Tino Hernandez told the City Council that selling or leasing the land would be one way to balance the agency's budget, which is running $170 million in the red.

East Harlem Councilwoman Melissa Mark Viverito objected to putting a market-rate apartment building right next to public housing. She says low-income residents are already feeling squeezed by gentrification.

VIVERITO: The spaces that they used to go to shop at no longer exist that are affordable to public housing residents, you know, and it becomes very very difficult to just have a quality of life.

REPORTER: The market-rate buildings would go a step further than plans hatched last year.

That was when the public housing agency leased some of its parking lots to private developers who must set aside at least half the units for affordable housing.