Following months of intense community opposition and a lawsuit by an elected official, the New York City Housing Authority has decided to withdraw a plan to build a mixed-income tower at one of its Upper East Side housing complexes, in hopes of putting forth a new plan that would likely have more market-rate units.

Set to be built by Fetner Properties, the project at the Holmes public housing complex at East 92nd Street between First and York Avenues had been on track to be the first infill project developed under the agency’s NexGen initiative, also known as NYCHA 2.0, which seeks to involve the private sector in helping to finance the rehabilitation of public housing. Under the deal, Fetner would have paid NYCHA $25 million to construct a 50-story building with 338 units, half of which would be below market rate, on a playground lot wedged between Holmes Towers, two 25-story buildings. The money was to be directed at fixing Holmes Towers, which contain roughly 1,000 residents and has been estimated as needing about $36 million worth of immediate capital repairs.

Under the new plan, which would still be developed by Fetner, the proportion of market rate units would likely rise to 70 percent, according to a report in The City.

On Monday, Chester Soria, a spokesman for NYCHA, confirmed that plan, saying the agency had decided to reformulate the project and that the NYCHA 2.0 model called for a split of 70 percent market-rate and 30 percent affordable units.

“It’s about how to move forward as fast as possible to get the full money for repairs for our residents,” he said.

He added that all of the tools cited under NYCHA 2.0 were up for consideration. These include using the Rental Assistance Demonstration, a federal program in which public housing units would be converted to Section 8; a rental subsidy program where families would pay 30 percent of their rent; and the selling of air rights to develop unused parcels of land.

“All options are on the table,” he said.

He added: “It’s all conceptual until we are able to have a conversation with stakeholders.”

NYCHA is expected to roll out a schedule in the coming weeks of meetings with the community. The engagement process will resemble that currently going on in Chelsea, where the agency is looking into redeveloping Fulton Houses, an 11-building complex that is also in sore need of rehabilitation, he said.

The original project at Holmes was roundly criticized from the start, on everything from the 500-foot height of the proposed building and the relatively small size of the lot — 20,000 square feet — to NYCHA’s intention to sidestep a public review process.

Critics also argued the $25 million paid by Fetner Properties for the 99-year ground lease deal was insufficient, and pointed to the company’s CEO Hal Fetner’s history of nearly $30,000 in donations to Mayor Bill de Blasio.

In April, Manhattan Borough President Gale Brewer sued the city and NYCHA over the plan, alleging that the agency was illegally circumventing the city’s public land use review process. The mayor has the authority to grant a zoning override, but land use experts said such applications were rare in big development projects.

The status of that lawsuit is now unclear. On Tuesday, Brewer's office did not respond to a request for comment.

The mayor's office also did not immediately respond to questions about the decision to scrap plans at Holmes. Back in March, asked about the controversy during his appearance on The Brian Lehrer Show, de Blasio adamantly expressed that "development needs to happen" at the Holmes housing complex.

“This about the needs for the many,” he said. “We have to be practical in the name of working people who deserve affordable housing.”

Latisha McNeill, who has lived at Holmes since 2012, was among those who protested the plan. On Monday, she told Gothamist that NYCHA's intentions to come back with another development failed to hear what residents have been saying all along.

"NYCHA does not need to build an entire building to fix two buildings," she said. "Why do you have to take a park from our kids? Why do you have to take our view?"

Reflecting the lack of faith in the floundering agency, which has failed to respond to even the most basic needs of public housing residents, she said of the NYCHA 2.0 model, "It's no guarantee. If and when this building is done, who's going to monitor these funds?"

UPDATE: The initial version of this story misstated the tenant rental contribution under Section 8. Tenants will pay 30 percent of their income toward rent.

UPDATE 6/18: A spokesman for Fetner Properties issued the following statement: “We remain committed to working with NYCHA to advance a project at this site to deliver new affordable housing, open space and much-needed funds for public housing infrastructure.”