A planned supertall apartment tower at Ground Zero is poised for a potential $31 million government funding boost — using money designated after 9/11 for lower Manhattan job creation and waterfront improvements.

The U.S. Department of Housing and Urban Development last month approved a proposal by the Lower Manhattan Development Corporation to redirect $21 million from a joint state/city jobs program and about $10 million from waterfront funds for unspecified “affordable housing” purposes.

In July, Gov. Kathy Hochul announced that the planned 900-foot residential skyscraper to be built by Silverstein Properties and Brookfield Properties at 5WTC would have one-third of its apartments set aside as affordable housing — frustrating advocates who had sought to have all apartments in the new tower be affordable.

Under the state’s plan, one-third of the 1,200 apartments at 5WTC will be rented at less than market rate for income-qualified tenants.

State officials had argued that a 100% affordable tower was not financially feasible and provided estimates that constructing such a project would require $900 million in government subsidies.

Before HUD approved the funding shift from jobs to housing, two local lawmakers had urged LMDC to direct those dollars toward affordable housing at 5WTC. In Sept. 7, U.S. Rep. Dan Goldman (D-Manhattan/Brooklyn) and state Sen. Brian Kavanagh (D-Manhattan) sent a joint letter to LMDC President Daniel Ciniello.

“We understand from discussions between LMDC staff and our offices that the reallocation of funds LMDC is now proposing would be consistent with using these funds to increase residential affordability at 5WTC,” the reps wrote. “We urge you to continue to work with us and the relevant federal and state agencies to achieve this goal.” 

The 5WTC plan was developed by the Port Authority, which controls the World Trade Center site, and New York’s Empire State Development agency, of which LMDC is a subsidiary.

A person cycles by the 5 World Trade Center development.
A cyclist passes by the 5 World Trade Center development site in lower Manhattan. Credit: Ben Fractenberg/THE CITY

A spokesperson for Empire State Development and the Lower Manhattan Development Corporation, Emily Mijatovic, told THE CITY that the $31.7 million is not yet earmarked toward any project. “LMDC is working on determining how to use the funds,” she said.

In March, Cinello announced at a board meeting that LMDC is in the process of winding down its operations. The Real Deal reported last month that it’s expected to cease operations by March 2024. Mijatovic did not respond to a question from THE CITY about its future.

Missing Middle Class

Mariama James, one of the cofounders of the Coalition for a 100% Affordable 5WTC, grew up in Lower Manhattan. She said the neighborhood, where residents were once few and concentrated largely in middle-income, racially diverse developments such as Independence Plaza and Gateway Plaza, has changed into an overwhelmingly affluent and white population.

“As I was growing up here, we had multimillionaires, we had superstars that you could bump into on the streets, Sarah Jessica Parker, Robert De Niro,” she said. “But we also had starving artists, and everyone could afford to live together. That’s not the case anymore.”

LMDC has received a total of $2.7 billion from the federal government to go toward the World Trade Center disaster recovery and to help rebuild Lower Manhattan. Of that amount, a total of $86.2 million has been specifically carved out for affordable housing. 

To date, the agency has spent tens of millions of dollars creating or preserving affordable housing in developments across Lower Manhattan neighborhoods that include Chinatown, the Lower East Side and Tribeca. 

Meanwhile, it has also spent $293 million toward business recovery and economic revitalization programs, down from $350 million originally promised in 2002. 

Of the $31 million HUD recently approved for affordable housing, $21.3 million had previously been allotted to the lower Manhattan Job Creation and Retention Program, designed to assist businesses that agreed to stay in or relocate to lower Manhattan. 

Another $2 million is getting reallocated from East River Waterfront Access, which the LMDC described as “completed and fully funded project,” in addition to $8.2 million getting reallocated from Pier 42 on the Lower East Side, which EDC is transforming into a park. LMDC asserts that sufficient funds are available elsewhere in its development programs to ensure Pier 42 gets done.

In 2004, LMDC had used $160 million in HUD funds to acquire the badly damaged Deutsche Bank building from the financial institution following the 9/11 attacks — the spot where 5WTC is now supposed to rise. Demolition took a decade and led to the deaths of two firefighters. 

The corporation has since engaged in a complex deal in which it has agreed to essentially swap the 5WTC property with Port Authority in exchange for properties the Port Authority owns at the World Trade campus, enabling the creation of the 9/11 Memorial and Museum as well as a Performing Arts Center slated to open this month

In 2021, Port Authority and LMDC selected a partnership spearheaded by Brookfield and Silverstein for the development of 5WTC — the first residences at the World Trade Center.  

The advocates at 100% Affordable 5WTC have argued that because the land is publicly owned, the building should be completely affordable. Even after Gov. Kathy Hochul’s July announcement of 33% affordable apartments, the group vowed to continue pushing for more.

James said that elected officials should follow through on their rhetoric, and add more affordable housing to the project.

“This is supposedly everyone’s mission. The mayor just made a huge announcement about it. The governor made one a couple months ago. It’s on the HUD website. Everybody says they want it,” she said. “We have an opportunity to do it. Let’s do it.”