NYC targets luxury apartments for less wealthy

NEW YORK (Reuters) - New York City on Wednesday started an experimental $20 million program to shore up blighted neighborhoods riddled with unfinished or vacant buildings by buying about 400 apartments from cash-strapped developers, the mayor and city council speaker said in a statement.

Under the program proposed this winter by Democratic Council Speaker Christine Quinn, owners of luxury condominium apartments could find themselves living next door to less well-heeled neighbors.

The new affordable housing units, which could cost around $50,000 each, would be set aside for moderate to middle-income residents, Quinn told reporters, saying many details have not been finalized.

Her estimate would save the city money as it now spends around $75,000 to $100,000 per unit. Once the city later this month puts out a formal request for developers to sign up, their responses should guide the program, which likely will not begin until next year.

"Projects will be selected based on which developers and banks offer the deepest discounts below market rates on prospective units," said Quinn in a joint statement with Mayor Michael Bloomberg, an independent seeking a third term in November.

Bloomberg in February almost doubled his affordable housing programs, one of the biggest for any U.S. city, to a $7.5 billion plan to build and preserve 165,000 units by 2013.

Most of the developers who apply for the new program likely will have small or mid-sized buildings located in the outer boroughs, Quinn said, saying downtown Brooklyn could be a prime site.

Manhattan apartments probably cost too much for most affordable housing programs, Quinn said. An average apartment in Manhattan cost $1,312,290 in the second quarter, though this was as much as 24 percent below the year-ago level.

(Reporting by Joan Gralla in New York; Additional reporting by Ilaina Jonas; Editing by Padraic Cassidy)