What's Next for Busted Condo Projects?

Now that the owners of Stuyvesant Town have defaulted on their $3 billion mortgage, it's worth asking what happens next to all the overleveraged apartment buildings and see-through condo projects out there – the remnants of many urban developers' ambitious boom-era dreams. In a new article for The American Prospect magazine, I look at one increasingly popular notion: the idea that these doomed projects could turn into the housing many cities really need -- the affordable kind.

New York City is doing exactly that, through something called the Housing Asset Renewal Program, or HARP. Announced last year as Mayor Bloomberg muscled his way into a third term as mayor, HARP gives developers cash subsidies of $50,000 to $75,000 per apartment on the condition that the would-be luxe apartments are turned into housing that's affordable for a middle-class budget. (This is New York City, of course, where "middle class" means income of up to $126,000 a year.)

Not surprisingly, many New Yorkers love the idea. Those with less than Bloomberg-sized budgets understand that it's insane that two out of every five households there spend more than half their income on housing.

Alas, it may be too good to be true.