Once AAFE had reorganized, the group began to focus on taking its work to another level. The AAFE v. Koch lawsuit had proved that opposing gentrification was not enough; it was time to deliver some concrete results. The organization had already built a reputation as an important advocate for New York's Asian and immigrant communities, but AAFE's second decade presented the organization with a new set of challenges.

As AAFE's staff continued and expanded their work in the community, they were constantly reminded of the importance of creating affordable housing. The effects of the SMBD had been neutralized, but Chinatown's housing was still woefully inadequate. Many local residents lived in rundown tenement buildings dating from the 19th century.

In January 1985, the Red Cross asked for AAFE's help in assisting fire victims from a destroyed apartment building at 54 Eldridge Street. The building had no heat or hot water, so people had resorted to using electric heaters in the dead of winter. The old, over-loaded wiring ignited a blaze that killed two elderly people and left a hundred and twenty-five tenants homeless. It took fourteen months to find city housing for the displaced tenants, who ended up far from their jobs and their children's schools in Chinatown.

After this experience, AAFE resolved to create transitional housing in the neighborhood so that people could suffer less disruption of their lives. The staff found two vacant buildings at 176 and 180 Eldridge Street and began to seek financing for rehabilitation that could provide both temporary and permanent low-income housing. They called their project Equality House.

In 1989, the first elderly and low-income tenants moved into their new apartments in Equality House. As AAFE became property owners, they made even greater efforts to communicate with tenants about what they could do to make better housing a reality. AAFE's tenant organizers educated the new buildings' residents about their rights and responsibilities, and helped create a tenants' association to address larger issues affecting the quality of life in the neighborhood.

Meanwhile, Chinatown was suffering from a decline in tourism. Many of the neighborhood's struggling small businesses lacked capital and know-how. AAFE therefore established the Manhattan Neighborhood Renaissance Local Development Corporation, which set up lending programs, technical assistance, and other services to help small businesses all over the Lower East Side, and thereby create jobs. In keeping with AAFE's values, Renaissance did not limit its services to members of the Chinatown or Asian American communities.

In the late 1980s, AAFE also started doing work around the Community Reinvestment Act, which required banks to perform positive acts for the communities in which they are located. AAFE investigated a number of local banks and discovered that they had a staggering deposit base, but very little lending activity. AAFE successfully showed the banks that small businesses in the neighborhood could offer them new business opportunities. This effort helped AAFE to establish new partnerships that laid the groundwork for further investment in the community.

Throughout this period, AAFE continued building community assets and worked tirelessly to promote Asian American civic and political participation at various levels. The organization firmly asserted its intention and demonstrated the ability of being an advocate, a builder and a service provider for the community for many years to come.