Last year’s bursting real estate bubble left the five boroughs littered with vacant and half-built projects, many of them market-rate units few can now afford. But city officials are hoping to rescue some of those stalled projects, create much needed affordable housing in the process, and begin to steady the real estate market as a result. Wednesday, the City Council and Bloomberg administration announced a $20 million program known as HARP—as in Housing Asset Renewal Program—that would subsidize the conversion of upwards of 400 stalled market-rate units into affordable ones.

By thawing frozen projects, the hope is to free up financing to finish construction on those that are not yet built and to fully occupy those that are. (The imprimatur of the city should help with financing, as well.)  Meanwhile, the city will help stabilize these buildings and their surrounding neighborhoods, thus avoiding the blight that plagued the city during the decline of the 1970s and 1980s. With 138 stalled projects confirmed by the Department of Buildings, and countless more unaccounted for, there are plenty of projects in need of support.

“Private developments that sit vacant or unfinished could have a destabilizing effect on our neighborhoods, but we’re not about to let that happen,” Mayor Michael Bloomberg said in a statement. “This program holds out the promise of addressing the unintended blight caused by vacant sites, while transforming what would have been market-rate buildings into affordable housing for working class New Yorkers.”

The program is the result of a council taskforce on affordable housing launched in 2008, though many of its ideas crashed along with the housing market. Instead, the taskforce began outlining HARP, which speaker Christine Quinn introduced in February during her State of the City address. The council then turned to the city’s Department of Housing Preservation and Development to implement the details and administer the program, which is still in the pilot phase. The cost is also shared between the council and the city through the reallocation of existing capital funds.

The city will issue a request for funding applicants—a sort of RFP with a rolling deadline—in July that is expected to run through December. Applicants will be judged on three criteria: those who offer the deepest discounts, require the least amount of subsidy, and provide the most “stabilization” to the neighborhood. For instance, a single building in need of subsidy in a ten block radius would be more likely targeted than 15 buildings in need within a five block radius, according to Andrew Doba, a council spokesperson.

While details of the plan are still being worked out, the expectation is that most of the money will be spent in the outer boroughs, where the greatest speculation and destabilization took place, and also where the city can stretch its money the furthest. For each unit of a project pledged as an affordable rental unit, applicants will receive $50,000 an amount officials emphasize is about a third to a half as expensive as the typical rate paid for new affordable units. Both unfinished and finished-but-empty projects are eligible for the program, though the expectation is that only a portion of a project’s total units would be converted from market-rate to affordable.

But first those seeking money must agree to take a loss on their projects, as the city insists that the program is not intended as a handout or bailout. “This will require real sacrifice from the banker and the developers,” Catie Marshall, a spokesperson for the Department of Housing Preservation and Development, said. “We’re not going to bankrupt anyone, but we’re not making them whole, either.”

Marshall said the department expects to get many of its applications from banks that have foreclosed on projects and want to get rid of them as quickly as possible. When money will begin to flow out remains to be seen, but it could be as soon as the department begins getting applications back. “We could start working on projects, depending on what comes in and how clean it is, by the Fall,” Marshall said. If the pilot phase goes well, the city will consider expanding it or even making it a permanent housing program.

Developers large and small, not-for-profit and high-end are already hailing the project. “I see a plus-plus for the city of New York, both for the people in the neighborhoods, who won’t have to look at these half-built buildings anymore, and the affordable housing users who will have shelter,” said Vincent Riso, a principal at the Briarwood Organization, which has been developing affordable housing since the 1980s.

Steven Spinola, president of the Real Estate Board of New York, acknowledged that while the program would not directly benefit his members—many of the city’s biggest name developers—it would provide a benefit by absorbing excess inventory and stabilizing lending. “I think it’s a creative use of rather limited city resources, and at the same time to throw a little help to a developer in challenging times,” he added. “It will create opportunities that did not exist before.”

And given the continued stasis in the financial markets, HARP could be the only opportunity for developers to get projects off the ground. “There’s so much inventory, why would a bank finance any new construction?” said Julien Vernet, Briarwood’s marketing director.

The only criticism of the program so far was that it would primarily support middle-income families because lower income housing would require greater subsidies. “They can either serve a large number of folks with a moderate income or less folks with low income,” Josh Lockwood, executive director of Habitat-NYC, said. “We just hope there’s room in the conversation for low-income families.”

But Lockwood was also quick to praise the program as one-of-a-kind. “They’re light years ahead of anywhere else just trying to make this work,” he said. “I just hope other cities will follow.”