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As the mayor and governor battle over the proposed Holocaust museum expansion in Battery Park City, housing activists might want to take the opportunity to remind the politicians of another deal, made a decade ago, that is now being routinely ignored by the city and state.

When the Battery Park City Authority was created in 1968 to oversee development of the West Side waterfront south of Chambers Street, the plan included housing for both rich and poor residents. The city budget crisis in the late 1970s forced officials to scale back these ambitions. Instead, the authority committed to giving the city $600 million from future budget surplus revenues to finance affordable housing elsewhere in the five boroughs.

The deal, penned in a series of 1980s agreements, was to be financed with Battery Park profits. If the contract had been honored, the Department of Housing Preservation and Development would have had an additional $79.2 million to spend this year. Instead, it’s getting nothing.

There are several reasons for this. First, the authority hasn’t been nearly as profitable as expected. Last year, it handed the city only $40 million; this year that figure is projected to be $44 million.

The real problem, however, is in how the city is choosing to spend the Battery Park surplus. The contract requires what is known as a “maintenance of effort,” meaning that the city is required to maintain its existing housing budget and increase it with the additional Battery Park City revenues. But the language is loose and the provision hasn’t been enforced. “It’s not very tough in terms of a maintenance of effort agreement,” observes Alexandra Altman, counsel for the Battery Park City Authority.

And even if this provision could be enforced, a one-sentence loophole gives the city the right to move this surplus into the general operating budget in any year “the City budget provides for general reductions in basic city services.” Under the Giuliani administration, pretty much every year fits that bill.

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