They rent a building to a property-developer/manager (eg Hines, Douglas Elliman, etc) that converts to residential and rents apt units to individuals, with a guaranteed portion of them affordable and rent stabilized.

It’s like if the city had a fleet of commercial vans they let a local taxi cab company lease at a submarket rate and convert to taxis. In exchange for the deal on the fleet, the taxi company sets aside a certain number of cabs dedicated to shuttling New Yorkers whose disabilities make public transit hard to use.

This property development business model is common, as is the affordable housing stock deal developers make with the city for things like tax breaks. What’s unique here is that the mayor’s office addressed the problem of perpetually lagging housing stock creation and skipped past years of slow property development and construction by offering a large building in the city that’s already built and ready to convert to residential. The city will then use the lease revenue to construct a new office. In the meantime, New Yorkers have more places to live.