NEW YORK CITY HOUSING AUTHORITY 250 BROADWAY + NEW YORK, NY 10007 HOUSING TEL: (212) 306-3000 + http:/inye govinycha AUTHORITY SHOLA OLATOYE CHAIR & CHIEF EXECUTIVE OFFICER Honorable Ritchie Torres Member of the New York City Couneil 250 Broadway, Suite 1759 New York, NY 10007 January 26, 2016 Dear Council Member Torres, ‘Thank you for your letter regarding the NextGeneration Neighborhoods program, one of 15 strategie goals of NextGeneration NYCHA (NGN), a long-term strategic plan that detajlsshow NYGHA will create safe, clean and connected communities for residents and preserve New-York City's publi¢ housing assets for the next generation, NYCHA has moved forward towards this goal by focusing on sirategies to help meet the challenges of declining governmental funding ahd aging infrastructure to ultimately generate budget surpluses instead of deficits. The goal of the 50/50 program is to add units of affordable housing to the Mayor's affordable housing plan - particularly in areas where itis challenging for the City to create affordable housing - and to generate maximum financial return to NYCHA in order to support the preservation of the City's public housing. Additionally, in order to ensure the City has maximum control over the affordability of the new units built, we have structured the program so that we will be leasing ~ not selling -- our land and will require that developers build rentals, not condos. For the 50/50 program, we analyze development opportunities based on the existing capital need at the NYCHA development, the potential for new construction at that location, the needs of the surrounding neighborhood, the City’s community development plans (e.g., is there a lack of affordable housing, is the City investing in infrastructure in the neighborhoods, etc.), and the potential financial return to NYCHA. identify sites for the 50/50 program, we consider whether a location can support market rate rentals that would result in a significant return to NYCHA. We use tools such as the City’s Market Study under the Mayor's Housing Plan and residential market studies produced by independent real estate services firms, The current strong real estate markets overlap with more than 80 NYCHA developments. As NGN isa 10-year plan, we expect additional NYCHA developments to become potential NGN Neighborhood sites. Given that this is a 10-year program and we are releasing two to four development sites per year, NYCHA used 30 to 40 potential development sites as a sample set of data points to analyze the returns for the 50/50 program. Highest and Best Use Development (market rate and/or condos) would yield a return of $1 billion to $1.5 billion at these sites. We then analyzed the return based on a long-term‘ground lease held by NYCHA (60-year leases), and the fact that it would be market rate housing with $0 percent affordable housing below 60 percent AML We strongly believe that it would not be appropriate or advisable for us to disclose more details at this ime, Our revenue projections were based on a set of potential development sites, but specific sites for NGN Neighborhood development have not yet been identified. Community engagement has been and will continue to be central to the site selection process. Further, disclosure of our assumptions, or calculations would undermine our opportunity through the competitive REP process to obtain the most creative and highest value proposals. [hope you find this response satisfactory and I look forward to sharing my testimony with you, the Committee on Public Housing, and housing residents this evening. Sincerely, Shola Olatoye Chair and CEO