Another developer, BRP Cos., has begun work on the four buildings in phase two that will add 242 affordable apartments. "It is changing the nature of a corridor that people avoided," Dunn said. "Now people want to go there."

As a candidate, de Blasio made building affordable housing the third major promise of his campaign. He dismissed the Bloomberg strategy of offering voluntary height and density bonuses to builders who set aside some apartments for lower-income residents because when the financial crisis hit, no one built those units. A study released during the campaign showed the Bloomberg strategy had produced only 2,300 affordable apartments between 2005 and 2012.

Within weeks of taking office, the mayor put a number on his promise: 200,000 affordable units over a decade, 80,000 of them new, and lower rents preserved on 120,000. It was the most ambitious program ever launched by a city in the United States. Assuming 2.6 residents per apartment, it would help half a million people. De Blasio put his deputy mayor, Alicia Glen, in charge of the details.

Glen is usually described as a former Goldman Sachs employee, which is both true and misleading. The 51-year-old ran Goldman's do-good units that helped small business and spurred community development, earning the firm PR points, not Wall Street–style profits.

Her plan had three components: directly finance all-affordable projects such as Dunn's in East New York; require developers of market-rate housing to lower the rents on 25% or more of the units in every building to affordable levels for the neighborhood and give them tax breaks to make it economically feasible for them to do so; and rezone areas of the city to spur more market-rate housing to increase the supply. The city itself would pour $10 billion into the program. Forcing developers to use their profits to provide affordable units would bring the total investment to $41 billion.

"The strategy was to adopt a pro-growth agenda for housing, make that a vehicle for affordable housing and capture the profits being generated by a frothy market for affordable housing," Glen said.

She faced a drumbeat of complaints about the plan, especially that it didn't help poor New Yorkers enough. It took two years to win City Council approval for a zoning resolution to enshrine mandatory inclusionary housing in law. Then she had to rework the rules to give priority to the lowest-income applicants and the homeless, adding $1.9 billion to the amount the city would spend.

In the past two years, public sentiment against the pro-growth component, which targeted 15 neighborhoods for rezoning to allow taller buildings and increase the housing supply, has reached a fever pitch. Only two rezonings have been approved—East New York and the Rockaways—where rents are too low to justify new development and affordable housing will have to be city-financed, as on Livonia Avenue.

More problematic is that too many New Yorkers think that new construction itself drives up rents and displaces residents.

The mayor has not helped Glen, rarely using his bully pulpit to explain the economic realities of supply and demand or make the case for density. At a star appearance at a conference on inequality this summer, economist Paul Krugman led de Blasio through his successes in narrowing inequality and his affordable-housing program. Then he asked what more could be done using land-use policies to create housing. Rather than discuss density, de Blasio made a pitch for raising taxes, this time through his plan for a mansion tax on the sale of apartments worth more than $2 million.

Glen, who keeps track of the numbers on the whiteboard in her office, has succeeded in increasing the amount of affordable housing. Some 2,000 new units have been completed, construction is underway on another 20,000, and rent protections have been extended on 52,000 more.

But the crucial test looms later this fall, when the council will take up a rezoning plan for East Harlem, where increasing density should produce 2,000 new units of market-rate housing and 625 affordable apartments. The borough president has opposed the rezoning, and neighborhood groups are mobilizing to defeat it in the council. If the mayor can't get the plan approved for the district represented by City Council Speaker Melissa Mark-Viverito, his strategy for housing will be in tatters as the second term begins.

As unequal as ever

Despite all de Blasio has done, the "tale of two cities" agenda has not made a dent in inequality. The Gini coefficient, a gauge of inequality, is about 0.55, as bad as any other city in the country. The percentage of all income going to the top 1% is 41%, the same as it has been since the city recovered from the financial crisis. The rich always get richer when the stock market soars and when investments like real estate jump in value.

Yet the mayor has effectively redistributed some wealth to those most in need. When he was in office less than two months, he won approval for a law requiring companies in the city with more than five employees to provide at least five paid sick days a year. That fall he ordered a 10% increase in the living wage for any firm doing business with the city. He backed a two-year rent freeze on regulated apartments.

The $15-an-hour minimum wage de Blasio campaigned on and forced Cuomo to embrace will boost the pay of 1.1 million city residents by the end of next year, according to the Economic Policy Institute, and an additional 300,000 will benefit as employers dole out increases to those who had been making $15.

The rich are not always the ones paying. Most large firms were already providing paid sick days and wages higher than the minimum wage, so small-business owners and especially restaurateurs are footing much of the bill. Many other businesspeople see de Blasio as an enemy for his tone-deafness about this.

"His inequality bizarrely excludes reforming the inequitable commercial rent tax or reforming a restaurant letter-grading system without due process," said Andrew Rigie, president of the New York City Hospitality Alliance.

Yet so far there is no evidence of any harm despite a lot of worry. The 26,500 active restaurants are 1,000 more than a year ago, the highest total in more than five years, and the 255,000 people they employ is a record.

Tax and spend

De Blasio is the only mayor in the past 50 years not to deliver a broad-based tax cut when the economy was expanding.

"I'm just a believer in investment in every sense," de Blasio said in June. "I think the notion that smaller government is better for the economy has been [disproved] so many times over, it's silly."

Instead, the $85 billion budget adopted for the fiscal year that began July 1 is almost 18% higher than the last Bloomberg budget, according to calculations by the Citizens Budget Commission, having grown at more than twice the rate of inflation. The latest capital-spending plan tops $95 billion, not only a record, but also 70% larger than the last Bloomberg plan. The number of city workers is expected to surpass 329,000, a record, in the current fiscal year, led by the new pre-K and police hires.

"The increases are primarily in permanent programs staffed by new employees," said CBC President Carol Kellermann. "And when the economy turns down, it will be difficult to cut them."