NYCHA Chair Olatoye at a NYCHA event (photo via NYCHA on Flickr)
There are several pieces to the affordable housing puzzle in New York City. One is the city’s large public housing stock, home to about half a million people across the five boroughs. Another, at times overlapping piece is Section 8 vouchers, also known as Housing Choice Vouchers, which are federal subsidies that allow low-income tenants to live in a variety of locations, depending on where those vouchers are being accepted.
The New York City Housing Authority (NYCHA) is in charge of both traditional public housing properties and the Section 8 voucher program in New York City. As public housing properties have continued to wither after decades of use and lack of continued investment, especially from the federal government, the repair needs and costs far exceed what NYCHA alone can afford. While federal funds have moved toward privatization, thus the Section 8 program, New York City has grappled with how to properly keep up its public housing. In 2015, Mayor Bill de Blasio and NYCHA Chair and CEO Shola Olatoye announced and began implementing an ambitious new plan, NextGeneration NYCHA, which aims to get the authority back on solid fiscal footing over the course of a number of years.
The Section 8 voucher program is funded by the federal government, but it is administered by local housing authorities. The program has been in the news of later because the federal government is considering a major shake-up of Section 8 with the goal of fostering neighborhood integration and socioeconomic mobility. But, the proposal has alarmed many in New York City who want the city exempted from the new rules.
New Yorkers wishing to obtain a Section 8 voucher can apply for one through NYCHA, which screens applicants and administers the most vouchers of any public housing authority in the country. The program allows voucher holders to rent a privately-owned apartment within in a certain rent limit - the participant spends 30 percent of their income on rent and the voucher serves as a federal subsidy that covers the remaining cost.
Meanwhile, the Rental Assistance Demonstration (RAD) program is a new form of federal assistance designed to help public housing authorities across the country pay for unmet repairs and redevelopment in public housing properties. The “national backlog of deferred maintenance” on public housing properties across the country currently totals to approximately $26 billion. In New York, NYCHA’s public housing properties’ “unfunded capital needs” total approximately $16.5 billion, more than half the national sum.
The goal of RAD is to alleviate the debt burden felt by local public housing authorities by allowing them to sell a stake in their properties to private development firms that can then refurbish the units. When a public housing authority sells a stake in their public housing property to a private developer and redevelopment of a public housing development takes place, the tenants living in these units are no longer tenants of a public housing development but become Section 8 voucher holders living in a private-public property, while the housing units themselves are required by law to continue as affordable housing units.
NYCHA’s Permanent Affordability Commitment Together (PACT) program is the operation that facilitates the use of RAD funding in New York City. While NYCHA is applying to have 40 public housing properties transformed into Section 8 properties through RAD/PACT -- a transformation that will allow the housing authority to harness the resources of private developers for refurbishment -- it has already implemented a public-private partnership for several properties around the city.
Bronxchester Houses is one such property. The redevelopment that has taken place at Bronxchester is not a RAD project simply because the property, while owned and operated by NYCHA since its acquisition in the 1970s, was never public housing but was rather always Section 8 housing. This status as Section 8 housing owned by NYCHA is one shared by five other properties, and when the housing authority sold a 50 percent stake in the properties to a private developer, Triborough Preservation Partners, which is itself a partnership between L+M Development and Preservation Development Partners, in late 2014, the sale allowed for the redevelopment of approximately 875 apartments.
Situated near The HUB shopping district in the South Bronx, the Bronxchester Houses are home to 208 apartments. The repairs completed by Triborough are both structural and cosmetic. The courtyard, once covered in asphalt with one small splash of grass, is now covered with greenery and includes a new playground, a new basketball court, new park benches, and new picnic tables.
On a recent visit accompanied by members of the media, Olatoye, the NYCHA chair and CEO, called the refurbished property a “haven for the community,” and an “island of respite,” descriptive language not frequently used when discussing NYCHA properties.
The cosmetic repairs made by Triborough were as important to NYCHA as the structural repairs. Olatoye noted that it was important for NYCHA to see the old, yellow cinder block walls so strongly associated with public housing replaced by brighter, more welcoming material in redevelopment. The elevators and mailboxes in the lobby were replaced and refurbished, creating a friendlier entrance. The purpose of these aesthetic changes is to create an environment for residents that is welcoming and destigmatized.
The updates to appearance, security, and structure made to the Bronxchester Houses would not have been possible without private funding. NYCHA is prohibited by law from placing debt on its properties, but a private company faces no such restriction. And while the currently established public-private partnerships in New York City are not RAD-funded, the future of this type of housing redevelopment will be.
The first property that will undergo rehabilitation through RAD/PACT funding is the Ocean Bay property in Queens. If the housing authority’s application for RAD funding is approved, 40 other NYCHA properties, which consist of 5,200 housing units, will follow.
NYCHA’s Vice President for Development, Nicole Ferreira says that the RAD program will allow NYCHA to chip away at the $16.5 billion capital needs deficit it faces. “The 5,200 [units] is just the beginning. We had talked in the NextGen report about at least getting 15,000 units. But I would say, though, the 5,200 equals one billion dollars in capital repairs, so if we get through that, that’s a billion dollars. The entire 15,000 units we’d like to get to, and maybe it ends up being bigger than that, who knows, but the entire 15,000 units is about 6 percent of our portfolio, but it represents 20 percent of our capital needs. 15,000 units equals three billion dollars in capital.”
While approval for RAD funding for those 5,200 units is not guaranteed, Ferreira is optimistic about NYCHA’s chances. “Our 5,200 units are on the HUD waitlist, so there’s a 185,000 unit cap nationwide, so any other additional units have been put on a waitlist, but we’ve been having very positive conservations with HUD about, as other public housing authorities can’t close projects that, or they have no longer any interest, that maybe NYCHA would be prioritized.”
Judith Goldiner, the attorney in charge of the Civil Law Reform Unit at Legal Aid Society is cautiously optimistic about the RAD program.
“What we hope will be good about RAD is sort of twofold: one is that the bad parts of RAD we think that we have tried to address by keeping basically all the ton of protections that tenants have in public housing now if their building is converted to RAD, and the hope is, the other good part of RAD would be that there’s money for repairs that there are not currently in public housing,” she said. “The concern, obviously is that we’re losing apartments in the public housing portfolio, and that’s not where we’d like to be.”
The RAD program signals a significant shift away from maintaining public housing in its traditional form and toward the preservation and rehabilitation of properties transformed from public housing to Section 8 housing, with private funding and without the additional step of privatization.
Section 8 refers to the section included in the federal Housing and Community Development Act that outlines the Housing Choice Voucher program. The federal program was established in 1974 under President Richard Nixon as a free-market alternative to public housing. It was originally designed to give low-income Americans agency and mobility in the housing market. It was also designed to save the government money; constructing and maintaining public housing is expensive. Transitioning away from public housing was seen as a win-win scenario for both the government and tenants because by the 1970s, living in public housing had become increasingly untenable as conditions for tenants continued to deteriorate and the federal government disinvested.
Vouchers allow qualified applicants to live in apartments of their choice up to a certain price -- which differs by location -- and devote approximately 30 percent of their income to rent while the federal government covers the remaining cost each month. While these vouchers were intended to give potential tenants with low incomes more choice in housing, in many cases that has not occurred. Because the amount of rent the federal government will subsidize is limited based on the average cost of rent in each specific area, voucher holders’ choices of apartments are limited, and thus, they are often confined to poorer neighborhoods. Currently, there are 90,000 Section 8 vouchers in use in New York City, and there are 147,033 families on the waitlist for vouchers.
Recently, the Obama administration proposed changes to the Section 8 voucher system, intending to increase the choices available to voucher holders and improve racial and socioeconomic integration in wealthier neighborhoods throughout the country. If enacted, the new regulations would adjust the rent subsidy based on average incomes in a given area, offering more subsidy in wealthier areas, less in poorer ones. The proposal targets the fact that because of limits, most Section 8 participants use the subsidy in poorer neighborhoods; by offering a higher subsidy ceiling, the hope is that more low-income earners will rent in wealthier areas.
There is, however, considerable debate - especially here in New York City - of whether the Obama administration’s goals will actually come to fruition through these changes. Some say that the changes would so disrupt things for low-income tenants in the city, with its unique housing market and incredibly low vacancy rates, that a spike in homelessness would be guaranteed.
The President’s proposed changes, announced in mid-June, are just the latest development in the long, turbulent history of affordable housing policy in the United States. A centerpiece of Mayor Bill de Blasio’s political agenda, the availability of affordable housing is an especially important issue for many New Yorkers. No city in the country distributes more Section 8 vouchers, but with 2.5 million people applying for only 2,600 affordable housing units last summer, affordable housing continues to elude many New Yorkers.
While the RAD program is intended to transform public housing into Section 8 housing, the Obama administration’s proposed changes to Section 8 vouchers are intended to move voucher holders to neighborhoods that are far away from most public housing. The plan to distribute smaller subsidies for tenants living in poorer neighborhoods is the main source of tension. While many officials in the Obama administration point to studies showing the inherent benefits of living in a wealthy, resource-rich neighborhood and the moral interest in desegregating some of the country’s biggest cities, a diverse coalition of stakeholders in New York City has emerged in opposition to the proposed changes.
Bronx City Council Member Ritchie Torres, chair of the Council’s public housing committee, fears that homelessness could rise as the federal government decreases subsidies for tenants living in poorer areas. In an op-ed for NY Slant, Torres wrote, “Moving people to neighborhoods that offer them a better life is a worthy endeavor, to be sure, but what happens when there is essentially no place for people to move? What happens when voucher holders, facing a vacancy rate of 1.8 percent for units affordable to them, have nowhere to go? HUD's romantic rhetoric about mobility and opportunity is at odds with the unromantic reality of the New York City housing market.”
Goldiner, of Legal Aid, also points to New York’s unique housing market as evidence that the city is unsuited to the proposed changes.
“New York has almost a 50 percent turn-back rate, which means when people have to move and get a voucher to move, almost 50 percent of them are not able to,” she said.
The critiques expressed by liberal politicians like Torres and nonprofits like Legal Aid Society are shared by some landlords who fear that these changes will result in more tenants finding themselves unable to pay their rent each month. The city is already dealing with a homelessness crisis hovering around 60,000 people without stable housing.
Despite this alarm, the studies to which the Obama administration points when justifying the new proposals show that location is key when it comes to one’s chances for upward social mobility.
Professors Raj Chetty and Nathaniel Hendren of Harvard University studied the effect of place on the long-term economic outcomes of children who moved during their childhood. Their research focused on whether the number of years a child spent growing up in a low-poverty neighborhood versus a high-poverty neighborhood had any effect on their success as an adult. They found that it did. As reported by the New York Times, low-poverty neighborhoods are not just areas where poverty is low, they are also areas where inequality, violent crime rates, and segregation across racial and socioeconomic lines are low, schools are good, and two-parent households are prevalent. According to the research, the earlier in life a child moves from a high-poverty neighborhood to a low-poverty neighborhood, the better.
Chetty and Hendren’s research shows that growing up poor in all parts of New York City does not bode well for a child’s earnings and livelihood as an adult. Many poor neighborhoods in New York City are areas with a high concentration of Section 8 voucher holders - areas of the city like Central Brooklyn, the South Bronx, and Upper Manhattan.
The concentration of voucher holders in poorer neighborhoods, a phenomenon in existence across the country, stems not only from tenants’ limit in choice due to government subsidy cutoffs, but it can also be attributed to landlord preference.
In many higher income neighborhoods, landlords do not prefer to have voucher holders as tenants. In 2008, the practice of discriminating against a potential tenant based solely on their status as a Section 8 voucher holder became illegal in New York City under the New York City human rights law; however, that does not always deter landlords from engaging in the practice, and in many areas of New York State the practice is perfectly legal.
Additionally, there is no federal law forbidding discrimination based on legal source of income. This fact has prompted U.S. Congressional Rep. Nydia Velazquez of Brooklyn to introduce a bill to Congress that would outlaw housing discrimination against Section 8 voucher holders across the country.
This discrimination is in line with much of the history of housing throughout the country. Access to housing in the U.S., including affordable housing, has been marred by discrimination for decades, and this discrimination has had serious consequences. According to proponents of the changes, Chetty and Hendren’s research shows that the road to equality is a matter of location and integration, and with the proposed changes to the Section 8 voucher program, the Obama administration is attempting to implement the tools to create a solution. But critics of the changes say that if the program can only be made possible by taking away subsidies from voucher holders living in poorer neighborhoods, a potential rise in homelessness is a real threat, especially in a city as large and as expensive as New York.
The proposed changes to Section 8 and the RAD program present New Yorkers with two possible options for change in how some affordable housing is created and maintained. Whether either option will do more harm than good for those in need of affordable housing remains to be seen.
In terms of improving NYCHA’s properties and consequently, residents’ homes, VP Ferreira is mindful of the strengths of public-private partnerships made possible by RAD, but also recognizes the need to explore all options when it comes to improving affordable housing for New Yorkers.
“The goal is, there’s not one program that’s going to address everything, but we have to use all of the tools at our disposal, and RAD is just one of those tools,” she said.
Note: this article has been corrected with the correct number of NYCHA developments or properties in the RAD application: it is 40, not 29.