed at the complex. NYCHA’s most recent assessment shows about $36 million worth of repairs are needed immediately, with more than $100 million needed over the next 20 years.