A NYCHA building in Queens (photo: Governor's Office)
In July 2020, the New York City Housing Authority published “A Blueprint for Change” to address decades of organizational mismanagement, financial instability, and repeated crises that were affecting the health and wellbeing of the city’s roughly 500,000 public housing residents. Last year, NYCHA achieved one of the crucial steps from that plan as the state Legislature and Governor Kathy Hochul approved, with urging by NYCHA and city government, the creation of a new Public Housing Preservation Trust that will help raise billions of dollars for the distressed authority, where hundreds of buildings need immense capital repairs.
Now, a new report from the city’s Independent Budget Office (IBO) analyzed NYCHA’s stabilization plan, particularly the Preservation Trust, and the hurdles the authority continues to face as it attempts to claw its way to sure footing and a state of good repair.
Though the report points to promising potential for the Trust and the benefits it can deliver for NYCHA developments, it makes a stark assessment of the agency in charge — a public authority under the control of the mayor but regulated by the federal government and funded by all three levels of government.
“Perhaps the largest risk to the success of the Trust, and the other strategies around management reforms and reorganization outlined in the Blueprint, is NYCHA itself,” reads the report from IBO, an independent city agency. “The authority may struggle as an organization to implement the changes outlined in the plan—particularly the Trust, which is a complex and untested model that will take many years to implement. However, keeping the status quo is not a viable option for NYCHA or its residents.”
NYCHA had an estimated $40 billion in capital needs over five years for maintenance and repairs across its 175,000 apartments at the time the blueprint was released, with those needs growing by a projected $1 billion each year.
The authority had already found funding for new management and repairs at 62,000 apartments through the Permanent Affordability Commitment Together (PACT) program, which brings public housing developments under private management so they can receive federal funding from the Rental Assistance Demonstration (RAD) program.
That left another 110,000 apartments that needed $18 billion in repairs, and NYCHA had only secured about $3.3 billion in capital funding at the time. The authority also estimated that it would need another roughly $7 billion for other improvements to community centers and green spaces, among other things, for a total of $25 billion.
It is important to note that since 2019 NYCHA has also been under a federal monitor as part of an agreement between the de Blasio administration, NYCHA, and the U.S. Department of Housing and Urban Development (HUD) to improve the authority’s performance and address pressing infrastructure issues. That agreement was the result of a lead paint scandal, on top of many years of mismanagement, other scandals, disrepair, deficits, and dangerous conditions.
Mayor Eric Adams, a first-term Democrat, integrated NYCHA into his own housing plan, in a change from past administrations that had focused on it as a separate issue. And winning state approval for the Preservation Trust, which de Blasio had first sought, was the initial major step in moving the plan forward. Besides the Trust and PACT, the mayor’s housing plan contains no other major planks to bring in billions for capital repairs, but he has also stressed the importance of funding from the federal government.
The new Preservation Trust – which is a separate public entity that will receive long-term ground leases from NYCHA – will be able to access federal Tenant Protection Vouchers (TPVs), essentially doubling the federal subsidies that NYCHA currently receives. The Trust will then be able to issue bonds to raise billions of dollars for capital repairs.
Under the state legislation that created the trust, NYCHA is limited to turning over only 25,000 apartment units to the Trust – which will help the Trust raise about $3.4 billion for repairs. If all 110,000 apartments that aren’t under the PACT program eventually fall under the Trust, it could raise as much as $15 billion.
Recently departed NYCHA CEO and Chair Gregory Russ indicated in July 2022 that tenant votes on conversions to the Trust could be held early this year and that the process of financing developments would then begin by the end of this year or early 2024. In December, NYCHA published the final voting procedures for the Trust after a four-month engagement process.
“With the NYCHA Public Housing Preservation Trust, NYCHA residents finally have the power to determine the future of their homes,” Mayor Adams said in a statement at the time. “After decades of disinvestment in NYCHA that has led to crumbling buildings and deteriorating infrastructure, the Trust will unlock billions of dollars for desperately needed repairs.” Adams has repeatedly cited the Trust as one of his top accomplishments of his first year in office.
The IBO report points to many roadblocks to the success of the Trust, however. As it notes, NYCHA will require tenant approval before a development can be transferred to the Trust.
“To implement the Trust, NYCHA will need to earn the backing of residents in many developments, and whether residents will support transferring their developments to the Trust remains to be seen,” the report reads, pointing out that the Trust is an “untested” model and that there was some tenant opposition when the issue came up in Albany. “NYCHA has struggled with public engagement in the past, and mistrust and skepticism among NYCHA residents for the authority may make it difficult to obtain buy-in,” the report states.
The Trust also needs more federal funding to work. Even with Democratic President Joe Biden at the helm, when Democrats controlled the House of Representatives and the Senate, they did not approve new funding for NYCHA despite trillions in spending on other infrastructure. The prospect of additional funding may now prove particularly difficult with a divided Congress after Republicans flipped control of the House in the midterms last year, though Democrats are nonetheless seeking public housing help. In January, U.S. Reps. Nydia Velazquez and Dan Goldman re-introduced the Public Housing Emergency Response Act, with co-sponsorship by other Democratic members of the city’s congressional delegation, which would provide $70 billion for public housing repairs across the country, including $32 billion dedicated to NYCHA.
As the IBO report points out, the federal government would have to appropriate almost $500 million for the Tenant Protection Voucher (TPV) program for NYCHA to be able to transfer 25,000 units to the Preservation Trust. For 110,000 units, the required funding rises to $2.2 billion. The federal omnibus spending bill that was approved in December only included about $337 million for the TPV program nationally and though that is more than triple the previous allocations, it falls far below NYCHA’s requirements. On top of that, the city will also need HUD’s cooperation in dedicating TPVs to NYCHA, instead of using formula-based distribution nationally.
“This year’s allocation for the Tenant Protection Voucher program is encouraging, given historical funding levels for the program, but whether NYCHA can obtain all the tenant protection vouchers necessary for the Trust’s implementation will likely remain a source of uncertainty in the years to come,” the IBO report states.
IBO also pointed out the benefits and risks of the Trust model.
The pros include the ability to make long-term investments in NYCHA capital projects, decreasing pressure on the city’s budget to contribute to NYCHA, a greater level of public control than the PACT model, a greater voice for residents in the process, streamlined procurement, and easier approval from the federal government.
The cons seem few. IBO noted that tenants have different rights under the Trust model, and pointed to ongoing concerns from advocates about legal protections. The report also notes that there exists a possibility that the Trust could default on its debts and face foreclosure, and its creditors “could potentially gain leasehold interest in the developments under the Trust, meaning a share in the right to operate the developments.” But the report also states that that is unlikely, that despite defaults the developments will still be owned by NYCHA, and that creditors are more likely to try to restructure the Trust’s debt while barely affecting tenants.
Overall, the report notes that the city’s plans to transform NYCHA will depend on the ability of current and future officials to implement them, noting that plans from previous administrations have largely been unsuccessful. “All told…NYCHA has 38 Transformation programs it plans to carry out to change the organization, with 21 of these programs in the implementation phase and 7 programs already completed,” the report reads. “It remains to be seen whether NYCHA will successfully implement these changes and in what timeframe.”
Citizens Budget Commission, a nonprofit fiscal watchdog, has issued similar warnings about the success of the Trust. “If NYCHA’s current operating practices and policies are imported wholesale to the Trust without changes, its effectiveness will be severely limited,” said Sean Campion, senior research associate at CBC, in testimony before the State Assembly Standing Committee on Housing in December 2020. CBC has warned for years that many thousands of NYCHA buildings and units could soon be more expensive to renovate than the cost of new construction. In fact, two Manhattan NYCHA complexes are now reconsidering the idea of demolition and new construction over repairs, Politico reported this past week.
While the Preservation Trust has yet to begin operating in earnest, the city is continuing the process of PACT conversions. In January, NYCHA announced the selection of developers under the PACT program to address $189.3 million in repairs at 10 buildings in Central and East Harlem. This month, the agency announced two more agreements with developers to provide $85 million in repairs at Metro North Plaza and Gaylord White Houses in East Harlem and $128.5 million in repairs to developments in the Northeast Bronx.
Also in January, Mayor Adams and Governor Hochul announced the first planning phase to replace 335 elevators at 20 NYCHA developments under a $300 million agreement with the Dormitory Authority of the State of New York approved in April last year.
Besides IBO, the city’s efforts also face scrutiny from Comptroller Brad Lander and the New York City Council. This week, Lander announced that his office – at the recommendation of the Comptroller’s NYCHA resident audit committee – would audit NYCHA’s repair process and eviction rates at RAD/PACT developments.
“Residents are the experts on what is broken in their homes, and their insight is an integral part of the oversight process to ensure that NYCHA is meeting its obligations,” Lander said in a statement announcing the audits. “Problems with the repairs process and concerns about rising evictions rose to the top in our conversations, and our auditors will be diving in on the details to understand what’s happening and what needs improvement.”
Next week, the City Council is set to hold an oversight hearing on air quality in NYCHA apartments while also considering a resolution introduced by Council Member Alexa Avilés, chair of the Council’s public housing committee, which calls on the state to fund its share of NYCHA’s annual capital costs.
by Samar Khurshid, senior reporter, Gotham Gazette